Or. Admin. Code § 863-015-0245

Current through Register Vol. 64, No. 1, January 1, 2025

Section 863-015-0245 - [Effective 7/1/2025] Residential Property Wholesaling Disclosure Requirements for Brokers

(1) As used in this rule, "Residential Property Wholesaling" means to market residential property for which the marketer has only an equitable interest or option to purchase and, at the time of marketing, the marketer has:

(a) Held such interest or option for fewer than 90 days; and

(b) Invested less than $10,000 in land development or improvement costs associated with the residential property.

(2) Covered Parties: A broker or principal broker conducting residential property wholesaling shall provide the residential property wholesaling written disclosure published on the Agency's website:

(a) To any potential buyers and sellers before entering into a written contract for a residential property wholesale transaction;

(b) To any broker or principal broker who is assisting a potential buyer in purchasing the property; and

(c) In all advertising related to the residential property that is the subject of a residential property wholesale transaction. Advertising on social media is exempt from the requirements of this rule if the advertising links to a separate page that complies with this rule.

(3) Standards for Proper Disclosure: The Real Estate Agency has established the standards for proper residential property wholesaling written disclosure requirements under this section. The disclosure must be in at least 10-point bold type and at a minimum must:

(a) State that the broker or principal broker:

(A) Is licensed;

(B) Will only have or only has an equitable interest in the property being sold;

(C) Will not have or does not have legal title to the property and therefore may not be able to directly transfer title to the buyer; and

(D) Might not be a licensed appraisal specialist and therefore might not be permitted to provide an opinion as to the value of the property.

(b) Include the following plain language definition of equitable interest: A person who has an "Equitable interest" in a property means someone that has contracted with the current owner for the right to buy the property at a later date even though they don't have legal title. The contract may allow the equitable interest holder to sell or transfer the right to purchase the property to someone else prior to close of escrow.

(c) Include the following statements:

(A) A broker or principal broker may assign equitable interest to another party prior to closing for profit.

(B) A seller or buyer who enters into a written contract for a residential property wholesale transaction may cancel the contract without penalty by delivery of a written notice of cancellation any time before 12 midnight at the end of the third business day after the receipt of the residential property wholesaling written disclosure. This right of cancellation may not be waived. Upon cancellation, all earnest money or deposits shall be returned to the person who provided the earnest money or deposit.

(C) If the broker or principal broker fails to provide a residential property wholesaling written disclosure to the seller before entering into a written contract for a residential property wholesale transaction, the seller may terminate the contract at any time without penalty and retain any earnest money or deposit paid to the seller or deposited in escrow by the broker or principal broker. An escrow agent may disburse the earnest money or deposit to the seller without the need for separate written instructions from the broker or principal broker if:

(i) The seller in writing asserts that the residential property wholesaling written disclosure was not provided to the seller before entering into the written contract for the residential property wholesale transaction and demands disbursement to the seller of all deposits held by the escrow agent; and

(ii) The seller has provided the escrow agent with a written release and indemnification against all liability arising from the disbursement of the earnest money and deposits to the seller.

(D) If the broker or principal broker fails to provide a residential property wholesaler written disclosure to the seller or buyer, and if the purchase and sale agreement is terminated as a result, the broker or principal broker shall be liable for damages incurred by seller and buyer.

(E) In any mediation or arbitration proceeding or civil action between buyer and seller, between buyer and broker or principal broker, or between seller and broker or principal broker that arises due to the broker's or principal broker's failure to provide a residential property wholesaling written disclosure before entering into a written contract for a residential property wholesale transaction as prescribed under this section, the prevailing party is entitled to recover all reasonable attorney fees, costs and expenses incurred at trial, on appeal, at mediation and at arbitration from the broker or principal broker.

(F) How to file a complaint. If you believe a real estate licensee or a residential property wholesaler has violated any governing statute or rule, you may file a complaint with the Oregon Real Estate Agency (OREA). OREA will review the complaint. In most cases, other people involved in the case, including the respondent, will be contacted. Based on the information received, OREA will determine whether to start an investigation.

Or. Admin. Code § 863-015-0245

REA 4-2024, adopt filed 12/12/2024, effective 7/1/2025

Statutory/Other Authority: Oregon Laws 2024, chapter 3, section 3

Statutes/Other Implemented: Oregon Laws 2024, chapter 3, section 2