Texas Real Estate Laws Every Wholesaler Must Know in 2025

Wholesaling real estate is 100% legal in Texas—as long as you do it correctly.

But violate the rules, and you could face fines, lawsuits, or worse. Texas tightened wholesaling regulations in 2017 with Senate Bill 2212, and many wholesalers still don't fully understand the law.

Here's everything you need to know to stay compliant and avoid legal trouble.

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Is Wholesaling Legal in Texas?

Yes. Texas law explicitly allows contract assignment without a real estate license—if you follow specific rules.

The key statute is Texas Occupations Code Section 1101.0045, which states:

"A person may acquire an option or an interest in a contract to purchase real property and then sell or offer to sell the option or assign or offer to assign the contract without holding a license... if the person:

1. Does not use the option or contract to engage in real estate brokerage, and
2. Discloses the nature of the equitable interest to any potential buyer."

Translation: You can wholesale without a license, but you cannot act like a real estate agent, and you must disclose your role.

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What Changed with Senate Bill 2212 (2017)

Before 2017, wholesaling in Texas existed in a legal gray area. Senate Bill 2212 clarified the rules—and added stricter requirements.

Key Changes:

1. Disclosure Requirements
   Wholesalers must now provide written disclosure to buyers about their equitable interest

2. Marketing Restrictions
   You can market your contract, but not the property itself as if you own it

3. Brokerage Activity Prohibition
   Acting like a real estate agent without a license is now explicitly illegal

Effective date: September 1, 2017

Impact: Wholesalers who ignore these rules face Class A misdemeanor charges (Texas Occupations Code §1101.351).

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The #1 Rule: Don't Act Like a Real Estate Agent

The biggest mistake wholesalers make: acting as if they're licensed agents.

What You CANNOT Do:

❌ List the property on MLS
❌ Represent the seller in negotiations
❌ Represent the buyer in negotiations
❌ Market the property to the general public as if you own it
❌ Hold open houses
❌ Put a "For Sale" sign in the yard with your name
❌ Advertise "I sell houses" or act as a broker

What You CAN Do:

✅ Market your contract rights (not the property)
✅ Find a buyer for your equitable interest
✅ Assign your purchase contract to an investor
✅ Advertise "Under contract - offering assignment"
✅ Disclose you're a wholesaler with equitable interest

Critical distinction: You're not selling a house. You're selling your right to purchase a house.

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Disclosure Requirements: What You Must Tell Buyers

Texas law requires written disclosure to potential buyers.

Required Disclosures:

Texas Property Code Section 5.0205 & 5.086 require you to disclose:

1. You do not hold legal title to the property
2. You are selling an equitable interest (contract rights), not the property itself
3. The nature of your interest in the transaction

Sample Disclosure Language:

"DISCLOSURE: The seller in this transaction does not hold legal title to the property. Seller is assigning their contractual rights under a purchase agreement with the property owner. Buyer is purchasing the right to acquire the property, not the property itself. This is an assignment of contract."

Where to include this:

• In your assignment agreement
• In marketing materials (emails, texts, flyers)
• In conversations (verbal disclosure before written)

Failure to disclose = engaging in unlicensed real estate brokerage (Texas Occupations Code §1101.0045)

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How to Market Your Deals Legally

✅ LEGAL Marketing Examples:

Email blast: "Assignment contract available - 3/2 house in Sherman, TX. Assignment fee: $10,000. Interested? Contact me for details."

Facebook post: "I have a property under contract in Dallas. Looking to assign to a cash buyer. ARV $250K, repairs $40K, my assignment fee $12K. DM for address."

Text to buyers: "New assignment opportunity: 4/2 in Plano, $180K contract price + $10K assignment fee = $190K all-in. ARV $280K. Want details?"

❌ ILLEGAL Marketing Examples:

Craigslist ad: "Beautiful 3-bedroom home for sale in Dallas! $180,000. Great investment opportunity!"
(Problem: You're marketing the property, not your contract)

Yard sign: "For Sale - Call John at 555-1234"
(Problem: Implies you're the owner or agent)

MLS listing: "Investor special! Priced to sell!"
(Problem: Only licensed agents can list on MLS)

The rule: Always make it clear you're assigning a contract, not selling a property.

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Assignment Contract Requirements

Your purchase contract with the seller must include an assignment clause.

Essential Contract Language:

"This contract may be assigned by Buyer to another party. Buyer may assign all rights, title, and interest in this contract without prior consent of Seller."

Better version (more protective):

"This contract may be unilaterally assigned by Buyer at any time before closing without prior notice to or consent by Seller. Seller unconditionally agrees: (1) that the effect of any such assignment will be to immediately relieve the person presently named as Buyer from any further obligations under the contract; (2) to accept the assignee of the Contract as Buyer under the Contract; (3) to execute a written consent to said assignment upon request; and (4) to cooperate in the closing process."

Why this matters: Without an assignment clause, you cannot legally assign the contract. The seller could refuse, and you'd be stuck.

