Is assigning a real estate contract legal in Texas?

Texas law allows a person to buy an option or an interest in a contract to purchase real property and then sell the option or assign the contract without a real estate license, if two things are true. The person must not use the contract to engage in real estate brokerage, and must disclose the nature of the interest in writing to any seller or potential buyer. That is Occupations Code Section 1101.0045. Without that disclosure, the law treats the sale or assignment as real estate brokerage.

What must the written disclosure say?

Property Code Section 5.0205 says that before entering into a contract to sell an option or assign a contract interest, the person must tell any potential buyer in writing that it is selling only an option or assigning an interest in a contract and does not have legal title. It must also tell the owner of the property in writing that it intends to sell an option or assign an interest in the contract.

Does the law require the assignor to tell me how much it is making?

The statute text speaks of disclosing the nature of the interest and the lack of legal title. It does not list a dollar amount that must be shared. If the spread between the two prices matters to you, ask for it and get the answer in writing. A Texas real estate attorney can tell you what your own contract requires.

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How Texas Land Contract Assignments Work

By the Land Dreamz team · Published October 27, 2026 · 8 min read · Leer en español

Short answer: Assigning a purchase contract means the buyer who signed with the owner hands its rights under that contract to a new buyer, who then closes with the owner. In Texas, a person who does this without a real estate license must not use the contract to do brokerage and must disclose the nature of the interest in writing to any seller or potential buyer (Occupations Code Section 1101.0045). Property Code Section 5.0205 adds that, before contracting to assign, the person must tell the buyer in writing that it holds only a contract interest and not legal title, and tell the owner in writing that it intends to assign.

Some buyers who sign a contract to buy your land never plan to close on it themselves. They plan to hand the contract to another buyer, who closes in their place. This is called assigning the contract, and people in the business often call it wholesaling. It is allowed in Texas, but the law sets rules for it. This guide explains what an assignment is, what Texas law says, and what the seller and the end buyer should check before they sign.

This is general information. It is not legal advice. For your situation, talk to a Texas real estate attorney.

What assigning a contract means

When you sign a contract to sell your land, the buyer does not own the land yet. You still hold legal title until closing. What the buyer holds is a right under the contract: the right to buy your land at the agreed price and terms. The law calls this an equitable interest.

In an assignment, the original buyer (the assignor) transfers that right to a new buyer (the assignee, or end buyer). The end buyer then closes with you, and the deed goes from you to the end buyer. The original buyer is usually paid by the end buyer for handing over the contract. A related move is selling an option, which is a right to buy that the holder can choose to use or not.

Nothing about this changes who owns the land before closing. Until the deed is signed and recorded, you are still the owner of record.

What Texas law says

Two short sections of Texas law cover this.

Occupations Code Section 1101.0045. A person may acquire an option or an interest in a contract to purchase real property and then sell the option or assign the contract without a real estate license if the person:

does not use the option or contract to engage in real estate brokerage; and
"discloses in writing the nature of the equitable interest to any seller or potential buyer."

The same section says that a person who sells or assigns without that disclosure is engaging in real estate brokerage. In Texas, brokerage requires a license from the Texas Real Estate Commission (TREC).

Property Code Section 5.0205. Before entering into a contract to sell an option or assign an interest in a contract to purchase real property, the person must disclose in writing:

to any potential buyer, that the person is selling only an option or assigning an interest in a contract, and that the person does not have legal title to the property; and
to the owner of the property, that the person intends to sell an option or assign an interest in a contract.

Both rules began in 2017 with Senate Bill 2212. Senate Bill 1577, signed on May 19, 2023, amended both sections, and its changes took effect on January 1, 2024. The current text of both sections says the disclosure must be in writing.

When SB 2212 was signed, TREC posted a short note explaining it. TREC wrote that if a person offers a property for sale when the person does not own the property, that person is engaged in brokerage and must be licensed. It also wrote that the practice of wholesaling remains legal if these "truth in advertising" rules are followed. In plain terms: you can market a contract, but you cannot market the land as if you own it.

What the seller should check

If you are the landowner, these are the questions to settle before you sign.

