After years of consideration, Ohio lawmakers finally passed legislation addressing real estate wholesalers. However, the bill does not go as far as some in the real estate industry would have liked.
Senate Bill 155 defines the term “wholesaler” and requires wholesalers to make certain disclosures to property owners. If those disclosures were not made, the Bill allows owners to cancel their contract with a wholesaler prior to close of escrow. The Bill also outlines three potential consequences for wholesalers who do not comply with the new requirements: (1) disciplinary sanctions from the Ohio Real Estate Commission, (2) private lawsuits brought by owners under the Consumer Sales Practices Act (“CSPA”), and (3) actions brought by the Ohio Attorney General under the CSPA.
If a wholesaler wishes to enter a contract as the buyer of real residential property, the wholesaler must first provide a disclosure form to the owner of the property. The disclosure form must declare that the buyer is a wholesaler, that lack of proper disclosure is a cause of action against the wholesaler, and that the wholesaler may not enter a contract unless the owner signs the disclosure form. It must also remind the owner that they are entitled to seek legal or professional advice before entering into any contract. Finally, it must include the following language (or language substantially similar to it):
A wholesaler is acting on the wholesaler’s own behalf and does not represent the owner in this transaction. A wholesaler enters assignable contracts with owners and seeks to sell or assign the wholesaler’s interest for a profit. The wholesaler may assign the wholesaler’s interest in the purchase contract to a third party without the owner’s consent before closing. The wholesaler may charge a fee to the third-party buyer separately for profit. The agreed purchase price between the owner and wholesaler may be below market value and is conveyed voluntarily.
The disclosure must be signed and dated by the property owner and the wholesaler. The wholesaler may not enter into a contract with the owner prior to the execution of the disclosure.
The disclosure requirement and the remedies for failure to disclose are not waivable. Any portion of a contract that modifies or waives the duty to disclose is void and unenforceable.
There are several consequences that a buying wholesaler may be subject to if they enter into a contract prior to the required disclosure.
If a wholesaler acts as the buyer in a residential real estate contract and fails to make the required disclosure, the property owner may cancel the contract at any time prior to the close of escrow without penalty. If the wholesaler paid any earnest money, the escrow or closing agent must disburse those funds to the property owner within thirty days.
S.B. 155 also provides that Ohio Real Estate Commission may impose disciplinary sanctions on a licensed real estate broker who fails to make the required disclosure or otherwise fails to comply with the wholesaler law. There are five possible disciplinary sanctions: (1) license revocation, (2) license suspension, (3) a fine not exceeding $2,500 per violation, (4) a public reprimand, and (5) mandated continuing education.
Furthermore, failure to present or complete the disclosure form is considered an unfair or deceptive act or practice in violation of the CSPA. In such event, the property owner is entitled to either rescind the transaction or sue to recover both actual economic damages and noneconomic damages (with such noneconomic damages not exceeding $5,000).
Finally, the Ohio Attorney General may enforce the wholesaler disclosure requirements using all powers and remedies made available to them by the CSPA. If the Attorney General shows by a preponderance of the evidence that the wholesaler failed to follow disclosure requirements, it may ask the court to issue a injunctive relief to prevent the wholesaler from continuing to enter into contracts without proper disclosures. If the wholesaler violates such an order, the court may then impose a civil penalty of up to $5,000 per day of violations.
S.B. 155 was signed by Governor DeWine on December 1, 2025 and will become effective on March 1, 2026. Many in the real estate industry were hoping for a licensure requirement for wholesalers. The Bill does not do that, but hopefully follow up legislation will eventually establish licensure requirements to further protect Ohio consumers.
Mr. Abercrombie is a Partner in the Business Group of Semro Henry Ltd. To contact him please call (419) 517-7377 or email abercrombie@semrohenry.com
Mr. Abercrombie gratefully acknowledges the assistance of Sarah Leong-Fern. Ms. Leong-Fern is a second year law student at the University of Toledo.