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Committee hears sponsor testimony for bill to restrict real-estate wholesaling practices
Summary
Senate Bill 155 would require disclosure by wholesalers, ban a wholesaler from entering binding contracts without a signed disclosure from the record owner, and require escrow agents to return earnest money to owners within 30 days if disclosure rules are violated, according to sponsor testimony.
Senate Bill 155, presented to the Senate Judiciary Committee in sponsor testimony, would target "real estate wholesaling," a practice sponsors described as posing risks to vulnerable homeowners by enabling assignment of purchase contracts for an assignment fee without the homeowner’s informed consent.
Sponsor testimony summarized the practice and the bill’s primary protections. "This legislation would, protect Ohioans from real estate wholesaling, which is a predatory practice that preys on vulnerable homeowners and robs them, in the most part from equity in their homes," a sponsor said during testimony, explaining that wholesalers enter contracts with owners then assign those contracts to third-party investors for an assignment fee, often without the owner’s knowledge until closing.
Key provisions explained to the committee include: a requirement that wholesalers disclose to the homeowner and end buyer their intention to assign the contract for profit; a prohibition on a wholesaler entering into a binding contract for the transfer of residential real estate unless the record owner has signed and dated a required disclosure form; and a requirement that an escrow or closing agent return earnest money paid by a wholesaler who violates disclosure rules to the record owner within 30 days after the owner cancels the contract.
Sponsor background and prevalence: The sponsor said the Ohio Division of Real Estate and Professional Licensing has reported increased wholesaling activity, with issues including predatory contract terms, misleading marketing and clouded titles. The sponsor cited other states that passed similar laws — including Texas, Illinois, Arizona and others — to argue for statutory clarity and homeowner protections.
Committee process: Senators Brenner and Ingram provided sponsor testimony and the sponsors indicated proponent witnesses would appear in a later proponent panel. No committee vote was taken at this hearing.
Procedural status: The committee recorded the testimony as the first hearing on Senate Bill 155; no final action was taken.
