Wholesaler's EMD not considered legal equitable interest anymore.

[Reginald Smith Jr.]

Hello all. I'm a property Wholesaler in Florence, SC. My Realtor received a disturbing news letter today from the South Carolina Real-Estate Commission titled, "Wholesalers." The newsletter was informing her that EMD's do not, or no longer will, be considered as a buyer's "equitable interest" anymore in the state of SC. Which would strip all non licensed real estate professionals of there ability to market there assignable contracts. If this is true, this could potentially negatively effect my business and every other RE professional that does business with me big time. As the 'equitable interest' loophole was the only way that we were allowed to 'legally' market our assignable contracts in the first place. My question to the RE attorneys out there is, is this true? Or, is it just some kind of scare tactic designed to put what they believe are there non-licensed competitors (Wholesalers) out of business? And FYI: I haven't submitted this questing to my attorney yet. I kind of wanted to see what the consensus on here was before I pop the question. Thanks in advance for all of your expertise.

[Ben Zimmerman]

I have a pretty big dislike for wholesalers in general for a wide variety of reasons, if you need a loophole in order to operate your business, then you probably shouldn't be in business in the first place.  This is especially true when there are hundreds of thousands of dollars on the line, and the ability to completely screw over a seller if things don't go right.

With that said, the SC real estate commission doesn't dictate what is or is not considered 'equitable interest'. Only applicable state laws and/or court rulings can do that. Unless a new law/court case just came out then I would largely ignore the SC commission. As always if you are putting up $100 or some other trivial amount of EMD for wholesaling then you are likely going to have problems in court justifying how $100 should be considered 'equitable interest' in a 300k home. On the other hand if you are putting down something like 3% EMD, then you would be hard pressed to find a court that wouldn't think that to be equitable.