Fraud By Inducement, Unlicensed Brokering, Preying On The Elderly

[John Thedford]

All the gurus, etc promoting unlicensed brokering forgot to mention this: many of their ideas are illegal in some states. In Florida, you cannot advertise property you do not own even if you have a contract on the property. That is clearly set out in 475.43. Those using contracts as a way to broker without a license are operating illegally. It might be prudent to consider how to operate legally if you want to build a RE business. IMO, the only way to legally "wholesale" is to close and then resell (unless you are a licensee). 

The stuff has hit the fan in Collier County. A local guy put a house under contract, proceeded to bring "inspectors" through the house that don't appear to be inspectors, pushed the owner to sign a contract, allegedly made several misleading statements, and induced the owner by making a claim of purchasing the house when in fact they were brokering the deal (illegally). The seller backed out, and now the "buyer"--who wasn't a real buyer, and the person they assigned to, have filed suit. The seller has now hired a top notch RE law firm in the area, and a countersuit is being filed. Among the counter claims are FRAUD, violation of FDUPTA, preying on the elderly, brokering without a license, etc. 

Walking in, making untruthful representations, using deceit, and entering into contracts under fraudulent pretenses is NOT the way to operate. I believe this "buyer" believes they have the seller against the wall, will get a judge to order transfer, and receive damages. They have NOT seen the counter claim, and that is when their plan is going to probably fall apart. 

If you want to operate in Florida you need to know parts of 475, particularly 475.43. I just posted in another thread where a BP reader just got a house under contract and now asks "now what". Before you sign any contract, consider your obligations, not just your need to make money.

[Bill Gulley]

Sorry so late in answering my mentions @John Thedford

Just a few comments;

Innocent until proven guilty applies to criminal law, no so much, if at all in civil matters.

Brokering anything is basically facilitating a transaction between a buyer and seller for compensation and no, a broker does not need to represent either party, they simply facilitate or cause the transaction to take place.

Disclosures, "I will rob you of your equity in my dealings" does not keep you from the legal consequences of robbery.  Informing another party of your intentions will not eliminate your liability of your intentions or acts.    

Stocks and bonds are personal property, not real property and in all states you must have legal title to advertise and show real property or have a lawful position to represent the owner. I say all sates because this is a matter under the UCC and Federal Trade Commission......the UCC is not adopted in all states but those states have similar or even the same aspects of the UCC concerning advertising, showing of real property and representing others in a transaction. See-"Strawman" transactions.

Instead of arguing about real estate license law, study Tort Law and Agency Law, causing a financial loss can get serious. Laws of agency apply to informal business relationships as well as in contracts, notice that an agency may exist with or without specific consent, such as with "Apparent Authority".

It is generally acceptable to market a contract, you may advertise the contract to purchase a property but not the property with representations that you hold legal title. Even if the seller agrees!

Goggle is your friend, the information you find may well be hazardous, so I suggest you read government sites, blogs at law firms, law schools are another good source, you should know the difference between guru crap, public forums and an educational or legal information site.

Most newbies really don't want to know, they want to believe, so if you really want to know just call your state real estate commission, ask to speak to an examiner or investigator or council. Then explain exactly what you intend to do, and then ask if your plan is compliant. They will not mislead you, lie or twist the truth with half truths, if they say fine, the go at it! 

As to intent, your true intent will be shown on your 5th or 6th or 12th deal, after you have done a few deals and never closed in your name, your intent becomes clear, you can't just claim to have good intentions, they must be shown!  

Simple minds seek simple solutions.  Real estate is not so simple :)