Real Property

Plain English Breakdown

Checked against official source text during the last sync.

Rules for Selling Real Estate Contracts

This bill sets rules for people who buy real estate and then sell their rights to someone else before owning the property themselves.

What This Bill Does

• Defines 'equitable interest' as a buyer's right to benefit from real property after signing a contract but before getting legal ownership.
• Requires buyers to tell potential new buyers about their rights in the property.
• Needs sellers to be informed of the buyer’s plan to sell their rights and when it will happen, if allowed by the original agreement.
• Makes sure all important information is written clearly and included in the contract.
• Limits lawsuits for breaking these rules to two years after signing a real estate contract.

Who It Names or Affects

• People who buy real estate with plans to sell their rights before getting legal ownership.
• Sellers of real property.
• Potential new buyers who might purchase the rights from someone else's contract.

Terms To Know

equitable interest

The right a buyer has to benefit or profit from real estate after signing a contract but before getting legal ownership of it.

Limits and Unknowns

• This bill only applies to transactions involving real property and does not cover other types of contracts.
• It is unclear how this will affect existing contracts that do not include these requirements.

Official Summary Text

WHOLESALING REAL PROPERTY

This bill provides
that a buyer who enters into a contract with a seller to purchase real property engages in the act of wholesaling the real property when the buyer, after entering into the contract with the seller, assigns the buyer's equitable interest in the real proper
t
y to a subsequent purchaser for a higher price than the buyer paid for the real property. As used in this bill, "equitable interest" means the right of a buyer to benefit or profit from real property after the buyer has entered into a contract for the pu
r
chase or sale of real property with a seller but before the legal title has been transferred from the seller to the buyer.

REQUIREMENTS FOR A BUYER ENGAGING IN WHOLESALING REAL PROPERTY

This bill authorizes a buyer who has entered into a contract with a
seller to purchase real property to engage in wholesaling the real property if the buyer discloses all of the following information in writing to the following persons:



A potential subsequent purchaser or assignee, the nature of the buyer's equitable interest in the real property.



The seller of the property, the buyer's intent to market its equitable interest prior to execution of the contract, and the effective date of any assignment of the buyer's interest to a subsequent purchaser of the real property at least three business days prior to the effective date of any assignment, if the contract allows for such assignment.

This bill requires such disclosures to be in bold, large font print and included in the written agreement.

VIOLATIONS

This bill re
quires an action for a violation of this bill to be commenced within two years after the execution of a contract for purchase and sale of real property.

Current Bill Text

HOUSE BILL 781
By Martin G

SENATE BILL 909
By Haile

SB0909
001494
- 1 -

AN ACT to amend Tennessee Code Annotated, Title 47
and Title 66, relative to wholesaling real property.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Title 66, Chapter 4, is amended by adding
the following language as a new part:
66-4-401. Part definitions.
As used in this part, "equitable interest" means the right of a buyer to benefit or
profit from real property after the buyer has entered into a contract for the purchase or
sale of real property with a seller, but before the legal title has been transferred from the
seller to the buyer.
66-4-402. Wholesaling real property.
A buyer who enters into a contract with a seller to purchase real property
engages in the act of wholesaling the real property when the buyer, after entering into
the contract with the seller, assigns the buyer's equitable interest in the real property to a
subsequent purchaser for a higher price than the buyer paid for the real property.
66-4-403. Requirements for a buyer engaging in wholesaling real property –
Action for violation of this part – Scope of this part.
(a)
(1) A buyer who has entered into a contract with a seller to purchase real
property may engage in wholesaling the real property if the buyer discloses the
following information in writing to:

- 2 - 001494

(A) A potential subsequent purchaser or assignee, the nature of
the buyer's equitable interest in the real property; and
(B) The seller of the property, the buyer's intent to market its
equitable interest prior to execution of the contract, and the effective date
of any assignment of the buyer's interest to a subsequent purchaser of
the real property at least three (3) business days prior to the effective
date of any assignment, if the contract allows for such assignment.
(2) Disclosures required under subdivision (a)(1) must be in bold, large
font print, and included in the written agreement.
(b) An action for violation of this part must be commenced within two (2) years
after the execution of a contract for purchase and sale of real property.
(c) This part only applies to transactions involving real property.
SECTION 2. The headings in this act are for reference purposes only and do not
constitute a part of the law enacted by this act. However, the Tennessee Code Commission is
requested to include the headings in any compilation or publication containing this act.
SECTION 3. This act takes effect upon becoming a law, the public welfare requiring it.