Legislation Introduced to Increase Transparency in Real Estate Wholesaling
By Anastasia Kotkovskaya, Manager, Advocacy and Research
Senate Bill (SB) 155 has been introduced with the intention of bringing greater transparency to the practice of real estate wholesaling in the state of Ohio.
Real estate wholesaling is a predatory practice that involves entering into a purchase agreement with a homeowner and then assigning that contract to a third-party investor for a profit. While legal, the practice has raised growing concerns due to reports of misleading tactics, including wholesalers presenting themselves as the actual buyer and offering homeowners well below market value – often without the homeowner realizing the full scope of the transaction until closing.
SB 155 would require wholesalers to provide a written disclosure to the homeowner before entering into a contract. This disclosure would need to include:
- That the individual entering into the contract is a wholesaler and does not represent the homeowner in the transaction.
- A recommendation that the homeowner seek legal counsel.
- An explanation that the wholesaler intends to assign the contract for a profit.
- A statement that the wholesaler can assign the contract without the homeowner’s consent.
- Notice that a fee may be charged to a third party.
- A warning that the offer price may be below market value.
If a wholesaler fails to provide and have the homeowner sign the disclosure, it would be considered an unfair or deceptive act under Ohio law. In such cases, homeowners would be able to cancel the contract and recover any earnest money paid.
As reports of aggressive and misleading wholesaling practices continue to rise – especially those targeting vulnerable homeowners – SB 155 is a step forward towards ensuring that home sellers are informed and protected in these transactions.
The bill has been assigned to the Senate Judiciary Committee. Learn more about SB 155 below: