Getting Busted in Ohio for Wholesaling and Praticing RE without a License

[Brian Gibbons]

Read Ch 4735

Get a lawyer

Get licensed and do wholesaling in OH

02 July 2014

http://www.com.ohio.gov/documents/Fall10REdiscipline.pdf

LYNETTE S. MALY, Twinsburg, Ohio, was found by the Commission to have violated Revised
Code 4735.02, unlicensed activity, and was accessed a civil penalty in the amount of $500.00,
when she held herself out as engaged in the business of real estate, while not licensed under
Revised Code Chapter 4735.

SHARI L. MORTER, Stow, Ohio, was found by the Commission to have violated Revised Code
4735.02, unlicensed activity, and was accessed a civil penalty in the amount of $500.00, when
she held herself out as engaged in the business of real estate, while not licensed under Revised
Code Chapter 4735.


MIKE ZUREN, Willoughby, Ohio, was found by the Commission to have violated Revised Code
4735.02, unlicensed activity, and was accessed a civil penalty in the amount of $1,000.00. The
Commission found that Mr. Zuren, when in expectation of collecting a fee, commission or other
valuable consideration, held itself out as engaged in the business of selling real estate in a
publication and offered or attempted to offer, listed or attempted to list 20 real estate properties
in the publication, without first being licensed under Revised Code Chapter 4735.

SHARI L. MORTER, Stow, Ohio, was found by the Commission to have violated Revised Code
4735.02, unlicensed activity, and was accessed a civil penalty in the amount of $500.00, when
she held herself out as engaged in the business of real estate, while not licensed under Revised
Code Chapter 4735.

GARY UNDERHILL, Wooster, Ohio, as the result of an investigation of the formal complaint,
was found by the Commission to have violated Revised Code 4735.02, unlicensed activity, and
was accessed a civil penalty in the amount of $2,500.00. The Commission found that Mr.
Underhill attempted to or assisted in the negotiation of the sale, exchange, purchase, rental or
leasing of real estate on 47 occasions without first being licensed under Revised Code Chapter
4735.


PAM BALINT, Ravenna, Ohio, was found by the Commission to have violated Revised Code 4735.02, unlicensed activity, and was assessed a civil penalty in the amount of $3,500.00. The Commission found that Ms. Balint acted as a real estate broker or real estate salesperson without being licensed under Chapter 4735. Ms. Balint’s conduct included accepting phone calls inquiring about the subject property and directing or assisting in the procuring of a prospective buyer to purchase the subject property. In addition, on five occasions Ms. Balint advertised or held herself out as engaged in the business of selling real estate. She placed signs with her phone number on it in the subject property’s yard. She ran an ad in a newspaper regarding real estate for sale with her phone number and name. She provided a flyer marketing the subject
property with her name and phone number on it. She marketed the property on the phone on two occasions.

EVIE KIDDER, Akron, Ohio, was found by the Commission to have violated Revised Code 4735.02, unlicensed activity, and was assessed a civil penalty in the amount of $21,000.00. The Commission found that she consistently took actions to list, negotiate the sale of, sell a property, and made several requests to collect a commission on the sale of a property. Ms. Kidder acted as a real estate broker or real estate salesperson without being licensed under Chapter 4735.

TONY HOFFMAN, Akron, Ohio, was found by the Commission to have violated Revised Code 4735.02, unlicensed activity, and was assessed a civil penalty in the amount of $21,000.00. The Commission found that he consistently took actions to list, negotiate the sale of, and sell a property and made several requests to collect a commission on the sale of a property. Mr. Hoffman acted as a real estate broker or real estate salesperson without being licensed under Chapter 4735.

DIANE SHELTROWN, Waynesville, Ohio, was found by the Commission to have violated R.C. 4735.02, unlicensed activity, but no penalty was imposed. Ms. Sheltrown, on 2 separate dates, directed and assisted in the procuring of prospects which was calculated to result in the sale of a property and she intended or expected to receive compensation or other valuable consideration for the conduct.

MUNNA AGARWAL, Euclid, Ohio, was found by the Commission to have violated ORC 4735.02, unlicensed activity, and was assessed a civil penalty in the amount of $1,000.00. The Commission found that Mr. Agarwal agreed to negotiate and negotiated a potential purchase of property, agreed to list and listed, agreed to offer and offered a property for sale, advertised and held himself out as engaged in the business of selling real estate, directed and assisted in the procuring of prospects and in the negotiation of a transaction which was calculated to result in the sale of a property and intended or expected to receive compensation or other valuable consideration for the above conduct, while not licensed under Chapter
4735.

