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S3136AReal Estate

Businesses and Professions - Real Estate Brokers and Salespersons

This bill requires real estate wholesalers to hold a broker's license, provide disclosures, and offer a three-day cancellation period.

Introduced70 Yea1 Nay4 Not voting
Population
Affected
15
Introduced Mar 20, 2026Committee Senate Judiciary

Plain-English Summary

This bill regulates the practice of real estate "wholesaling," where a person signs a contract to buy a property and then sells that contract to a third party for a profit before actually taking ownership. The legislation requires these wholesalers to hold a valid real estate broker's license if they do this more than once a year. It also mandates that they clearly disclose their intentions to both the original seller and the final buyer, and provides both parties with a three-day window to review and cancel the contract without facing any penalties.

For younger readers

Sometimes people make a deal to buy a house, but before they actually pay for it, they sell that deal to someone else to make money. This is called "wholesaling." This new rule says that if people want to do this, they have to get a special real estate license from the state. They also have to be very honest and tell the person selling the house and the new buyer exactly what they are doing. It also gives everyone three days to change their minds and cancel the deal without getting in trouble.

Who & Where It Applies

Impacted groups
Real estate wholesalersHomeowners and sellersReal estate buyersReal estate brokersTitle and settlement companies
Impacted communities
All

Constitutional & Fiscal Check

None Likely. The bill regulates commercial transactions, occupational licensing, and contracts, which fall squarely within standard state police powers. There are no apparent First, Fourth, or Fourteenth Amendment issues, as commercial speech (mandatory disclosures) can be regulated to prevent fraud, and the licensing requirement does not violate due process.

Estimated cost
None
Estimated revenue
Amount unknown

Bill Analysis

Both viewpoints
For Progressives
  • Protects vulnerable homeowners from predatory real estate practices by mandating clear disclosures and a three-day cancellation period, allowing them time to consult legal or financial advisors.
  • Increases regulatory oversight by requiring individuals who flip real estate contracts to obtain a proper broker's license, ensuring they are held to professional and ethical standards.
  • Empowers buyers by prohibiting wholesalers from forcing them to use specific closing attorneys or title companies, promoting fairness and transparency in housing transactions.
  • May create barriers to entry for low-income or marginalized individuals attempting to build wealth through real estate, as obtaining a broker's license requires significant time and money.
  • Does not provide state-funded legal assistance or resources for low-income sellers to actually use the three-day review period effectively.
  • The financial penalties for violations ($500 first offense, $1,000 subsequent) may be too low to deter large, wealthy corporate wholesalers from exploiting the system.
For Conservatives
  • Protects private property rights of sellers by ensuring they are fully informed about who is purchasing their property and giving them a mechanism to back out of misleading contracts.
  • Establishes clear, uniform rules for real estate transactions, which provides legal certainty and stability for the real estate market.
  • Introduces civil liability that forces bad actors to return ill-gotten profits, ensuring that disputes are handled through the courts rather than heavy-handed government agency intervention.
  • Imposes burdensome new occupational licensing requirements on real estate wholesalers, limiting free enterprise and restricting an individual's ability to freely trade contracts.
  • Infringes on the freedom of contract by mandating a non-waivable three-day cancellation period, preventing consenting adults from finalizing immediate, binding agreements.
  • Increases government interference in the private real estate market by dictating specific disclosure language and terms that must be included in private contracts.

Votes

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Full Bill Text

2 versions
Changes to existing Rhode Island law · 88 additions · 1 deletion

SECTION 1. Sections 5-20.5-1 and 5-20.5-2 of the General Laws in Chapter 5-20.5 entitled "Real Estate Brokers and Salespersons" are hereby amended to read as follows: 5-20.5-1. Definitions. When used in this chapter, unless the context indicates otherwise:

(1) “Associate broker” means any licensed real estate broker employed or engaged as an independent contractor by or on behalf of a licensed real estate broker to do or deal in any activity as included or comprehended by the definitions of a real estate broker in subsection (5) of this section, for compensation or otherwise.

(2) “Director” means the director of business regulation for the state.

