New law makes wholesaling illegal is SC

[John Underwood]

The new law the SC Governor just signed makes wholesaling illegal.

It has 3 parts.

1. It defines wholesaling

2. It says you must have a license to wholesale.

3. It says a licensed realtor can't wholesale.

No attorney is going to risk anything that might be deemed wholesaling. 

You can't do a double closing because you can't market the property or contract prior to owning it.

You can buy the property then market it.

You could also get owner financing for 60 to 90 days and then market the property for sale.

[John Underwood]

Quote from @Peter Walther:

South Carolina HB 4754 is a new law that bans wholesaling completely. There is a lot of confusion around this law so on this podcast Jerry interviews Gary Pickren, a SC lawyer and member of the SC real estate commission to clear the air. Find out what this law means and how it will impact wholesaling.

Wholesaling is Officially BANNED In SC - New Law Explained By A Lawyer (buzzsprout.com)

Correct, banned completely.  
I know there are people out there trying to read it a different way, but you can't mention a property for sale even if you are trying to sell the contract. You can absolutely sell a contract, but you can't advertise anything about the property. 

The attorneys thought this through when they made the law. If you think your smarter or found a work around, you might be the person that they make an example out of. Don't be that guy.

Realtors will be looking to report people advertising properties they don't own (contract or no contract).

[Troy Gandee]

@Vinny Patel You can read it however you want, but every single closing attorney I've spoken to in the Charleston market will no longer be closing assignments or double closings, so it is effectively done. The intention of the REC was to stop the practice of wholesaling as we know it.

[Chris Seveney]

@Troy Gandee

You make a great point, and this sometimes is where people get stuck - in many instances people rely on their interpretation or opinion of things - but In reality if you are the only person or minority who holds that opinion and everyone you need to do business with has a different opinion - you can argue till your blue in the face but if everyone around you who you need to close a transaction will not do it, does it matter what your opinion is?

Have something similar in my industry where people will say you can do X, which technically you can but similar situation in that you can do it but you have a non marketable product that no one will buy.

[Troy Gandee]

@Chris Seveney Correct. An attorney who is on the board with the REC was in the room during most of these conversations. His name is Gary Pickren. He recused himself in many conversations/votes because he closes a lot of these types of deals, but he was there for the conversations. It's not a mystery that the intention was to essentially stop wholesaling. The legislators wrote this bill in a way to cut it off at multiple angles. You can still use the legal instrument of an assignment of contract, but not as a wide spread business practice. These closing attorneys do not want to be accessory to what the REC would consider unlawful practices. They're not willing to face the SC Supreme Court and put their law licenses on the line over these deals.

You can find Gary talking about this in a couple of different videos now. He's been meeting with different REI groups and explaining this bill.

[Joshua VanName]

Quote from @John Underwood:

Quote from @John Underwood:

Quote from @Joe S.:

Quote from @Tom Gimer:

Quote from @John Underwood:

Quote from @Tom Gimer:

@John Underwood  I read what I believe to be the new SC legislation. Please provide the full new definition of “wholesaling” and reconcile the conclusion of your post with the last sentence in the definition.

  No need. After listening to several Attorneys, they are not going to risk closing these deals goin forward as they have been done in the past.

OK then I will. The definition of wholesaling (a new term under SC brokerage laws) reads as follows:

"Wholesaling" means having a contractual interest in purchasing residential real estate from a property owner, then marketing the property for sale to a different buyer prior to taking legal ownership of the property. Advertising or marketing real estate owned by another individual or entity with the expectation of compensation falls under the definition of "broker" and requires licensure. "Wholesaling" does not refer to the assigning or offering to assign a contractual right to purchase residential real estate.

Since every word of a statute has to be given meaning, the last sentence is a clear carve out for investors who assign contracts and offer that interest to the end buyer. Sounds like more business is coming for local attorneys who understand the new law.

Good catch. A lot of what people consider wholesaling is contract assignment for a fee anyways. 

True.
You just can't advertise a property that you don't own as it is now highly illegal is SC and no attorney is going to close these deals anymore. You will have to buy it out right or be buying.it under an installment contract. This is what the attorneys are saying. 

Not sure if I already posted this or not. I so I apologize.

This just confirms most attorneys will not want to mess with this. Too much risk.

