Seeking clarity re: 2024 changes to Texas wholesaling laws

[Savanna Kwieran]

Hey there, friends. I am trying to fully understand what new regulations have been implemented in Texas for wholesaling, because I'm seeing discrepancies in what I'm reading and hearing. First, I was informed that wholesaling in Texas now requires a double-close, which made my eyes go wide and prompted a deeper inquiry. But in researching the legislation, all I see is a new rule about disclosure. Bill SB 1577 states that effective January 1, 2024, wholesalers in Texas are required "to disclose their interest in the property in writing to both buyers and sellers." To me, nothing about that prompts necessity for a double-close when assigning a property. 

Am I missing some other new legislation, which would indeed make a double-close necessary? Or, is assigning a contract to an end buyer the regular old way still in place, and the only change is disclosure? Because if it's only the disclosure thing, I'm golden, because I choose to be upfront about that anyway. 

[T. Alan Ceshker]

There are 3 separate statutory codes governing wholesaling. They are substantially similar.

The bottom-line requirements for wholesalers are:

• A buyer must disclose to a seller of their intention to wholesale the property;
• A buyer must disclose they are selling their equitable interest/contract rights (versus selling the property) in all marketing, advertisements and communications with other parties;

It is important that each and every communication, ad, sign, post and communication have a disclosure that the wholesaler is marketing and selling their equitable interest or their contract rights. If a wholesaler places a sign in the front yard with their number and states: For Sale - 3 bed 2 bath, this is enough to possibly get fines by TREC.

Our suggested disclosure in a separate addendum to the TREC 1 to 4 is:

EQUITABLE INTEREST ADDENDUM

The Buyer and Seller agree and understand that the Buyer may sell an option or assign an interest in this Contract. The Seller agrees that the Buyer has the right to sell and assign their contract rights and equitable interest in the Property. Seller agrees there is no further approval needed from Seller to allow the assignment of this contract to a third party/end buyer.

I have an information form for this - let me know if you wan to receive this.

Also, if you would like to learn more about how Ceshker Group Title can assist you in your real estate efforts, reach out to schedule a time to meet with us.