ELYHUE E. DUFF, Akron, Ohio, was found by the Commission to have violated ORC 4735.02, unlicensed activity, and was assessed a civil penalty in the amount of $1,000.00. The Commission found that Mr. Duff assisted in the procuring of a prospect and negotiation of a transaction, which was calculated to result in the sale of a property, wrote a sales contract for the parties, and intended or expected to receive compensation or other valuable consideration for the above conduct, while not licensed under Chapter 4735.

[Account Closed]

@Jay Hinrichs

Suggesting we change the tone of the conversation in this thread from admonishing and scaremongering is not policing.  It is suggesting we make it positive, encouraging, supportive, and constructive by helping people get an idea of what to do, not what not to do.  I certainly didn't mean to offend your delicate sensibilities (or even be hypocritical, although I can understand how it may have come across that way re-reading).  

In my experience having owned, building (and later selling) successful companies, and more specifically, a team in those companies, people respond well when they are shown the right direction rather than being told to avoid the wrong direction.  The problem with being told not to do the wrong thing is that it leaves a void.  They don't know the right thing to do instead. 

The majority of posts I have read are people seeking advice on the right direction not to be told to avoid the wrong direction.  I am suggesting we do that for them.  That's all (and this is my final word - I am letting it go after this).

[Tiffany Keogh]

Originally posted by @Ned Carey:

@Brian Gibbons Do you have any more detail on these cases. based on what you posted you cannot draw any conclusion. The cases in the link seem not to be dealing with wholesaling.I looked up the code in OH and it says just like many other states that doing specified actions "FOR ANOTHER" is the violation. Doing those action for you own benefit would not be acting as a broker without a license as the law is written. Lacking court case precedents to the contrary I don't see any difference in OH other than some bureaucrat being on a rampage to stop wholesaling. 

I believe wholesaling with a license puts you at more risk, not less risk. A wholesale deal could essentially be considered a net listing by a court which would be clearly illegal. Otherwise buying and then reselling for a greater price, would mean not dealing openly and honestly with all parties as required by licensees.

 To me it appears the issue arises when the investor didnt already have a buyer lined up ahead of time. I am glad this information was posted because I have heard alot of issues in Ohio and its good to be able to study and see the fines and violations. I am going to be on the safe side and become a licensed agent before conducting any real estate business in Texas.

[Tiffany Keogh]

Originally posted by @Guy Gimenez:

Every state has it's own real estate laws regarding what constitutes licensee activities. Texas too has been cracking down on "unlicensed activity", including heavy fines. 

As a broker/investor, if I meet with a seller whom I have no intention of representing, I am only required to notify them that I am a licensee and that I intend to buy their house, not represent them in the sale of their house. Period. The seller can think what they want, I have made my intentions clear and I have not created a fiduciary relationship in any form or fashion. 

The legal issue typically arises in Texas when unlicensed "investors", take a weekend course or read a book or watch a video and then perform licensee activities such as claiming "I have a buyer who is looking for an owner financed home" or "I have a motivated seller" who needs to sell quickly and the investor doesn't have any interest in the property, equitable or otherwise.

 I am glad to see your clarification from a broker/investor standpoint. I want to "jump in" wholesaling, but I have always been hesitant because I just took all of my courses and will sit for my license next week and my interpretation of Texas rules and laws are to NOT conduct ANY type of real estate transactions that can result in you getting paid ANY money (regardless of what you call it) without a license...PERIOD! Thank you for that confirmation. I will get started AFTER I get my license. Better safe than sorry (and broke)

[Tiffany Keogh]

Originally posted by @Account Closed:

@Brian Gibbons

 so only licensed agents can legally wholesale and 95% of the wholesalers are committing illegal activity if they don't take an equitable title position ? Is that the conclusion?

 Not sure about others, but they make the law very clear here in Texas, and I am going to get my license BEFORE I conduct any type of RE transaction where I expect to get paid. Its always highly recommended that you have a real estate attorney, which Im sure can help protect you in court, but I would rather stay out of the "grey" area, keep my reputation intact and be licensed just to be on the safe side. Thats just my professional choice.

[Gregory Beaty]

Originally posted by @Tiffany Keogh:

Originally posted by @Account Closed:

@Brian Gibbons

 so only licensed agents can legally wholesale and 95% of the wholesalers are committing illegal activity if they don't take an equitable title position ? Is that the conclusion?

