Tennessee Senate passes new wholesaling real property legislation

On April 8, 2025, the Tennessee State Legislature introduced House Bill 781, aimed at regulating the practice of wholesaling real property. The bill, which has since been substituted by Senate Bill 909, seeks to clarify the legal framework surrounding the assignment of equitable interests in real estate transactions.

The primary purpose of House Bill 781 is to establish clear definitions and requirements for individuals engaging in wholesaling real estate. Under the proposed legislation, a buyer who enters into a contract to purchase real property can assign their equitable interest—essentially the right to benefit from the property— to another buyer for a profit. This practice, while common in real estate, has raised concerns regarding transparency and fairness in transactions.

Key provisions of the bill include mandatory disclosures that buyers must provide to both potential purchasers and sellers. Specifically, buyers are required to inform sellers of their intent to market their equitable interest and disclose the nature of that interest to subsequent buyers. These disclosures must be presented in bold, large font within the written agreement, ensuring clarity and visibility.

The bill has sparked notable debates among lawmakers and stakeholders in the real estate industry. Proponents argue that the legislation will protect consumers by ensuring they are fully informed about the nature of the transactions they are entering into. Critics, however, express concerns that the additional regulations could stifle the wholesaling market and limit opportunities for investors.

Economically, the implications of House Bill 781 could be significant. By establishing a more regulated environment for wholesaling, the bill may enhance consumer confidence in real estate transactions, potentially leading to increased market activity. Conversely, if perceived as overly restrictive, it could deter investors from participating in the market.

As the bill progresses through the legislative process, its future remains uncertain. Experts suggest that the outcome will depend on the ability of lawmakers to balance consumer protection with the interests of real estate investors. The next steps will involve further discussions and potential amendments as the bill moves toward a final vote.