I guess they could always be a paralegal when they lose their law license.

your attorney is rather laid back with his correspondence

[Andrew R. Lucas]

Quote from @Dahae Yi:

Installment method? Double close? Wholetail? What’s the best solution for South Carolina wholesale ban?

More and more states are tightening their wholesaling regulations, and South Carolina followed suit in the second week of May. A lot of people are still confused—even closing attorneys are scratching their heads!

But guess what? I've got a SUPER SIMPLE SOLUTION that most people already know.

No more racking your brain for workarounds. No more googling about installment methods, wondering if double closings are still possible, or hunting for closing attorneys who'll go along with it.

Instead, you can close on the property as an ACTUAL BUYER using OPM (Other People’s Money). This gives you all the rights to do whatever you want to MAXIMIZE YOUR PROFIT. Clean it up, put on a fresh coat of paint, and list it on the MLS to attract tons of buyers, including retail buyers! This is how you can increase your profit and put that money back into your business to get even more deals.

I’m a private money lender partnering up with wholesalers in South Carolina to help you close more deals SAFELY and boost your profits. WINTER IS COMING. Be ready to adopt quickly and win bigger!

Wholetail South Carolina

Our company pivoted 2 years ago and begin closing on all properties and listing on the MLS. Our profit increased 3x!!!
We are partnering with any Deal Finders out there that can find deals, but can't close them.  

Yall don't let this keep you out of the business.  Its time to Connect and Learn how to Build businesses in this new market space.  

[Jay Hinrichs]

Quote from @John Underwood:

The new law the SC Governor just signed makes wholesaling illegal.

It has 3 parts.

1. It defines wholesaling

2. It says you must have a license to wholesale.

3. It says a licensed realtor can't wholesale.

No attorney is going to risk anything that might be deemed wholesaling. 

You can't do a double closing because you can't market the property or contract prior to owning it.

You can buy the property then market it.

You could also get owner financing for 60 to 90 days and then market the property for sale.

Well John,  I went to close a deal today for one of my clients in Aiken SC and at the last second title co attorney said NOPE.. we will no longer close anything that is an assignment.. And we also wont do double closes  .. as that again on its face means the wholesaler was marketing it before they owned it.

I think what will happen as you noted is that no one is going to close wholesale deals in Sc anymore UNTIL there is clear cut case law that has gone through the courts would be my guess.

So one or two day transactional funding is NOT going to work either.  If these wholesaler want to get paid they need to get a license and go work for a brokerage or they need to have their own money buy their inventory Then start marketing it once they own it.. U know just like you and I do :)

[Chris Williams]

Quote from @Chris Seveney:

@Tom Gimer

Seeing conflicting posts on this - not a wholesaler but curious about laws as we invest in most states.

Seeing both sides saying its still legal and others where it is not

Also with most wholesalers, while technically legal most states do not allow you to advertise property you do not own without a license and that is where most do not follow the law

 Yea I think wholetailing will be the new way of wholesaling. It makes you more money and is way less confusing than wholesaling. It is actually the strategy that I am switching to for the future. 

[Chris Williams]

Quote from @Troy Gandee:

A lot of wholesalers are trying to pick apart the description of "wholesaling" and making assumptions on the "marketing" aspect of the new bill. There's a line that says the assignment of contract bit is not illegal, but that's meant as a contractual tool. Not as a business practice.

Essentially what this boils down to is a ban on the practice of "wholesaling" as a business. They're trying to funnel investors into taking the title or employing an agent. I know a lot of folks think agents are silly, but the reason they're doing this to protect the public. In their view, to be a licensed agent, you must learn the laws, pass tests, comply with a supervising broker and pass a background test. You don't have to do any of those things to wholesale a property.

You can still actively market the sale of any property you own yourself without an agent. This legislation is meant to stop unlicensed individuals from being compensated by any means associated with buying and selling real estate for others. In their view, that's no different than acting as a real estate salesperson without licensure.

You can assign contracts all you want, but you can't market them to prospective buyers or receive any compensation from doing so. And double closings will not work because you're still typically marketing the property for sale prior to taking ownership.

Just line up bridge debt and take title to the property. We've been doing this for 4 years in preparation for this. I've also been warning wholesalers about this for about 2 years. The REC released a bulletin warning this was eventual last summer.

 I agree. Actually purchasing the property and then making a profit makes you look 100% more legit and also the profits are usually more than what a flipper will give you an assignment, so why not do it? 

[Jeanette Winton]

Quote from @Scott Trench:

@Dave Meyer - I am getting conflicting perspectives on this new law. 

