wholesaling

[Jeremy Mckenzie]

Is wholesaling legal in the state of Louisiana? 

[Braden Smith]

Hi @Jeremy Mckenzie

Wholesaling is just the assigning of a contract in essence. Assigning a contract is perfectly legal in Louisiana. The issue many wholesalers run into is with the marketing of the property. By law you may not publicly market a property for sale that you do not own without a real estate license. To do it correctly, you should have a private buyer list that you market to. If you post properties for sale that you have under contract but do not own, you are then practicing real estate without a license. The Louisiana Real Estate Commission (LREC) is currently reviewing this situation in Louisiana and will be passing legislation related to this soon. Wholesaling is frowned upon by LREC, but if it is done correctly you have nothing to be concerned with.

You can read the actual law here:  http://www.lrec.state.la.us/pages/license-law-upda...

Here is a link to a newsletter from LREC regarding the subject:  http://www.lrec.state.la.us/files/March2015.pdf

The part of the newsletter related to wholesaling is as follows:

"According to Louisiana license law, real estate activity that requires licensure is defined as any activity relating to any portion of a real estate transaction performed for another by any person, for a fee commission or with the expectation to receive valuable consideration for services.

The LREC has recently received numerous inquiries regarding unlicensed real estate activity. Due to proliferation of different business models wherein a real estate license may not be required, the LREC's Strategic Plan Committee has directed the LREC staff to review all licensing laws and rules that relate to licensure requirements. The results of this review will be considered by the committee when finalizing the LREC's strategic plan.

Louisiana licensing law provides that a license is not required for any person or corporation who, individually or through an employee or representative, performs acts of ownership with reference to property they own. As an employee or representative of an owner, a person can act on their behalf without a license. However, if the employee or representative works for more than one owner or entity, they would then need to be licensed.

Attorneys must be licensed to receive a commission or fee except for payment of services on behalf of a client required in the normal course of other legal representation.

A person employed and supervised by a licensed real estate broker to conduct property management functions would not be required to be licensed. The salaried employee may receive lease applications, security deposits, rental payments, show rental units and execute leases. The execution of a management agreement must be conducted by a person who is licensed.

An individual may conduct auctions of real estate without a real estate license if he is properly licensed by the Louisiana Auctioneer Licensing Board.

The LREC has the authority, by law, to issue subpoenas, and may impose a civil penalty of no more than $5,000 upon any unlicensed person who, after a hearing is found to have engaged in real estate activity without the benefit of a currently valid license.

In addition, the LREC may assess costs and attorney fees against the unlicensed person found to have been engaged in real estate activity without a current license.

No person engaged in real estate activity without a currently valid license shall have the right to receive any compensation for services so rendered. In addition to any other penalties imposed under R.S. 37:1455 and 1458, the commission may require that any person engaged in real estate activity without a license return any fees collected for engaging in real estate activity."

Hope that helps and answers your question.