 Not sure about others, but they make the law very clear here in Texas, and I am going to get my license BEFORE I conduct any type of RE transaction where I expect to get paid. Its always highly recommended that you have a real estate attorney, which Im sure can help protect you in court, but I would rather stay out of the "grey" area, keep my reputation intact and be licensed just to be on the safe side. Thats just my professional choice.

 You must remember that that license alone is not worth the paper it's written on.  Without a Broker to hang it with, it's of no use to you.  The key will be finding a Broker you can hang you license with and do your transaction without having to do a commission split with. This is my problem at the moment.  I'm in Phoenix, AZ.  I've been seeking a Broker who will allow me to hang my license so that I can legally do the business. So far, when I call Brokers I'm either told "Nope! That business is shady and hurts the real estate professional as a whole." Or I'm told "Sure! I'm happy to be your broker, for a 70/30 or 60/40 split..." 

[Lee S.]

I'm with a flat fee broker who has no issues with anything I want to do on the investment side.  He has actually become very interested in what I'm trying to do and wants to learn more for himself.  if anyone is interested in who I'm working for just send me a pm, I want my referral fee!

[Gregory Beaty]

Originally posted by @Lee S.:

... I want my referral fee!

 Haha you are a Realtor! LoL! ; )
I just spoke with someone here saying she hangs her license with HomeSmart and they don't care what she does so long as she pays her per deal fee (like $250 + $50 E&O) and that's only if she runs it through her broker. She said she doesn't always run it through them... idk...

[Lee S.]

Originally posted by @Gregory Beaty:

Originally posted by @Lee S.:

... I want my referral fee!

 Haha you are a Realtor! LoL! ; )
I just spoke with someone here saying she hangs her license with HomeSmart and they don't care what she does so long as she pays her per deal fee (like $250 + $50 E&O) and that's only if she runs it through her broker. She said she doesn't always run it through them... idk...

 Yeah. I think the referral fee is enough for 1 cup of coffee a month, but it's better than none.  Mine is similar to what you mention, I think it's the way to go for investors.

[Gregory Beaty]

Originally posted by @Lee S.:

Originally posted by @Gregory Beaty:

Originally posted by @Lee S.:

... I want my referral fee!

 Haha you are a Realtor! LoL! ; )
I just spoke with someone here saying she hangs her license with HomeSmart and they don't care what she does so long as she pays her per deal fee (like $250 + $50 E&O) and that's only if she runs it through her broker. She said she doesn't always run it through them... idk...

 Yeah. I think the referral fee is enough for 1 cup of coffee a month, but it's better than none.  Mine is similar to what you mention, I think it's the way to go for investors.

 Well brother, any time I'm in CA or you come down to AZ, Starbucks on me! I'm always interested in making new friends and contacts. 

[Brian Gibbons]

@Gregory Beaty

If you go to a REIA, there are creative REI brokers there.

Got to negotiate a good deal, say first 5 deals, then next 5 deals, etc.

If they are doing next to nothing, you doing all marketing, all negotiation, all legal, all as a PRINCIPAL, (sub2, lease w option, lease purchase, wrap, land contract, etc), it should be nominal.

[Gregory Beaty]

Originally posted by @Brian Gibbons:

@Gregory Beaty

If you go to a REIA, there are creative REI brokers there.

Got to negotiate a good deal, say first 5 deals, then next 5 deals, etc.

If they are doing next to nothing, you doing all marketing, all negotiation, all legal, all as a PRINCIPAL, (sub2, lease w option, lease purchase, wrap, land contract, etc), it should be nominal.

Brian! Thanks so much for that advice! I was slated to go the the AZREI in Phoenix on Monday but was stuck in Canada. I'll get there next time and see about setting that up. 
Thanks brother! 

[Tiffany Keogh]

I agree Gregory and I am surely hoping BP networking will help me find such a broker. Here in Texas. In the meantime I will continue to study and network to increase my value.

[Ubaldo M Gomez]

Wow the posts about Wholesaling in here has convinced me not to go to seminars or gurus don't tell you these things. Real Estate investing can be a dirty game if you are not educated or informed. If it was that easy wholesaling, gurus would be doing it and keep to themselves but no they take your money and later tell you that you did not read the fine print where it states they were not advisors but seek a lawyer before doing any of these things of wholesaling. People, read the fine prints and research with respected Rei's before buying How to make money in Real Estate properties is my 2 cents here.

[Account Closed]

Interesting that someone from California is commenting on what I am doing in Ohio. I'm actually working with someone and I don't have to have a license as long as I work with someone who does. 

Maybe you should concentrate on California. I'll do Ohio. 

