Ohio Division of RE investigators cracking down on wholesalers

[Gary Bailey]

We've noticed a significant uptick in investigations, particularly in the Cincinnati area, by investigators for the Ohio Division of Real Estate. The division employs 12 total investigators and a number of supervisors. They are all very busy and very good at their jobs.

Our company has been investigated 2 times (and passed with flying colors) just within the last 8 months for alleged unlicensed activity.

The issue that continually comes up is advertising a property for sale that you or your company does not own. According to the investigator I have spoken to at length, his is fine as long as you are a licensed Ohio agent.

What about "equitable interest"?

The term that gets thrown around among wholesalers and armchair real estate attorneys is "equitable interest." I have read on this site and others that as long as you have an equitable interest (i.e. a contract or option to purchase the property) then you are acting as a principal in the transaction and therefore aren't subject to Ohio license laws.

Whether or not you agree, the opinion of the Ohio Division of Real Estate is quite simple: you cannot advertise a property that you do not own without a real estate license. When I asked the investigator if it was ok since we had a contract to purchase the property here is how the conversation went:

Me: "What if we have a contract to purchase the property and therefore have equitable interest?"

Investigator: "Do you own the property?"

Me: "We WILL own the property, as soon as we close."

Investigator: "You can't market a property that you don't own without a license."

Me: "What if we are marketing the contract or the assignment but not technically the house itself."

Investigator: "Do you own the house?"

Me: "No."

Investigator: "You can't market a property that you don't own without a license."

So there it is Ohio Wholesalers. In the opinion of the Ohio Division of Real Estate, if it walks like a duck and quacks like a duck, it's a duck. In their opinion "advertising" a house includes advertising the contract or an assignment.

Good luck out there!

Gary Bailey