Tennessee Wholesaling Law: SB 0909

State: Tennessee | Bill: SB 0909 (Public Chapter 72), adding Sections 66-4-401 through 66-4-403 to the Tennessee Code | Effective date: March 25, 2025, effective immediately on signing (already in effect) | Applies to: Contracts on real property (all real property, no residential-only limit and no vacant-land or commercial carve-out, 66-4-403(c)) | Bottom line: Wholesaling is still legal here. You must disclose your equitable interest in writing to both the seller and your end buyer, in bold large-font print inside the written agreement, and give the seller written notice at least three business days before you sign with a new buyer. Separately, Tennessee case law says marketing a house you do not yet own can be unlicensed brokerage, so market carefully or get licensed.

What the Law Says (Plain English)

Tennessee did two things with SB 0909. It wrote "equitable interest" and "wholesaling" into state law, and it attached disclosure duties to wholesaling. It did NOT ban wholesaling and did not create a licensing requirement by itself.

Equitable interest, translated: the moment you sign a purchase contract with a seller, you own something. Not the house, but the right to profit from the house. The statute defines it as "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."

Wholesaling, translated: entering into a contract with a seller, then selling or transferring that equitable interest to another buyer for a higher price.

Notice the operative trigger word in 66-4-402: the buyer "assigns the buyer's equitable interest in the real property to a subsequent purchaser for a higher price than the buyer paid." On the statute's plain text, the trigger is an assignment. A straight assignment of your contract is squarely covered. A novation (your end buyer signs a brand new contract with the seller and yours goes away) and a true double close (you take title at the A-B closing, then resell as the owner) assign nothing, so on a narrow plain-text reading they may fall outside this law. We still recommend doing the disclosures anyway, because the fix is cheap and a court could read "assigns" more broadly. A third-party industry source reads the law to reach some double closes, but that is its interpretation, not the statute's words.

What you must do to wholesale legally:

1. Disclose to your end buyer the nature of your equitable interest, in writing. In practice: give the buyer a copy of your contract with the seller so they know exactly what position you hold.
2. Disclose to the seller, before you sign with them, your intent to market or sell your equitable interest. A clear clause in your purchase contract handles this.
3. Give the seller written notice at least three business days before you sign the assignment with your new buyer. The statute is explicit that this is three business days (66-4-403(a)(1)(B)). This is the step that changes how deals actually flow: find your buyer, send the seller written notice, wait out the three business days, then execute the assignment.
4. Put all of these disclosures in bold, large-font print inside the written agreement. The statute (66-4-403(a)(2)) requires the required disclosures to be "in bold, large font print, and included in the written agreement." They cannot be buried in fine print or left to a verbal handshake, and no separate standalone form is required (they live in the agreement itself).

The separate landmine: case law. In a 2021 Tennessee appeals case (rendered in the transcript as Sota v. Presidential Properties LLC, spelling unverified), a wholesaler contracted properties and then advertised the properties themselves for sale before closing. Both the trial and appeals courts held that this violated the Tennessee Real Estate Broker License Act. Marketing property you do not own, for a "fee, compensation, finder fee, or any other valuable consideration," was treated as brokering without a license. SB 0909 did not overturn or address that. So in Tennessee you are managing two separate rules: the disclosure statute AND unlicensed-brokerage exposure from how you market.

What You CANNOT Do

• Assign a contract without having disclosed, in the contract with the seller, that you may sell your equitable interest
• Sign with your end buyer the same day you find them. You must send the seller written notice first and wait at least three business days
• Hide your position from the end buyer. They must see the nature of your equitable interest in writing
• Advertise the house itself (photos, address, beds/baths, price) before you own it. Under the 2021 case law that looks like unlicensed brokering, which is criminal exposure, not just civil

What You CAN Still Do

• Assign contracts the compliant way. Disclosure clause in your A-B contract, written notice to the seller, three-business-day wait, then execute the assignment
• Buy the property, take title, then sell it. Once title transfers, your interest is legal, not equitable, and the statute no longer applies. Selling a house you own is not brokering either
• Use a notice addendum as standard practice. Our industry research report includes a Tennessee Wholesale Notice Rider that builds the three-business-day notice into your paperwork
• Wholesale with a license. A licensed agent or broker removes the case-law brokerage risk (the disclosure duties still apply; the statute has no licensee exemption)

The Loopholes

1. Take Title First, Then Sell (Clean)

The whole statute hangs on the words "before the legal title has been transferred." If you close on the property, take title, and only then find your buyer and sell, you never sold an equitable interest. No disclosure duties, no three-business-day notice. It also answers the case-law problem, because selling property you own is not brokering. Cost: transactional or short-term funding plus a second set of closing costs. Note the bias warning: this "takedown method" is promoted by a source that sells funding for it, so the conclusion benefits that source commercially and we treat the recommendation cautiously. The logic still holds on the statute's own trigger words, just price the extra costs into your offer.