Perhaps @Tom Gimer representing the side of "wholesaling will be alive and well under the new law in SC" and one of the folks who is adamant that it this new law is the death of wholesaling as we know it in the state could get on and duke it out on the BP Podcast? 

[Jerryll Noorden]

Quote from @Tom Gimer:

Quote from @John Underwood:

Quote from @Tom Gimer:

@John Underwood  I read what I believe to be the new SC legislation. Please provide the full new definition of “wholesaling” and reconcile the conclusion of your post with the last sentence in the definition.

  No need. After listening to several Attorneys, they are not going to risk closing these deals goin forward as they have been done in the past.

OK then I will. The definition of wholesaling (a new term under SC brokerage laws) reads as follows:

"Wholesaling" means having a contractual interest in purchasing residential real estate from a property owner, then marketing the property for sale to a different buyer prior to taking legal ownership of the property. Advertising or marketing real estate owned by another individual or entity with the expectation of compensation falls under the definition of "broker" and requires licensure. "Wholesaling" does not refer to the assigning or offering to assign a contractual right to purchase residential real estate.

Since every word of a statute has to be given meaning, the last sentence is a clear carve out for investors who assign contracts and offer that interest to the end buyer. Sounds like more business is coming for local attorneys who understand the new law.

 The EFF are you going to scare the entire board by purposely omitting that ONE sentence CLEARLY stating  Wholesaling is A OK and then when called out on it,  use mere opinion to validate your scare tactics.

That is the reason I am no longer active on these forums. For crying out loud man.

What is your agenda here? Seriously?!

And ALSO...

I still want to see what they define as "Marketing a property".

If I organize a BBQ party with all my friends that so happen to be on my buyer's list and during a bear dad joke I say " Ohh btw guys, I just locked up a contract want to see it?" 

Is that "marketing" too?

[Jerryll Noorden]

Quote from @Tom Gimer:

Quote from @Andrew R. Lucas:

Quote from @Tom Gimer:

Quote from @John Underwood:

Quote from @Tom Gimer:

@John Underwood  I read what I believe to be the new SC legislation. Please 

I am an attorney and I disagree 

Hey dude, you dropped your mic!

[Jerryll Noorden]

Quote from @Troy Gandee:

@Vinny Patel You can read it however you want, but every single closing attorney I've spoken to in the Charleston market will no longer be closing assignments or double closings, so it is effectively done. The intention of the REC was to stop the practice of wholesaling as we know it.

 That has nothing to do with the law and legalities of wholesaling which is the premise of the post. Some of you are more interested in pushing an opinion/agenda then pushing actual data.

It is tiring!

You may have your opinion and that's great. Don't dress it up as fact or data.

You think it is illegal. Stop doing it. Let those that know better do it.

[Jerryll Noorden]

Quote from @John Underwood:

The new law the SC Governor just signed makes wholesaling illegal.

It has 3 parts.

1. It defines wholesaling

2. It says you must have a license to wholesale.

3. It says a licensed realtor can't wholesale.

No attorney is going to risk anything that might be deemed wholesaling. 

You can't do a double closing because you can't market the property or contract prior to owning it.

You can buy the property then market it.

You could also get owner financing for 60 to 90 days and then market the property for sale.

 OK so you are saying...

Most attorneys won't want to risk it.

Yet your tile of the post says: "New law makes wholesaling illegal is SC"

I have had my issues with you for years already mainly because you can never admit you are wrong.

So which is it?

Is it LEGAL but most attorneys won't risk it?

Or are you going to keep trying to be right by continuously changing your narrative as people prove you wrong?

Man I am not sure why I keep getting involved with this crap.

Guys.. have fun ..

I need to make some money!

[John Underwood]

Quote from @Jerryll Noorden:

Quote from @John Underwood:

The new law the SC Governor just signed makes wholesaling illegal.

It has 3 parts.

1. It defines wholesaling

2. It says you must have a license to wholesale.

3. It says a licensed realtor can't wholesale.

No attorney is going to risk anything that might be deemed wholesaling. 

You can't do a double closing because you can't market the property or contract prior to owning it.

You can buy the property then market it.

You could also get owner financing for 60 to 90 days and then market the property for sale.

 OK so you are saying...

Most attorneys won't want to risk it.

Yet your tile of the post says: "New law makes wholesaling illegal is SC"

I have had my issues with you for years already mainly because you can never admit you are wrong.

