Proposed NC Law Could Require Real Estate Licenses for Residential Wholesalers

North Carolina real estate brokers may soon see significant changes in how residential wholesaling is regulated.

House Bill 797, titled the "Residential Property Wholesaling Protection Act," aims to bring clarity and consumer protection to residential property transactions involving wholesalers.

Defining Residential Wholesaling Activities

Under this proposed legislation, residential property wholesaling activities would be explicitly defined as real estate brokerage activities, thus requiring individuals and entities engaged in wholesaling to hold a valid North Carolina real estate broker license. Activities covered by this definition include:

• Soliciting homeowners to enter purchase contracts, unless intending to occupy the property personally.

• Marketing, assigning, or selling purchase contracts or equitable interests in residential properties.

• Dealing in contracts or options related to residential properties.

The bill clearly defines "residential property" to include any property with dwelling units intended for living, regardless of occupancy status (owner-occupied, rented, or vacant). This definition is crucial for eliminating ambiguity around wholesaling practices.

New Homeowner Protections

One of the bill's key protections for homeowners is a mandatory 30-day right-to-cancel provision. This provision allows homeowners ample opportunity to reconsider their decision after signing a contract. Cancellation rights are mandatory and explicitly cannot be waived. Wholesalers must prominently disclose these cancellation rights directly in the purchase contracts, using clear and noticeable 14-point font language placed immediately above the homeowner’s signature.

If a homeowner exercises their right to cancel, wholesalers are required to promptly refund any payments made within 10 business days. Importantly, homeowners exercising this right face no financial penalties or damages.

Consequences for Violations

The proposed law establishes clear consequences for violations, categorizing failures to comply with disclosure requirements or cancellation provisions as "unfair or deceptive trade practices." Violators could face significant penalties, including lawsuits under existing consumer protection laws, enabling affected homeowners to seek relief and damages.

Moreover, the Attorney General is specifically empowered under this legislation to enforce these protections actively, providing an additional layer of consumer security.

Industry Reaction and Implications

Many real estate brokers have long advocated for stricter regulation of residential wholesaling, often arguing that unlicensed wholesaling practices can mislead homeowners about property values and contractual implications. If passed, House Bill 797 would directly address these concerns, ensuring greater transparency, accountability, and protection in residential transactions.

Real estate brokers across North Carolina should monitor this legislation closely. Its passage would not only enhance consumer protections but also potentially expand the brokerage market to include professionals previously operating without licensure.

Preparing for Potential Changes

House Bill 797, if enacted, would become effective October 1, 2025. Brokers interested in maintaining compliance and expanding their understanding of wholesaling regulations should prepare by familiarizing themselves thoroughly with the bill's specifics and the new requirements it proposes. Agents should also inform investor clients, who often purchase properties from wholesalers, about these upcoming changes.

Do you think that wholesalers should be required to obtain a real estate license? Sound off in the comments or discuss with a colleague in an upcoming CE Class!

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