Pro tip: Use "[Your Name] and/or assigns" as the buyer name in the contract. This signals assignment from the start.

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Do You Need Proof of Funds?

Technically, no—but practically, yes.

While Texas law doesn't require proof of funds to wholesale, sellers and title companies often ask for it.

Options:

1. Your own bank statement (if you have funds)
2. Transactional funding letter (from a lender)
3. Proof from your end buyer (once you have one lined up)
4. Earnest money deposit (shows good faith)

Typical earnest money: $500-$2,000

Why it matters: Without proof of ability to close, sellers won't take you seriously—and title companies may refuse to work with you.

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Double Closing vs. Assignment: Legal Differences

You have two ways to wholesale in Texas:

1. Assignment of Contract

How it works: You assign your purchase rights to the end buyer
Legal requirement: Must disclose your equitable interest
Pros: Simple, low cost, fast
Cons: Your assignment fee is visible to everyone

2. Double Closing (Simultaneous Closing)

How it works: You buy from seller (A-B), then immediately sell to buyer (B-C)
Legal requirement: You briefly own the property
Pros: Your profit stays private
Cons: Two sets of closing costs, requires transactional funding

Both are legal in Texas as long as you follow disclosure rules.

When to use double closing:

• Large assignment fee ($20K+) you want to keep private
• Seller refuses to allow assignment
• End buyer doesn't want seller to know their purchase price

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Common Legal Mistakes (And How to Avoid Them)

Mistake #1: Using Boilerplate Contracts from Other States

Fix: Use Texas-specific contracts or have an attorney draft yours

Mistake #2: Not Getting Assignment Clause in Writing

Fix: Never assume you can assign. Get it in the original contract

Mistake #3: Marketing Properties Like You Own Them

Fix: Always say "assignment available" or "under contract"

Mistake #4: Skipping Written Disclosures

Fix: Use disclosure language in every agreement and marketing piece

Mistake #5: Representing Yourself as a Licensed Agent

Fix: Never use terms like "listing agent," "representing," or "broker"

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What If You Want a Real Estate License?

You don't need a license to wholesale in Texas—but having one provides advantages:

Benefits of Being Licensed:

✅ More flexibility in how you market properties
✅ MLS access to find and list deals
✅ Legal protection if accused of unlicensed activity
✅ Credibility with sellers and buyers
✅ Commission income from traditional sales

Downsides:

❌ Fiduciary duties to clients (more liability)
❌ TREC oversight and regulations
❌ Continuing education requirements
❌ E&O insurance costs

Bottom line: Most full-time wholesalers don't get licensed. But if you also want to list properties or represent buyers, it's worth considering.

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Working with Title Companies

Title companies facilitate closings in Texas—but not all of them work with wholesalers.

What to Look For:

✅ Experience with assignments and double closings
✅ Willingness to work with investors
✅ Clear fee structure for assignment vs. double closing
✅ Fast turnaround (7-14 days)

Questions to Ask Title Companies:

1. "Do you handle assignment of contract closings?"
2. "What's your fee for an assignment?"
3. "Do you offer transactional funding for double closings?"
4. "How long does a typical wholesale closing take?"

Pro tip: Build relationships with 2-3 wholesaler-friendly title companies. They'll become essential partners in your business.

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The Bottom Line on Texas Wholesale Laws

Wholesaling is legal in Texas when you:

✅ Disclose your equitable interest in writing
✅ Don't act like a licensed real estate agent
✅ Market your contract rights, not the property
✅ Include assignment language in your contracts
✅ Work with title companies experienced in wholesale transactions

Follow these rules, and you'll stay compliant while building a profitable wholesale business.

Ignore them, and you risk fines, lawsuits, and criminal charges.

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Get Legal Advice (Seriously)

This article provides general information—not legal advice.

Every deal is different. Every situation has nuances.

Strongly recommended:

• Consult a Texas real estate attorney before your first deal
• Have them review your contracts and marketing materials
• Ask about specific scenarios you'll encounter
• Budget $500-$1,500 for initial legal consultation

It's worth it. One legal mistake can cost you $10,000+ in fines or lost deals.

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Focus on Deals, Not Legal Worries

PropPipeline connects Texas wholesalers with cash buyers in a compliant, transparent marketplace.

✅ Built for Texas wholesalers
✅ Disclosure-friendly platform
✅ Verified buyers actively looking for assignments
✅ Tools to manage deals legally and efficiently

Stop worrying about compliance. Start focusing on finding great deals.

Join PropPipeline today and wholesale with confidence.

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Key Resources

Texas Laws:

• Texas Occupations Code Section 1101.0045
• Texas Property Code Sections 5.0205 and 5.086
• Senate Bill 2212 (2017)

Legal Help:

• Texas Real Estate Commission (TREC): trec.texas.gov
• State Bar of Texas Real Estate Lawyers: texasbar.com
• Local real estate attorneys

Disclaimer: This article is for educational purposes only and does not constitute legal advice. Always consult with a licensed Texas attorney regarding your specific situation.