So which is it?

Is it LEGAL but most attorneys won't risk it?

Or are you going to keep trying to be right by continuously changing your narrative as people prove you wrong?

Man I am not sure why I keep getting involved with this crap.

Guys.. have fun ..

I need to make some money!

That's correct. It's Illegal, therefore attorneys are not going to risk it.
I imagine if you do this in SC you could be the poster boy they make an example out of. You could be famous.  

[Don Konipol]

Quote from @John Underwood:

Quote from @Jerryll Noorden:

Quote from @John Underwood:

The new law the SC Governor just signed makes wholesaling illegal.

It has 3 parts.

1. It defines wholesaling

2. It says you must have a license to wholesale.

3. It says a licensed realtor can't wholesale.

No attorney is going to risk anything that might be deemed wholesaling. 

You can't do a double closing because you can't market the property or contract prior to owning it.

You can buy the property then market it.

You could also get owner financing for 60 to 90 days and then market the property for sale.

 OK so you are saying...

Most attorneys won't want to risk it.

Yet your tile of the post says: "New law makes wholesaling illegal is SC"

I have had my issues with you for years already mainly because you can never admit you are wrong.

So which is it?

Is it LEGAL but most attorneys won't risk it?

Or are you going to keep trying to be right by continuously changing your narrative as people prove you wrong?

Man I am not sure why I keep getting involved with this crap.

Guys.. have fun ..

I need to make some money!

That's correct. It's Illegal, therefore attorneys are not going to risk it.
I imagine if you do this in SC you could be the poster boy they make an example out of. You could be famous.  

The ADVERTISING and MARKETING of a property you do not hold title to but have a CONTRACTURAL interest in requires a real estate broker license. HOWEVER, real estate brokers are profited from engaging in the advertising and marketing of a property in which the person advertising or marketing is not the titled owner, merely holds a contractural interest, under a theory that doing so \is a violation of agency rules and laws.

First, the interpretation that the above is a violation of agency seems to be a stretch and ripe for legal action.  
Second, since that act of flipping a contract is in itself specifically discussed as NOT illegal or prohibited, why wouldn’t an attorney or title company be willing to transfer title based on the “flip”?  They’re not supporting the act of “advertising or marketing”.  Surely there be some attorneys or title issuers with this interpretation? 

[John Underwood]

Quote from @Don Konipol:

Quote from @John Underwood:

Quote from @Jerryll Noorden:

Quote from @John Underwood:

The new law the SC Governor just signed makes wholesaling illegal.

It has 3 parts.

1. It defines wholesaling

2. It says you must have a license to wholesale.

3. It says a licensed realtor can't wholesale.

No attorney is going to risk anything that might be deemed wholesaling. 

You can't do a double closing because you can't market the property or contract prior to owning it.

You can buy the property then market it.

You could also get owner financing for 60 to 90 days and then market the property for sale.

 OK so you are saying...

Most attorneys won't want to risk it.

Yet your tile of the post says: "New law makes wholesaling illegal is SC"

I have had my issues with you for years already mainly because you can never admit you are wrong.

So which is it?

Is it LEGAL but most attorneys won't risk it?

Or are you going to keep trying to be right by continuously changing your narrative as people prove you wrong?

Man I am not sure why I keep getting involved with this crap.

Guys.. have fun ..

I need to make some money!

That's correct. It's Illegal, therefore attorneys are not going to risk it.
I imagine if you do this in SC you could be the poster boy they make an example out of. You could be famous.  

The ADVERTISING and MARKETING of a property you do not hold title to but have a CONTRACTURAL interest in requires a real estate broker license. HOWEVER, real estate brokers are profited from engaging in the advertising and marketing of a property in which the person advertising or marketing is not the titled owner, merely holds a contractural interest, under a theory that doing so \is a violation of agency rules and laws.

First, the interpretation that the above is a violation of agency seems to be a stretch and ripe for legal action.  
Second, since that act of flipping a contract is in itself specifically discussed as NOT illegal or prohibited, why wouldn’t an attorney or title company be willing to transfer title based on the “flip”?  They’re not supporting the act of “advertising or marketing”.  Surely there be some attorneys or title issuers with this interpretation? 

 Are attorneys going to do due diligence to confirm a contract for a property has not been advertised with the property Info? 

Do they know many of the usual suspects that are known wholesalers?

