Relating to the wholesaling of residential property by a wholesaler, and providing civil penalties

This bill relates to the wholesaling of residential property by a wholesaler. “Wholesaling”, “residential property”, and “wholesaler” are defined in the bill. The bill requires a person to be licensed as a real estate broker, or to be represented by a licensee, to engage in wholesaling. The bill permits a licensee to represent a wholesaler in a wholesaling transaction. The bill requires a wholesaler to disclose to all parties to a wholesale transaction prior to executing a contract to purchase or to convey an equitable interest to a buyer or other entity the legal identities of all parties to the wholesale transaction and an explanation of the wholesaling process, including disclosure that the wholesaler holds an equitable interest in the residential property and may not be able to convey title to the property. The bill also requires the wholesaler to provide a copy of an executed agency agreement to all parties prior to executing the contract. If a wholesaler fails to comply with the disclosure requirements, the seller or the buyer may cancel the contract at any time prior to the closing of the sale of residential property without penalty, and may retain any earnest money paid by the wholesaler. An individual engaged in wholesaling in violation of the bill is subject to a civil penalty of up to the greater of $10,000, or 10 percent of the sale price of each residential property for which the individual engaged in wholesaling in violation of the bill. The real estate commission shall adopt rules as necessary to implement and administer the bill.