“(c) No contract for the sale of improved or unimproved residential real estate under which the seller(s) agree to provide any financing for the purchaser(s), unless specifically permitted by pre-empting Federal law or regulation, shall remain executory for a period exceeding six (6) months. The parties may renew the executory contract, by written agreement, for a period not exceeding more than an additional six (6) months. The time between execution and final settlement of such a contract shall be no longer than those combined time periods. For purposes of this subsection ‘final settlement’ shall mean a transaction wherein the seller(s) convey(s) a deed to the residential real estate to the buyers in return for payment amounting to the purchase price, which may include a mortgage in the amount of any financing extended by the seller(s).
(d) Notwithstanding the provisions of subsection (c), the parties may agree, under the contract of sale to not engage in a final settlement until fulfillment of a condition of paying the last installment of the purchase price under a conditional sale, provided that the conditional sales agreement includes provisions indicating:
(1) the periodic rental value of the real estate, which is not to exceed 75% of the original periodic installment amount under the conditional sales agreement;
(2) in the event of buyer(s) default for failure to pay, the buyer(s) have a right to redeem the property by making full payment of the remaining contract amount within 120 days of the seller(s) providing written notice of the default;
(3) if, after default, the buyer(s) fail to redeem the property by full payment within 120 days, the contract converts by law to a landlord/tenant agreement, wherein rent shall be the rental value established in (1) above and which shall apply retroactive to the date of default;
(4) in the event of the agreement being converted to a landlord/tenant agreement after default, any amount paid by the buyer(s) as a down payment on the conditional sales agreement shall be deemed a security deposit, with any amount exceeding that allowed by § 5514 of this Title first being credited towards arrears in rent and any remainder excess paid to the tenant.”.
Section 2. Further Amend § 314 of Title 25 of the Delaware Code by deleting the phrase “a or b” as found in subsection “(e)”, as amended, and inserting in lieu thereof the phrase “a, b or c”.
Section 3. Further Amend § 314 of Title 25 of the Delaware Code by adding new subsections “(f)” and “(g)” to read as follows:
“(f) Failure to comply with the requirements of subsection (d) of this Section shall make the contract voidable by the buyer(s) under the conditional sales agreement at any time prior to the payment of the last installment under the agreement, unless in default for failure to pay under the agreement, under which circumstance the agreement shall be voidable by either party until such time as the conditional sales agreement is converted to a landlord/tenant agreement.
(g) In the event of a dissolution of an agreement under conditions stated in subsection (d) or (f), the Justice of the Peace Court shall have concurrent jurisdiction with the Court of Chancery to hear and adjudicate cases brought to enforce the rights of parties in the property, including, but not limited to, an action for an accounting.”.
Section 4. Amend § 5101 of Title 25 of the Delaware Code by adding a new subsection “(c)” to read as follows:
“(c) This Code shall apply to any relationship between parties arising by law under a conditional sales agreement which has been converted to a landlord/tenant agreement by operation of § 314(d)(3) of this Title, but shall not apply to any other conditional sales agreement.”.
Section 5. Amend Chapter 51 of Title 25 of the Delaware Code by creating a new Section “§ 5122” to read as follows:
“§ 5122. Equitable jurisdiction relating to converted conditional sales agreements.
In addition to any other equitable authority granted to, or inherent in the powers of, the Justice of the Peace Court to hear and properly dispose of actions brought under Chapters 51 through 57, 63 and 70 of this Title, that Court shall have the equitable jurisdiction, concurrent with the Court of Chancery, to fully determine the rights of all parties at the time of hearing any matter brought pursuant to the conversion of a conditional sales agreement to a landlord/tenant agreement by operation of § 314(d)(3) of this Title. Such authority shall include, but not be limited to, an accounting for all payments made under the conditional sales agreement prior to the conversion of the contract to a landlord/tenant agreement.”.
Section 6. Amend § 5141(28) of Title 25 of the Delaware Code by adding at the end of the sentence, but before the period “.” the following:
“which has been converted to a landlord/tenant agreement pursuant to § 314(d)(3) of this Title”.