Richards Layton & Finger
 

Delaware Real Estate Law Update - Legislature Removes Impediment to Seller Financing of Commercial Real Estate

August 11, 2011

On July 13, 2011, Governor Jack Markell signed Senate Bill 104. This legislation excludes the application of 25 Del. C. § 314(c) to most commercial real estate contracts involving seller financing. Previously, contracts for “improved or unimproved residential real estate” under which the seller agreed to provide financing for the purchaser could not remain open for more than six months (plus one six-month extension) without the risk of either seller or buyer exercising a right (contained in the statute) to rescind the contract at any time prior to closing. Senate Bill 104 amends Section 314(c) to clarify that the restriction contained in that section applies only to one-to-four-family residential real property used primarily for personal, family, or household purposes, so that such right of rescission no longer applies to most commercial real estate contracts. Senate Bill 104 is effective as of the date of its enactment, and it is also effective as to all contracts entered into before the date of its enactment that have not yet reached final settlement and that do not expressly refer to Section 314(c) in the contract. 
 

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