Louisiana Act 807: New Wholesaling Rules Every Baton Rouge Buyer and Seller Needs to Know (Effective August 1, 2026)

Louisiana Act 807: New Wholesaling Rules Every Baton Rouge Buyer and Seller Needs to Know (Effective August 1, 2026)

Posted By Kevin Young, REALTOR® | Kevin’s Corner | Baton Rouge Real Estate Market Analysis

What Is Louisiana Act 807 and What Does It Regulate?

Before August 1, 2026, residential property wholesaling in Louisiana operated in a largely informal regulatory space. Wholesalers—individuals or entities who secure a purchase contract and then assign or sell that contractual right to an end buyer for a profit—were not subject to specific disclosure or consumer-protection requirements under state real estate law. Act 807 changes that in a meaningful way.

The law defines wholesaling as securing, negotiating, or facilitating the purchase or sale of residential real property with the intent to transfer, assign, or sell a contractual right or equitable interest in that property—directly or indirectly—for financial gain. A wholesaler, under the Act, is any person or entity engaged in or intending to engage in that activity.

Importantly, the law does not require wholesalers to hold a Louisiana real estate license. However, it draws a clear line: unlicensed wholesalers may market their contractual rights to purchase, but they may not represent buyers or sellers or perform any activity that otherwise requires a license under Louisiana Real Estate License Law (La. R.S. 37:1430, et seq.). Wholesalers and investors should consult a Louisiana-licensed real estate attorney to confirm which specific activities fall within or outside the licensed-activity boundary under the Act. Crossing that line exposes a wholesaler to both contract voidability and civil enforcement. For the Greater Baton Rouge market—where wholesaling activity has grown alongside investor interest in distressed and value-add properties—this legislation formalizes a practice that many homeowners encountered without fully understanding.

Required Disclosures, Cancellation Rights, and Earnest Money Under Act 807

Act 807 establishes several concrete, non-negotiable requirements that wholesalers must satisfy before a contract is signed and throughout the transaction.

**Written Disclosures Required Before Signing:** A wholesaler must prominently disclose in writing, prior to contract execution: (1) their intent to assign, transfer, or sell their contractual rights or equitable interest for a higher price than offered to the seller; (2) a recommendation that the seller seek independent legal advice before signing; and (3) the seller's right to cancel the contract for any reason, without penalty, for at least five calendar days after execution.

**Mandatory Contract Language:** Every wholesaling contract must include specific statutory notice language identifying the cancellation deadline date and stating that the wholesaler cannot ask the seller to sign any deed, cash sale, or conveyance document until the cancellation period has expired. The LREC has published a standard 'Wholesaling Residential Real Property Mandatory Cancellation Notice' form, which wholesalers must provide to sellers at no cost.

**Earnest Money Requirement:** Wholesaling transactions now require a minimum earnest money deposit of at least 1% of the purchase price, held in escrow in accordance with the Act. If a wholesaler withdraws or is found non-compliant with the Act's requirements, that deposit is forfeited to the seller. Note, however, that if the seller exercises the five-day cancellation right, the wholesaler receives the deposit back—consult a Louisiana-licensed real estate attorney for guidance on how deposit rules apply to your specific situation.

**Prohibited Conduct:** Wholesalers are explicitly barred from acting on behalf of the seller through a mandate or power of attorney, misrepresenting any license or certification, placing any lien or encumbrance on the property, or engaging in deceptive or unfair trade practices. Violations render the contract voidable by the seller until title transfer and may result in civil penalties of up to $5,000 per violation, enforceable by the LREC and, under the Act's enforcement provisions, the Louisiana Attorney General. Consult a Louisiana-licensed attorney for guidance on the full scope of enforcement and remedies available under Act 807.

What Act 807 Means Practically for Baton Rouge Sellers and Investors

**For Homeowners and Sellers:** The most immediate practical benefit is transparency. Before Act 807, a homeowner could sign a wholesaling contract without fully understanding that the person across the table intended to resell that contract—often at a significant markup—to a third-party buyer. The mandatory written disclosure eliminates that ambiguity. The five-day cancellation window gives sellers a genuine opportunity to consult an attorney, compare offers, or simply reconsider without financial consequence. The 1% earnest money requirement adds a layer of financial accountability: if a wholesaler is non-compliant or withdraws without a valid contractual basis, the seller retains that deposit.

Sellers should also note that the law prohibits wholesalers from acting as their advisor or representative. If a wholesaler is offering guidance on what to do with the property, suggesting they are acting in the seller's interest, or asking for a power of attorney, those are red flags that may indicate a violation of Act 807. If you have concerns about a wholesaler's conduct, the LREC is the appropriate agency to contact.

**For Wholesalers and Investors:** The law formalizes what was previously an informal process. Wholesalers must now use compliant contract language, provide the LREC cancellation form, and fund a minimum earnest money deposit for every deal. This raises the cost and commitment level per transaction, which may reduce the volume of speculative or low-effort wholesaling activity in the market. Investors who operate transparently and professionally will find that the new framework actually clarifies their legal boundaries. Compliance is not optional: a non-compliant contract is voidable by the seller at any point before title transfer, meaning a wholesaler could lose a deal at closing if disclosures were not properly made at the outset. Have a Louisiana-licensed real estate attorney review your contract templates and business practices before using them in any transaction.

Questions to Ask, Documents to Review, and Professionals to Consult

Whether you are a homeowner who has been approached by a wholesaler or an investor building a wholesaling business in Greater Baton Rouge, the following practical steps apply.

**For Sellers—Before You Sign Anything:**
– Ask the wholesaler to provide all required written disclosures before you review or sign any contract.
– Request the LREC 'Wholesaling Residential Real Property Mandatory Cancellation Notice' form. The LREC is required to make this available, and the wholesaler must provide it to you at no cost.
– Confirm the contract includes the statutory cancellation language and a clearly identified cancellation deadline date.
– Use the five-day cancellation window to consult a Louisiana-licensed real estate attorney. Act 807 requires the wholesaler to recommend that you seek legal advice before signing.
– Verify that earnest money is being deposited into an escrow account as required by the Act, not simply held by the wholesaler.
– If you have questions about whether a wholesaler's conduct complies with Act 807, the LREC is the appropriate agency to contact.

**For Investors and Wholesalers:**
– Have a Louisiana-licensed real estate attorney review your contract templates and disclosure documents for compliance with Act 807 before using them in any transaction.
– Confirm your business practices do not cross into licensed brokerage activity—consult your attorney about which specific activities require a real estate license under Louisiana law.
– Budget for the 1% earnest money deposit as a standard cost of doing business under the new framework.
– Access the LREC's published cancellation form at lrec.gov and incorporate it into your standard transaction package.

Neither this article nor your REALTOR® can provide legal advice, determine whether a specific contract complies with Act 807, or advise on civil penalty exposure. Those determinations require a licensed Louisiana attorney.

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