Contract Assignment in California

[Nixon Vayupak]

Can anyone who wholesale in California please confirm if this correct or incorrect.  I was having a conversation with a broker and they informed me that by law in California you are able to assign contracts up to 8 times in a year if you are not a certified Broker or Real Estate agent here in CA.  If this is true what other routes are available if you would like to wholesale additional deals, besides double closing?

[David Oldenburg]

@Nixon Vayupak  @Aaron Mazzrillo  First, great question, and I like the rant from Aaron!  I am one of those "brokers" :-).  I know and have read the CA Business and Professions Code 10131.1, and I will throw in my 2 cents and advice regarding the area of wholesaling.  First, I know and deal with many wholesalers, as I am the founder and leader of a 650+ member real estate investing group in the Sacramento / Roseville area. Many of my members wholesale, flip, etc... including me.

The way the code is written it is not clear if "wholesaling" would apply.  The key word that is used in 1A 1B and 1C is "PUBLIC".  When doing loans for or purchases with, or selling to the "PUBLIC"... Here is the exact verbage of 1A... 

""The acquisition for resale to the public, and not as an investment, of eight or more real 

property sales contracts or promissory notes secured directly or collaterally by liens on real 

property during a calendar year.""

They make it very clear in 1A that if you are not dealing with the public, or it is an investment, it would

not apply. Wholesalers are not dealing with the public, and are almost always dealing with investors,

and it is an investment on both sides. B and C make the same reference to the public, but they previously

in 1A make it clear that the "public" is different than "investors seeking "investments".

However, let's say that I am wrong, and they really don't want anyone doing more than 7 wholesale deals

per year, unless they are a RE broker or a licensed agent. That is very simple, after you do 7 deals, make

the rest with an agent. There are tens of thousands of Realtors, agents and brokers in CA, and most of them,

at least 90% are starving. Just have the agent make the offer on the home, even if there are no commissions

being paid, and the property is not in MLS, this is very easy to do. You hire an agent to do this for you

on every deal. They are just simply submitting an offer for you, and most would do that for very little.

It's no different than when a buyer comes to me and asks me to help them buy a FSBO. I can still help them

as an agent, even if I am paid by the buyer and paid very little. A licensee can make unlimited offers,

sales and acquisitions for their clients.

If there is an attorney who has "actual" experience in the area of wholesaling, and can give some case law where a wholesaler has been found guilty of wholesaling more than 7 deals to investors, I would love to hear your side of this.  I doubt any wholesalers here are going to change what they do either way. I know many unlicensd wholesalers who do that many deals in a month!