What level of risk are they going to put their license to practice law?

When will somebody be made an example out of?

There are questions that no one really knows the answers to at this point in time.

I am discussing this specific to the new SC law.

They created this law for a reason. No one knows yet how much it will be enforced. If they choose to enforce it and someone argues I was only selling a contract, but they advertised the property it will likely not fare well for them to fight the law makers who enacted this law.

There are ways around this. You buy the property with hard money, private money or cash. You could also buy with owner financing.

Then you can legally market the property as the owner.

It's a simple pivot to not be accused of breaking the new law.

[Don Konipol]

Quote from @John Underwood:

Quote from @Don Konipol:

Quote from @John Underwood:

Quote from @Jerryll Noorden:

Quote from @John Underwood:

The new law the SC Governor just signed makes wholesaling illegal.

It has 3 parts.

1. It defines wholesaling

2. It says you must have a license to wholesale.

3. It says a licensed realtor can't wholesale.

No attorney is going to risk anything that might be deemed wholesaling. 

You can't do a double closing because you can't market the property or contract prior to owning it.

You can buy the property then market it.

You could also get owner financing for 60 to 90 days and then market the property for sale.

 OK so you are saying...

Most attorneys won't want to risk it.

Yet your tile of the post says: "New law makes wholesaling illegal is SC"

I have had my issues with you for years already mainly because you can never admit you are wrong.

So which is it?

Is it LEGAL but most attorneys won't risk it?

Or are you going to keep trying to be right by continuously changing your narrative as people prove you wrong?

Man I am not sure why I keep getting involved with this crap.

Guys.. have fun ..

I need to make some money!

That's correct. It's Illegal, therefore attorneys are not going to risk it.
I imagine if you do this in SC you could be the poster boy they make an example out of. You could be famous.  

The ADVERTISING and MARKETING of a property you do not hold title to but have a CONTRACTURAL interest in requires a real estate broker license. HOWEVER, real estate brokers are profited from engaging in the advertising and marketing of a property in which the person advertising or marketing is not the titled owner, merely holds a contractural interest, under a theory that doing so \is a violation of agency rules and laws.

First, the interpretation that the above is a violation of agency seems to be a stretch and ripe for legal action.  
Second, since that act of flipping a contract is in itself specifically discussed as NOT illegal or prohibited, why wouldn’t an attorney or title company be willing to transfer title based on the “flip”?  They’re not supporting the act of “advertising or marketing”.  Surely there be some attorneys or title issuers with this interpretation? 

 Are attorneys going to do due diligence to confirm a contract for a property has not been advertised with the property Info? 

Do they know many of the usual suspects that are known wholesalers?

What level of risk are they going to put their license to practice law?

When will somebody be made an example out of?

There are questions that no one really knows the answers to at this point in time.

I am discussing this specific to the new SC law.

They created this law for a reason. No one knows yet how much it will be enforced. If they choose to enforce it and someone argues I was only selling a contract, but they advertised the property it will likely not fare well for them to fight the law makers who enacted this law.

There are ways around this. You buy the property with hard money, private money or cash. You could also buy with owner financing.

Then you can legally market the property as the owner.

It's a simple pivot to not be accused of breaking the new law.

Perhaps you’re correct….or maybe some attorneys feel that their act of closing a transaction is in itself not illegal; they AREN’T facilitating or encouraging advertising/marketing, merely closing a transaction which is not illegal.  If it’s the act of advertising/marketing that’s illegal and not the transaction itself then it’s certainly possible that there will be attorneys that are fine with closing these transactions.
so, time will tell.  In any case, there is no requirement that a transaction be closed by an attorney or have title insurance.  If the parties are willing to forgo title insurance and forgo financing, the exchange of cash for deed and recording of such can be done without third party.  Though I would foresee this in very limited circumstances. 
John, I’m just not as convinced as you are that this is going to stop all flipping of contracts as there are many wholesalers who don’t need to advertise or market the property, at least as I assume the meaning of advertising and marketing to be putting out for sale to the general public.  Usually case law is developed when actual situations are litigated.  I see lots of room here for differing interpretations as to compliance.  If everyone agreed with every law the courts would not be full of cases being tried where prosecutors fail to have their interpretation of law verified.  

[Jay Hinrichs]

Quote from @Don Konipol:

Quote from @John Underwood:

Quote from @Don Konipol:

Quote from @John Underwood:

Quote from @Jerryll Noorden:

Quote from @John Underwood:

The new law the SC Governor just signed makes wholesaling illegal.