(3) “Opinion of value” means an analysis, opinion, or conclusion prepared by a person licensed under this chapter, in the ordinary course of his or her business relating to the price of specified interests in or aspects of identified real estate or identified real property or by comparison to other real property currently or recently sold in the marketplace for the purpose of listing, purchase, or sale, excluding an appraisal prepared by a person licensed under the provisions of chapter 20.7 of this title, that conforms to the standards adopted by the uniform standards of professional appraisal practice (“USPAP”).

(4) “Real estate,” as used in this chapter, includes leaseholds as well as any and every interest or estate in land, whether corporeal or incorporeal, freehold or non-freehold, and whether the property is situated in this state or elsewhere.

(5) “Real estate broker”:

(i) Within the meaning of this chapter, includes all persons, partnerships, associations, and corporations, foreign and domestic, who or that:

(A) For a fee, commission, or other valuable consideration, or with the intention or expectation of receiving or collecting a fee, commission, or other valuable consideration, lists, sells, purchases, exchanges, rents, leases, prepares an opinion of value, or auctions any real estate, or the improvements on real estate including options or who negotiates or attempts to negotiate any such activity;

(B) Advertises or holds himself or herself, itself, or themselves out as engaged in those activities;

(C) Directs or assists in the procuring of a purchaser or prospect calculated or intended to result in a real estate transaction;

(D) Engages or assists individuals or entities in engaging in securing, negotiating, or facilitating the sale of real estate for the primary purpose of transferring, assigning or selling their equitable interest in the real estate, directly or indirectly, for financial gain prior to taking possession or legal ownership of such real estate more than once in any period of twelve (12) months.

(ii) Also includes any person, partnership, association, or corporation employed by or on behalf of the owner or owners of lots, or other parcels of real estate, at a stated salary, or upon a fee, commission or otherwise, to sell that real estate, or any parts, in lots or other parcels, and who or that sells, exchanges or leases, or offers or attempts or agrees to negotiate the sale, exchange, or lease of any such lot or parcel of real estate.

(6) “Real estate salesperson” means and includes any person employed or engaged as an independent contractor by or on behalf of a licensed real estate broker to do or deal in any activity as included or comprehended by the definitions of a real estate broker in subsection (5) of this section, for compensation or otherwise. 5-20.5-2. Persons exempt.

(a) Neither the term “real estate broker” nor “real estate salesperson” is held to include:

(1) Any person, partnership, association, or corporation, who or that, as a bona fide owner, lessee, or lessor, performs any of the previously stated acts as to property owned, or leased by them, or to their regular employees, where those acts are performed in the regular course of, or as an incident to the management of the property and the investment in the property; provided, however, that such exemption shall not apply to the sale of an equitable interest in real estate;

(2) A builder, developer, or contractor licensed or registered with the department of business regulation when assigning or transferring an equitable interest in vacant land or property intended for new construction in connection with bona fide development, financing, construction, or subdivision activity; or (2)(3) Any person, partnership, association, or corporation, or any of their employees, who or that seeks to acquire, lease, rent, sell, or deal in real estate that has been or will be used or held for investment by that person, partnership, association, or corporation.

(b) This chapter is also not to be construed to include:

(1) Any attorney at law licensed by the supreme court of the state nor any person holding in good faith an executed power of attorney from the owner, authorizing the final consummation and execution for the sale, purchase, leasing, or exchange of real estate;

(2) The acts of any person while acting as a receiver, trustee, administrator, executor, guardian, or under court order, or while acting under authority of a deed of trust or will;

(3) The acts of any person, partnership, association, or corporation who or that appraises real or personal property for the purpose of conducting a mass appraisal, municipal revaluation for tax purposes, or other forms of ad valorem appraisal; or

(4) Public officers while performing their duties as public officers.

SECTION 2. Title 34 of the General Laws entitled "PROPERTY" is hereby amended by adding thereto the following chapter: 34-51-1. Definitions. For purposes of this chapter:

(1) “Assignment contract” means an agreement between a wholesaler and a buyer in which a wholesaler agrees to sell the wholesaler’s equitable interest in real estate to the buyer for compensation and without assuming title to such property.

(2) “Person” means a natural person, corporation, government, governmental subdivision or agency, business trust, estate, trust, partnership, association, joint venture, or other legal or commercial entity.

