Senate Bill (SB) 155 has been introduced in Ohio with the aim of increasing transparency in real estate wholesaling. This practice involves signing a purchase agreement with a homeowner and then transferring that contract to a third-party investor for profit. While it is legal, concerns have been raised about misleading tactics including representing the wholesaler as the buyer and offering homeowners below-market values without their full understanding.
The proposed legislation, SB 155, mandates that wholesalers must provide a written disclosure to homeowners before establishing a contract. This disclosure must clarify that the individual is a wholesaler, who does not represent the homeowner, and advises the homeowner to seek legal counsel. It must explain that the contract will be assigned for profit, that such an assignment does not require the homeowner’s consent, and that a third-party fee might be applied. Additionally, it must warn that the offer price might be below market value.
Failure to provide this disclosure, signed by the homeowner, would be considered an unfair or deceptive practice under Ohio law, allowing homeowners to cancel their contracts and recover any earnest money paid.
The introduction of SB 155 comes in response to increasing reports of aggressive and misleading practices, particularly those targeting vulnerable homeowners. SB 155 aims to ensure that home sellers are better informed and protected in these transactions. The bill is currently with the Senate Judiciary Committee.
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