Did the buyer tell you, in writing, that it may assign? Section 5.0205 says the owner must be told in writing that the person intends to sell an option or assign the contract, and that this must happen before the person contracts to do so. If a buyer says it will close itself, ask it to put that in writing too.
Does the contract allow assignment? Read the contract for any wording about assignment. Some contracts allow it freely, some require the seller's consent, and some say nothing. If you want a say in who your end buyer is, ask an attorney how to write that in.
Who holds the earnest money, and how much is it? Earnest money is the buyer's proof that it means to close. Our guide to earnest money in a Texas land sale explains how it is held and when a buyer can get it back.
What happens if the end buyer never shows up? Read the default section of your contract and the closing date. Ask the original buyer, in writing, what it will do if it cannot find an end buyer by closing.
Who pays which closing costs? An assignment should not shift costs onto you. Our page on who pays closing costs in a Texas land sale shows where those costs are set in a Texas contract.

Your price is the price in your contract. An assignment hands that contract to someone else; it does not rewrite it. If anyone asks you to change the price or the dates later, that is a new written amendment, and you can say no. For more on what a solid offer should spell out, see what a cash offer on Texas land should include.

What the end buyer should check

If you are buying a contract from someone else, you are stepping into a deal you did not write. Check these points first.

The written disclosure. Under Section 5.0205 you should receive, before you contract, a written statement that the person is assigning only a contract interest and does not have legal title. If a listing or ad presents the land as if the person owns it, ask why.
The underlying contract. Ask to read the full contract between the owner and the assignor: the price, the earnest money, the closing date, any option period and any deadlines that may already be running. You take on those dates.
Who owns the land. The title company's commitment shows the owner of record and what is recorded against the land. Our guide on how to read a title commitment walks through it.
Where your money goes. Find out who holds any money you pay, and whether the assignment fee is shown on the closing statement. Our guide to what happens at closing with a Texas title company shows what to expect on closing day.
Whether the person is licensed. If someone is acting as an agent for you or for the owner, you can look them up on TREC's public License Holder Search by name or license number.

The statute text speaks of disclosing the nature of the interest. It does not list a dollar amount that must be shared. If the assignor's spread matters to you, ask for it in writing.

How we handle it

Land Dreamz buys land, houses and commercial property directly. Sometimes we close and hold the property ourselves. Sometimes we assign our purchase contract to another buyer. When we may assign, we tell the owner in writing before we do, and when we offer a contract interest to a buyer, we say in writing that we hold an equitable interest under a purchase contract and not legal title. Ask us on the first call which route we expect to take for your property.

Questions to ask any buyer

Will you close on this land yourself, or might you assign the contract?
If you may assign, will you tell me that in writing before you do?
How much earnest money will you deposit, and with which title company?
What happens if your end buyer does not close by the closing date?
Will anyone market my land, and how will the ad describe your interest?

Our page on how to check a land buyer has more questions like these. If you would rather talk it through, call (346) 255-4742. If you are ready to see a number, you can ask us for a cash offer.

Common questions

Is assigning a real estate contract legal in Texas?: Texas law allows a person to buy an option or an interest in a contract to purchase real property and then sell the option or assign the contract without a real estate license, if two things are true. The person must not use the contract to engage in real estate brokerage, and must disclose the nature of the interest in writing to any seller or potential buyer. That is Occupations Code Section 1101.0045. Without that disclosure, the law treats the sale or assignment as real estate brokerage.
What must the written disclosure say?: Property Code Section 5.0205 says that before entering into a contract to sell an option or assign a contract interest, the person must tell any potential buyer in writing that it is selling only an option or assigning an interest in a contract and does not have legal title. It must also tell the owner of the property in writing that it intends to sell an option or assign an interest in the contract.
Does the law require the assignor to tell me how much it is making?: The statute text speaks of disclosing the nature of the interest and the lack of legal title. It does not list a dollar amount that must be shared. If the spread between the two prices matters to you, ask for it and get the answer in writing. A Texas real estate attorney can tell you what your own contract requires.
Does an assignment change the price I get as the seller?: Your price is the price written in your contract with the original buyer. An assignment hands that contract to someone else; it does not rewrite it. Any change to price, dates or terms would need a written amendment you sign.
When did these rules take effect?: The equitable interest rules were added in 2017 by Senate Bill 2212. Senate Bill 1577 amended both sections, and its changes took effect on January 1, 2024. Check the current text on the Texas Legislature's statutes site before you rely on it.

Sources

Each source was opened and read on October 27, 2026. Rules and rates change: check the source for the current version.

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