It has 3 parts.

1. It defines wholesaling

2. It says you must have a license to wholesale.

3. It says a licensed realtor can't wholesale.

No attorney is going to risk anything that might be deemed wholesaling. 

You can't do a double closing because you can't market the property or contract prior to owning it.

You can buy the property then market it.

You could also get owner financing for 60 to 90 days and then market the property for sale.

 OK so you are saying...

Most attorneys won't want to risk it.

Yet your tile of the post says: "New law makes wholesaling illegal is SC"

I have had my issues with you for years already mainly because you can never admit you are wrong.

So which is it?

Is it LEGAL but most attorneys won't risk it?

Or are you going to keep trying to be right by continuously changing your narrative as people prove you wrong?

Man I am not sure why I keep getting involved with this crap.

Guys.. have fun ..

I need to make some money!

That's correct. It's Illegal, therefore attorneys are not going to risk it.
I imagine if you do this in SC you could be the poster boy they make an example out of. You could be famous.  

The ADVERTISING and MARKETING of a property you do not hold title to but have a CONTRACTURAL interest in requires a real estate broker license. HOWEVER, real estate brokers are profited from engaging in the advertising and marketing of a property in which the person advertising or marketing is not the titled owner, merely holds a contractural interest, under a theory that doing so \is a violation of agency rules and laws.

First, the interpretation that the above is a violation of agency seems to be a stretch and ripe for legal action.  
Second, since that act of flipping a contract is in itself specifically discussed as NOT illegal or prohibited, why wouldn’t an attorney or title company be willing to transfer title based on the “flip”?  They’re not supporting the act of “advertising or marketing”.  Surely there be some attorneys or title issuers with this interpretation? 

 Are attorneys going to do due diligence to confirm a contract for a property has not been advertised with the property Info? 

Do they know many of the usual suspects that are known wholesalers?

What level of risk are they going to put their license to practice law?

When will somebody be made an example out of?

There are questions that no one really knows the answers to at this point in time.

I am discussing this specific to the new SC law.

They created this law for a reason. No one knows yet how much it will be enforced. If they choose to enforce it and someone argues I was only selling a contract, but they advertised the property it will likely not fare well for them to fight the law makers who enacted this law.

There are ways around this. You buy the property with hard money, private money or cash. You could also buy with owner financing.

Then you can legally market the property as the owner.

It's a simple pivot to not be accused of breaking the new law.

Perhaps you’re correct….or maybe some attorneys feel that their act of closing a transaction is in itself not illegal; they AREN’T facilitating or encouraging advertising/marketing, merely closing a transaction which is not illegal.  If it’s the act of advertising/marketing that’s illegal and not the transaction itself then it’s certainly possible that there will be attorneys that are fine with closing these transactions.
so, time will tell.  In any case, there is no requirement that a transaction be closed by an attorney or have title insurance.  If the parties are willing to forgo title insurance and forgo financing, the exchange of cash for deed and recording of such can be done without third party.  Though I would foresee this in very limited circumstances. 
John, I’m just not as convinced as you are that this is going to stop all flipping of contracts as there are many wholesalers who don’t need to advertise or market the property, at least as I assume the meaning of advertising and marketing to be putting out for sale to the general public.  Usually case law is developed when actual situations are litigated.  I see lots of room here for differing interpretations as to compliance.  If everyone agreed with every law the courts would not be full of cases being tried where prosecutors fail to have their interpretation of law verified.  

Don I do a fair amount in SC mainly new construction for my personal portfolio and I do some short term fix and flip JV deals.. the houses come in sometimes from wholesalers land almost never. But what I do see in SC is as you note trying to do your own escrows will be very limited. the reason from what I see is most folks in the business there rely 1000% on closing attorneys and have very limited to NO clue how to do an escrow.. Not that they cant learn but its not common especially when your talking about wholesalers and the type of clients that buy from them. Its the Same from what I have seen in IL . Basically attorney closing states folks in the business never really learn the back end of the business and how to basically do anything on their own when it comes to researching title and public records etc..

The last deal I closed up in Aiken Sc the attorney balked and would not pay the wholesaler.. this led my agent to do a work around and we got it done.. So I really think this will be like we see posted on BP  ( hey I am looking for an investor friendly title / closing attorney) I think your right some will take the business as they dont perceive this to be a big risk and others who maybe dont do a lot of assignment type work just pass on it all together.