2. Assign the Compliant Way (Clean)

This is not really a loophole, it is the path the statute built. Disclosure clause in the seller contract, contract copy to the buyer, written notice to the seller, wait three business days, execute. The real cost is deal risk inside the three-business-day window: your buyer has those three days to change their mind before anything is signed. Get buyer deposits or a signed intent document (that itself may count as contracting with the new buyer, so have an attorney bless your sequence).

3. Double Close With a Pre-Arranged Buyer (Gray)

In Missouri a double close is the clean escape. Tennessee is closer than you might expect, but read the trigger carefully. The statute's operative word is "assigns" (66-4-402): you wholesale when you "assign the buyer's equitable interest." In a true double close you take title at the A-B closing and resell as the owner, so you assign nothing, and on the statute's plain text that structure may fall outside this law entirely. We still recommend doing the disclosures and the three-business-day notice anyway, because the fix is cheap and a court could read "assigns" to reach a pre-arranged flip. A third-party industry source reads the law to reach "certain double closing structures depending on how structured," which is its interpretation, not the statute's words. For the cleanest position, do not sign the B-C contract until after you own the property (that turns it into Loophole 1). Talk to a Tennessee attorney before building a no-disclosure double-close process.

4. Market the Contract, Not the Property (Gray)

The standard line "advertise your assignable contract, never the house" is weaker in Tennessee than almost anywhere, because the 2021 case law punished pre-title marketing as unlicensed brokering, and the Google report notes that crossing into brokerage remains a Class B misdemeanor under Section 62-13-110. If you market at all before title, keep it strictly to your contract position, keep your disclosures airtight, and understand a Tennessee court has already ruled against a wholesaler on this ground once.

5. Get Licensed (Clean for the brokerage risk)

A Tennessee real estate license takes the case-law brokerage threat off the table entirely. It does not remove the SB 0909 disclosure duties: the statute (66-4-403) contains no exemption for licensees, so a licensed wholesaler still owes the same disclosures and notice. Do them anyway.

Penalties If You Violate It

• Unlicensed brokerage (the case-law path): criminal exposure. Marketing property you do not own can be charged as unlicensed real estate activity, a Class B misdemeanor under Title 62 (the Real Estate Broker License Act, Section 62-13-110 per the Google report). This lives in a different title of the code and is separate from SB 909, which creates no criminal penalty of its own
• Civil claims from the seller or buyer for failing the disclosure and notice duties. SB 909 creates a private right of action that must be brought within two years of the contract's execution (66-4-403(b))
• A contract becoming unenforceable is an unverified claim from one industry source; SB 909 itself contains no such provision, so treat that specific risk as unconfirmed (see gaps)
• Exact statutory damages and fine amounts are not spelled out in SB 909 (see gaps), so treat the civil downside as open-ended until confirmed

Required Disclosure Language

SB 909 mandates WHAT you must disclose and HOW it must be formatted, but it does NOT prescribe exact wording. You draft the language yourself, as long as it conveys the required content and meets the format rules below.

Required content (66-4-403(a)(1)):

• To your end buyer (a potential subsequent purchaser or assignee): disclose "the nature of the buyer's equitable interest in the real property." In practice, make clear that you hold an equitable interest under a purchase contract, not legal title, and that you are assigning that position.
• To the seller: disclose "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."

Formatting (66-4-403(a)(2)): the disclosures "must be in bold, large font print, and included in the written agreement." They go inside the purchase or assignment agreement itself, set in bold and in a large font. No separate standalone disclosure document is required, and the statute specifies no signature block.

Wording: not mandated. The statute never quotes a required sentence, so there is no verbatim script to copy. Draft plain-language disclosures that cover the content items above, and make sure the print is bold and large.

Quick Reference

This is an analysis of secondary sources, not legal advice. Confirm your deal structure with a Tennessee real estate attorney, especially the double-close question and the three-business-day notice mechanics.

Sources: a third-party industry report (Tennessee section and Tennessee Wholesale Notice Rider), Google deep research report (Tennessee section), and video commentary from an industry source breaking down this law.