Wholesaling and contract assignment in Tennessee: what a seller should know

Wholesaling is when a buyer signs a contract to buy your house and then assigns that contract to another buyer for more than your contract price. Tennessee allows it, with disclosures. Since 2025, Tenn. Code Ann. §§ 66-4-401 to 66-4-403 require the buyer to tell you in writing, before you sign, that it intends to market its interest, and to put that disclosure in bold, large print inside the contract. We assign contracts on some houses ourselves, so this post covers what the statute says and what we disclose.

What the law says, section by section

The rules came from Senate Bill 909, enacted as Public Chapter 72 of 2025. The bill text adds a new part to Title 66, Chapter 4, with three sections.

Section 66-4-401: the definition

An equitable interest is the right of a buyer to benefit or profit from real property after signing a purchase contract with the seller and before legal title transfers. Once you sign, the buyer holds that interest until closing.

Section 66-4-402: what counts as wholesaling

A buyer wholesales when, after signing with you, it assigns its equitable interest to a subsequent purchaser for a higher price than the buyer agreed to pay. The gap is the wholesaler’s fee.

Section 66-4-403: the disclosures

A buyer may wholesale only if it discloses, in writing:

• to any later purchaser or assignee, the nature of the buyer’s equitable interest;
• to you, the seller, its intent to market that interest, before the contract is signed;
• to you, the effective date of any assignment, at least three business days before that date, if the contract allows assignment.

Those disclosures must be in bold, large font print and included in the written agreement. An action for a violation must be filed within two years after the purchase contract is signed, and the part applies only to real property. The part does not mention licensing and does not cap the buyer’s profit.

Timing matters in that list. The disclosure to you has to come before the contract is signed, so a clause you first see at the closing table does not meet it.

What an assignment changes for you

Your price stays the price in your contract. The new buyer, called the assignee, steps into the original buyer’s place and closes with you on the contract’s terms. The original buyer’s profit is the fee the assignee pays for the contract, which is the gap between your price and what the contract is worth to the assignee. The closing date, the earnest money terms and the contingencies stay as written, because the assignee takes the contract as it stands.

The risk is who shows up at closing. An assignee may have less cash, a different timeline, or less interest in closing than the buyer you met. Read the contract for what happens if nobody closes: whether you keep the earnest money, how long the buyer has, and when you can cancel and sell to someone else.

Questions to ask before you sign

1. Does the contract allow assignment, and is the disclosure in bold, large print in the agreement itself?
2. How much earnest money goes down, who holds it, and when does it become yours?
3. What is the closing date, and what happens if the assignee does not close by it?
4. Who pays closing costs, including the transfer tax that Tennessee puts on the buyer?
5. Will you see the assignee’s name and proof of funds before the assignment takes effect?
6. How much does the buyer expect to make on the assignment?

A buyer who will not answer the last one has given you information. Weigh it before you sign.

How we handle assignment

We are a private buyer, not a licensed real estate agent or broker, and we do not represent you. On some houses we close ourselves. On others we assign the contract to another buyer who closes. When we may assign, the contract discloses it in writing before you sign, and we give you notice of an assignment’s effective date, as Tennessee law requires. If you ask what we expect to make on the assignment, we tell you before you sign.

Our record so far: 20+ real estate transactions and 16 business acquisitions across Tennessee, North Carolina, Georgia and South Carolina.

Assignment versus listing

A wholesaler is a buyer, and a buyer owes you no fiduciary duty. A listing agent does. If the house shows well and you have months to wait, a listing may net you more, and our cash offer vs listing page shows both routes with your numbers. A direct sale fits when you need a set closing date, an as-is sale, or no showings, and assignment is one way direct buyers fund those closings. How we calculate an offer shows where our number comes from, and our post on the cost to sell a house in Tennessee lists the lines on the other side.

This is general information, not legal or tax advice. Talk to a Tennessee attorney or CPA about your situation.