Knowing a little bit about John and his model there in SC he is one I have no doubt could learn the escrow process..and may already understand how to do his own.. But like I said pretty much everyone else I have interacted with in SC over the last 10 years.. Its write a contract give it to the closing attorney and Duck.. :)

[John Underwood]

Quote from @Don Konipol:

Quote from @John Underwood:

Quote from @Don Konipol:

Quote from @John Underwood:

Quote from @Jerryll Noorden:

Quote from @John Underwood:

The new law the SC Governor just signed makes wholesaling illegal.

It has 3 parts.

1. It defines wholesaling

2. It says you must have a license to wholesale.

3. It says a licensed realtor can't wholesale.

No attorney is going to risk anything that might be deemed wholesaling. 

You can't do a double closing because you can't market the property or contract prior to owning it.

You can buy the property then market it.

You could also get owner financing for 60 to 90 days and then market the property for sale.

 OK so you are saying...

Most attorneys won't want to risk it.

Yet your tile of the post says: "New law makes wholesaling illegal is SC"

I have had my issues with you for years already mainly because you can never admit you are wrong.

So which is it?

Is it LEGAL but most attorneys won't risk it?

Or are you going to keep trying to be right by continuously changing your narrative as people prove you wrong?

Man I am not sure why I keep getting involved with this crap.

Guys.. have fun ..

I need to make some money!

That's correct. It's Illegal, therefore attorneys are not going to risk it.
I imagine if you do this in SC you could be the poster boy they make an example out of. You could be famous.  

The ADVERTISING and MARKETING of a property you do not hold title to but have a CONTRACTURAL interest in requires a real estate broker license. HOWEVER, real estate brokers are profited from engaging in the advertising and marketing of a property in which the person advertising or marketing is not the titled owner, merely holds a contractural interest, under a theory that doing so \is a violation of agency rules and laws.

First, the interpretation that the above is a violation of agency seems to be a stretch and ripe for legal action.  
Second, since that act of flipping a contract is in itself specifically discussed as NOT illegal or prohibited, why wouldn’t an attorney or title company be willing to transfer title based on the “flip”?  They’re not supporting the act of “advertising or marketing”.  Surely there be some attorneys or title issuers with this interpretation? 

 Are attorneys going to do due diligence to confirm a contract for a property has not been advertised with the property Info? 

Do they know many of the usual suspects that are known wholesalers?

What level of risk are they going to put their license to practice law?

When will somebody be made an example out of?

There are questions that no one really knows the answers to at this point in time.

I am discussing this specific to the new SC law.

They created this law for a reason. No one knows yet how much it will be enforced. If they choose to enforce it and someone argues I was only selling a contract, but they advertised the property it will likely not fare well for them to fight the law makers who enacted this law.

There are ways around this. You buy the property with hard money, private money or cash. You could also buy with owner financing.

Then you can legally market the property as the owner.

It's a simple pivot to not be accused of breaking the new law.

Perhaps you’re correct….or maybe some attorneys feel that their act of closing a transaction is in itself not illegal; they AREN’T facilitating or encouraging advertising/marketing, merely closing a transaction which is not illegal.  If it’s the act of advertising/marketing that’s illegal and not the transaction itself then it’s certainly possible that there will be attorneys that are fine with closing these transactions.
so, time will tell.  In any case, there is no requirement that a transaction be closed by an attorney or have title insurance.  If the parties are willing to forgo title insurance and forgo financing, the exchange of cash for deed and recording of such can be done without third party.  Though I would foresee this in very limited circumstances. 
John, I’m just not as convinced as you are that this is going to stop all flipping of contracts as there are many wholesalers who don’t need to advertise or market the property, at least as I assume the meaning of advertising and marketing to be putting out for sale to the general public.  Usually case law is developed when actual situations are litigated.  I see lots of room here for differing interpretations as to compliance.  If everyone agreed with every law the courts would not be full of cases being tried where prosecutors fail to have their interpretation of law verified.  

 I agree with you.

Some wholesalers will have people come to them stating what they are looking for therefore eliminating the need to advertise.

I have already noticed changes in the local wholesalers in my area. Some who are rightly concerned I have noticed have pivoted and are buying properties now, others I have seen are saying we find you properties. This is a definite change in the way they were doing business.