(3) “Real estate” means leaseholds as well as any and every interest or estate in land, whether corporeal or incorporeal, freehold or non-freehold, and whether the property is situated in this state or elsewhere.

(4) “Wholesaler” means a person who engages or assists individuals or entities in engaging in the securing, negotiating, or facilitating the sale of real estate for the primary purpose of transferring, assigning or selling their equitable interest in the property, directly or indirectly, for financial gain prior to taking possession of legal ownership of such real estate more than once in any period of twelve (12) months. “Wholesaler” shall not include a builder, developer, or contractor licensed or registered with the department of business regulation when assigning or transferring an equitable interest in vacant land or property intended for new construction in connection with bona fide development, financing, construction, or subdivision activity.

(5) “Wholesale contract” means an agreement between a wholesaler and the seller of real property in which the real estate wholesaler agrees, or reasonably expects or intends to, for compensation and without assuming title to such property, facilitate or orchestrate the sale of such property to a third party. 34-51-2. Licensing Requirements. No person shall enter into a wholesale contract or assignment contract of real estate unless such person:

(1) Possesses a valid, active real estate license issued by the department of business regulation in accordance with § 5-20.5-6; or

(2) Qualifies for an exemption from licensing in accordance with § 5-20.5-2. 34-51-3. Wholesale contract requirements.

(a) Before entering into a contract to purchase real estate, a wholesaler shall disclose, in writing, to the owner of the property that the wholesaler may assign the contract of sale to another person for a fee, compensation or other valuable consideration.

(b) Each wholesale contract shall include language providing notice that:

(1) The seller retains a period of three (3) days, excluding weekends and federal and/or state holidays, within which the seller may, in the seller's discretion and at the seller's expense, review the terms of the contract with an attorney or other advisor; and

(2) The seller may cancel such contract during the three (3) business day period without providing any reason for such cancellation or incurring any penalty or obligation, except for the return of any deposit, if any, that the wholesaler paid or provided to the seller or the seller’s agent. 34-51-4. Assignment contract requirements.

(a) Before entering into an assignment of contract to purchase real estate, a wholesaler shall disclose in writing to any prospective buyer that the wholesaler holds an equitable interest in the property but does not hold legal title to the property.

(b) Each contract of assignment shall include language providing notice that:

(1) The buyer retains a period of three (3) days, excluding weekends and federal and/or state holidays, within which the buyer may, at its discretion and at its expense, review the terms of the contract with an attorney or other advisor; and

(2) The buyer may cancel such contract during the three (3) business day period without providing any reason for such cancellation or incurring any penalty or obligation.

(c) No assignment contract shall contain language that prohibits the assignee from using their own closing attorney, settlement agent, or provider of an owner’s title policy. 34-51-5. Right of cancellation.

(a) The transfer of real estate that is subject to a wholesale contract shall not occur until the cancellation period of the wholesale contract has expired.

(b) The assignment of real estate shall not occur until the cancellation period of the assignment contract has expired.

(c) The right to cancel a wholesale contract or assignment contract shall not be waived by any party to a wholesale contract.

(d) If the wholesaler fails to include the disclosures required in § 34-51-3 in the wholesale contract, the seller or buyer may cancel a wholesale contract or assignment of contract without penalty at any time before the consummation of the contract. A buyer who rescinds a contract under § 34-51-4 shall be entitled to the refund of any deposit paid in connection with the assignment of the contract of sale of real estate. 34-51-6. Penalties for violations.

(a) Any person who violates the provisions of §§ 34-51-3, 31-51-4 or 34-51-5 shall be punished by a fine of five hundred dollars ($500) for a first offense and by a fine of one thousand dollars ($1,000) for each subsequent offense.

(b) If any person has received any money, or the equivalent, as a fee, compensation, or profit by or in consequence of a violation of any provision of this chapter, they shall, in addition to any fines imposed in subsection (a) of this section, be civilly liable in an amount of money no less than equal to the sum received in fee, compensation or profit, but not more than three (3) times the fee, compensation or profit received, as may be determined by the court.

SECTION 3. This act shall take effect on January 1, 2027.