Thanks little buddy.

[Dell Schlabach]

Originally posted by @Account Closed:

 Does that attempt at insulting Brian Gibbons make you feel bigger?

I see you have two posts on the site, have you even looked at Brians contribution to the site, and the depth of his understanding and knowledge real estate law. He is probably better versed in Ohio real estate law then 98% of the so called wholesalers in the state.

I was at a local real estate conference a month ago, sat in a session where a trainer was doing a presentation on lease option/rent to own, although I am not interested in doing that, I am a rehabber and wholesaler. I was impressed with the guys knowledge and seeming integrity of his program.

I mentioned it to a friend I thought would be interested in the program. Come to find out he's an affiliate of Brian Gibbons.

I don't know but I suspect this guy from California is involved in more wholesale and creative finance deals in Ohio then 80% of the combined "wholesalers" in Ohio.

I don't know Brian and he plays a very different real estate game then I do, but I have always appreciated his depth of knowledge and explanation of his viewpoint. He has made massive contributions to the site.

If you disagree with any of his points, and you make a rational counterpoint or argument, there can be a debate that will give people insight, but snide comments from you dont make Brian look smaller, and doesn't elevate your status with any of the regulars here.

We welcome you to the site, it is an awesome tool to learn about real estate, and we encourage you to stick around and participate, by providing examples and solutions others may not have thought of. The idea of partnering with someone with a licensed is such an example.

[Account Closed]

I dont believe you need to have a license to whole sale in Ohio.

[Bill Gulley]

Originally posted by @Account Closed:

I dont believe you need to have a license to whole sale in Ohio.

 Depends on what you call "wholesaling" if it's the uru crap, I suggest you begin reading this thread from the beginning. 

And this stuff goes on in threads with folks attempting to defend the practice that usually entails unethical deception with an owner.

The issues is, is that if you don't have the ability and intent to follow the letter of the contract, where there was a meeting of the minds, yo don't have a valid contract, that's not real estate is basic business law. That's why the regulators are barking.  

And if Brian Gibbons has a course on TIC, TAC, TOE, would you please let me know....!

And, BTW, Ohio doesn't belong to anyone on BP, we have a past state investigator from Ohio on BP, so I doubt you're the expert even if you do have a law degree, but I doubt you do as there hasn't been an attorney defend wholesaling to date on BP......Hmmmmm, wonder why that is? :)

[Michael Nicholson]

How do you check you state's real estate laws? I am in South Carolina, just getting started, and was thinking about wholesaling my first deals. I didn't know there was this whole legal element to it that could back to bite me.

[John Underwood]

I know many wholesalers  in Greenville and have never heard of any issues in SC.

[Russ Scheider]

We do lots of wholesale deals in SC.  Some we close on and others we assign contracts.  I make sure my buyers know whether I hold the title or just a contract. I have closed assignments with 6 different attorneys in Charleston. No issues. 

[Jo Amick]

I have never had issues here in SC either. Are you talking about having a contract on a property amd listing it for sale on the MLS?

[Jazzmine Johnson]

@John Underwood @Russ Scheider are you two referring to being just a RE investor and/or agent? pertaining to the legality of RE wholesaling. 

[John Underwood]

Originally posted by @Jazzmine Johnson:

@John Underwood @Russ Scheider are you two referring to being just a RE investor and/or agent? pertaining to the legality of RE wholesaling. 

Just a RE investor. 

[Troy Gandee]

@John Underwood I'm not an attorney and this isn't legal advise, but I'm a Realtor and investor in SC. I've wholesaled properties, as well. You can not provide and "fiduciary duties" to anyone regarding real estate without a real estate license or without being an attorney. You also can not market a property for sale that you do not have any "ownership interest" in. That's why you wholesale properties after you have a ratified contract. Once your offer has been accepted, it gives you the necessary ownership interest to market the property for sale. Basically, you just can't pretend to be an agent because that's fraud. If you're transparent with your buyers and sellers, it isn't an issue. And you must make sure that you have the property under contract before you market it for sale.

[Vincent Polisi]

Originally posted by @Brian Gibbons:

If you're in Ohio or California or Florida get license if you're doing wholesaling

whether it's option contracts or sale and purchase agreements that are assigned, get licensed and act as a principal

 You don't need to be licensed in any state. What you need to do is stop committing fraud, falsely advertising, and collecting fees for services that fall under licensed activity (not you personally, but anyone that's following the traditional "wholesaler" model which isn't wholesaling at all, it's contract assignments done wrong). .