Substitute Senate Bill No. 256 seeks to regulate the acquisition of residential properties by private equity entities, stipulating that these entities cannot purchase or offer to purchase any interest in single-family or two-family residences unless the properties have been publicly listed for at least 90 days. This waiting period will reset if the seller alters the asking price. The bill defines "private equity entity" as an institutional real estate investor or an entity receiving funding from one, with specific criteria regarding ownership and asset management, while explicitly excluding 501(c)(3) nonprofit organizations and entities involved in state housing land trust programs.

Furthermore, the bill requires private equity entities to provide a signed written notice to the seller or their agent before completing a purchase, confirming their status and adherence to the 90-day waiting period. Violations may incur civil damages and penalties of up to $250,000, with the Attorney General empowered to take civil action against offenders. The definition of "institutional real estate investor" has been updated to reflect an increase in the asset management threshold from $30 million to $50 million. The bill is set to take effect on October 1, 2026, and is influenced by recent federal initiatives aimed at limiting large institutional investors' purchases of single-family homes.