To your point I buy properties all the time with deeds I have created myself and I take these and have them recorded. This would eliminate the need to find an Attorney willing to close something they are not comfortable with. However, if I advertised a property for sale that I did not own this would not prevent a disgruntled Realtor from turning me into the authorities.

[Don Konipol]

As more and more states see flipping “wholesaling” residential real estate where a homeowner is involved as needing consumer protection the fantasy of no capital no experience easy entry in this field will be eliminated (good riddance!).  Thou each states approach differs, they fall into two general categories (1) require licensure for wholesaling, making wholesaling a violation of licensure and or (2) disclosure and protection laws concerning “taking advance” of homeowners.  So, we can foresee the following

1- Mentors (gurus) shifting to promoting wholesaling of commercial and investment properties.  Since this is a tougher sell to their targeted market, the number of mentoring programs and success of those selling $40k programs will be reduced dramatically.

2. Real (established wholesalers) will face drastically reduced competition from the unknowledgeable muddying the waters and reduced competition from those with some knowledge but no or limited capital. 

3. Wholesaling will lose the “flip the contract” meaning and take on the traditional meaning of purchasing a property at a wholesale price and selling at a markup at a retail price. Retail price means either the price a fixed up house  is sold to a user or the price a fixer upper is sold to a rehabber. 

4. It will take some additional capital to run a successful wholesaling business, above the capital required for marketing, operations, and admin.  Successful wholesalers will have the cost of buying and for short term holding properties.  

5. Options will be put into use more.  I know they have limited use/acceptance, but are workable in some circumstances.  Many gurus teach using the purchase contract as a no cost option; with a true option both parties are cognizant that a closing will only happen under certain conditions and a price for the option can be established accordingly.  

Since real estate and laws governing such are primary state differentiated, the transition will be uneven. My guess is that the most heavily populated states will initiate legislation, while rural states may be less motivated to do so. 

[Tom Gimer]

Some posters have no idea how networked wholesalers do business.

Many contracts we receive are accompanied or followed by assignments the same day. No marketing required. No investorlift, no Craigslist, no email blasts, no BS contingencies included. 

In fact when I see the contract, the neighborhood and the purchase price, I have a decent idea who the assignee will be. 

[Don Konipol]

Quote from @Tom Gimer:

Some posters have no idea how networked wholesalers do business.

Many contracts we receive are accompanied or followed by assignments the same day. No marketing required. No investorlift, no Craigslist, no email blasts, no BS contingencies included. 

In fact when I see the contract, the neighborhood and the purchase price, I have a decent idea who the assignee will be. 

Right! So the way I interpret the new law, you would not be “wholesaling” because by definition you’re not advertising or marketing a property you don’t own but have a contractural basis in.  The ACTS of offering to purchase, assigning or flipping a contract, and collecting a fee for such does NOT  in itself require a real estate license.  Interesting to note that the new law would prohibit you from flipping a contract as defined IF you were a licensed agent/broker in the state

It’s important to remember what the new law says. It defines wholesaling as advertising or marketing a contractural interest you have in a real property for purchasing said property.  Then it says you are required to hold a real estate license to legally wholesale. Then it says if you hold a real estate license you can’t wholesale because it’s a violation of your duty to the seller.  

[Jay Hinrichs]

Quote from @Don Konipol:

Quote from @Tom Gimer:

Some posters have no idea how networked wholesalers do business.

Many contracts we receive are accompanied or followed by assignments the same day. No marketing required. No investorlift, no Craigslist, no email blasts, no BS contingencies included. 

In fact when I see the contract, the neighborhood and the purchase price, I have a decent idea who the assignee will be. 

Right! So the way I interpret the new law, you would not be “wholesaling” because by definition you’re not advertising or marketing a property you don’t own but have a contractural basis in.  The ACTS of offering to purchase, assigning or flipping a contract, and collecting a fee for such does NOT  in itself require a real estate license.  Interesting to note that the new law would prohibit you from flipping a contract as defined IF you were a licensed agent/broker in the state

It’s important to remember what the new law says. It defines wholesaling as advertising or marketing a contractural interest you have in a real property for purchasing said property.  Then it says you are required to hold a real estate license to legally wholesale. Then it says if you hold a real estate license you can’t wholesale because it’s a violation of your duty to the seller.  

for up and running established wholesalers this may not be an issue but for those starting out they will be hamstrung without being able to advertise.