Legal - wholesale and lease option in CA

[Joji M.]

Does California Code - Section 10130 and 10131 prohibit you to do an assignment of contract and/or sandwich lease option unless you have a broker license? One of my lawyers mentioned that you need to have a broker license to do such transactions in CA (i.e. prohibits you to sell a property to another party before closing the deal with the initial party). Is that correct? If anyone can share some knowledge/experience , I’d appreciate.

[Bill Walston]

CA Business and Professions Code Sections 10130 and 10131 absolutely DO NOT prohibit you from assigning contracts (or doing a SLO)...

Code Section 10130 says that it is unlawful to act as a broker without a license...

Section 10131 sets out the functions of a broker...

Neither code section mentions the word 'assignment,' nor does it describe the action of assigning a contract.

It is absolutely legal for you to assign your rights to any contract TO WHICH YOU ARE A PARTY unless that contract specifically prohibits assignment. The key is that you must be a party to a contract. Accordingly, if you have a Purchase and Sale Agreement you can assign that contract to a third party. Note that you are NOT selling a property that you do not own. You are simply assigning your rights in a contract. The same is true of a Lease Agreement or an Option to Purchase.

You need to make sure that your attorneys are real estate attorneys and have experience working with investors. If yours don't, I would suggest finding a new attorney.