New Tennessee Wholesaling Law (SB 909): What Real Estate Wholesalers Need to Know

Short answer: Wholesaling is still entirely legal - but Tennessee now requires more transparency and oversight.

What Is Real Estate Wholesaling?

Real estate wholesaling is a strategy where an investor (the “wholesaler”) puts a property under contract and then assigns or sells that contract to another buyer for a profit. In simple terms, the wholesaler acts as a middleman. The wholesaler usually never actually purchase the property themselves.

Instead, the wholesaler finds a motivated seller, signs a purchase agreement for a low price, and then finds an end buyer willing to pay a higher price. The wholesaler assigns their contract rights to that end buyer and pockets the difference as a wholesale fee.

This means the end buyer ultimately closes on the property, not the wholesaler. It’s a popular short-term real estate investing technique because it can generate profits without large upfront costs or fixing up houses.

Why Is Wholesaling Real Estate Controversial?

Wholesaling is legal in Tennessee and most states, but it has become controversial for several reasons including, but not limited to:

No License Required: Unlike real estate agents or brokers, wholesalers typically do not need a real estate license to flip contracts in Tennessee. This low barrier to entry means just about anyone can attempt wholesaling with little oversight. Critics argue that unlicensed individuals might not follow the same consumer protection rules that licensed Realtors must follow.
Potential to Mislead Sellers: Perhaps the biggest controversy is the perception that some wholesalers might take advantage of vulnerable or uninformed sellers. A wholesaler might persuade a distressed homeowner to sign a contract at a below-market price, then immediately assign the contract to an investor for, say, $10,000 more. The seller might not realize that the wholesaler never intended to buy the house themselves or that the property was worth more. This lack of transparency can make the practice seem unethical – essentially profiting from the seller’s equity without the seller knowing. (Of course, not all wholesalers are unethical – many operate fairly and provide a useful service to sellers who need a quick, as-is sale.The key is being transparent and fair.)
Lack of Regulation: Until recently, Tennessee had no specific laws regulating wholesaling of real estate. This regulatory gap led to a kind of “wild west” environment where unscrupulous practices could occur if a wholesaler wasn’t honest.

These concerns – especially about transparency and consumer protection – likely prompted lawmakers to take action.

Tennessee Senate Bill 909: New Wholesaling Law Overview

Tennessee enacted Senate Bill 909 (SB 909), a law aimed at regulating wholesale real estate transactions. SB 909 was passed on March 17, 2025, and went into effect on March 25, 2025. SB 909 creates new disclosure requirements for anyone who wholesales real property in Tennessee.

Under this law (codified in Tennessee Code Annotated Title 66, Chapter 4), “wholesaling” is officially defined for the first time in Tennessee.

The statute defines wholesaling/wholesaler as: "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." (Tenn. Code Ann. § 66-4-402)

Key Disclosure Requirements for Wholesalers under SB 909 Tennessee

Most importantly, SB 909 requires wholesalers to disclose their intentions and role to all parties involved. The goal is to ensure that both the original seller and the ultimate buyer understand what’s going on.

If you’re wholesaling real estate in TN now, SB 909 mandates these disclosures:

Disclose to the end buyer (assignee) the nature of your equitable interest in the property. In plain English, the end buyer needs to be informed that you are under contract to buy the property and are selling/assigning them that contract, and that the wholesaler is not the current owner of the real estate.
Disclose to the seller, before signing the contract, the wholesaler's intent to market or assign its interest. (i.e. inform the seller in writing that you may find another buyer to take over the deal.)
If you assign the contract, you must notify the seller of the effective date of that assignment at least 3 business days in advance.
Make Disclosures Clear (Bold Text): All of the above disclosures must be made in writing and included in the purchase contract (or an addendum), in bold, large-font print

These requirements essentially bring wholesaling out into the open. A seller will know from the start if their buyer (wholesaler) might flip the contract, and the end buyer will know they’re paying a wholesaler for the contract (not buying directly from the original owner).

What about enforcement? SB 909 creates a legal cause of action for failing to follow these rules. If a wholesaler does not provide the required disclosures or notice, and someone is harmed by that omission, the harmed party can potentially bring a lawsuit against the wholesaler.

The law sets a two-year statute of limitations for any such action. This means the injured party (perhaps a misled seller or buyer) has up to two years from the date of the original purchase contract to file a claim in court.

How Can Wholesalers in Tennessee Stay Compliant?

Wholesaling is still legal in Tennessee—but SB 909 adds important rules you need to follow:

Disclose early and clearly. Let the seller know up front if you plan to assign the contract, and include that disclosure in bold, large-font print within the agreement.
Give proper notice. If you assign the contract, notify the seller at least 3 business days before the assignment becomes effective.
Be transparent with buyers. Let end buyers know you're assigning your equitable interest, not selling them the property itself.
Market ethically. Advertise your contract—not the property—unless you're the actual owner.
Keep good records. Retain all signed contracts, disclosures, and notices in case questions come up later.
Stay current. Laws change, and the wholesaling space continues to evolve in Tennessee.

We’re Here to Help!

⚠️ Because wholesaling involves legal gray areas, we highly recommend working with an attorney to ensure your contracts are enforceable and compliant. We've seen too many deals go sideways due to poorly written templates pulled from the internet. The cost of solid legal guidance is almost always far less than the cost of cleaning up a failed deal.

If you have any questions about real estate wholesaling in Tennessee or need help updating your contracts and practices to comply with SB 909 Tennessee, we are here for you. We can guide you through the new requirements, review or draft contracts with the proper disclosures, and provide advice tailored to your situation.

Feel free to reach out today for a free consultation. Whether you’re a wholesaler wanting to make sure you’re on the right side of the law, or a home seller approached by a wholesaler and unsure of your rights, we’re happy to discuss your options and help protect your interests.

Disclaimer: This blog post is for informational purposes only and does not constitute legal advice. Reading this post does not create an attorney-client relationship with our firm. Real estate laws (and their interpretation) change frequently, and the information above may become outdated. Always consult a qualified attorney about your particular situation before proceeding with any real estate wholesaling transaction.