Texas Wholesale Contract

[Larry Simmons Jr]

Hey everyone,

I have a few properties I am trying to assign but first I realize I need to tie them up under contract.

Is there a basic contract I can use to tie up the property? A P&S, or what?

Thanks.

*Side Note* I have read up on the previous topics with this matter, I was just wondering if someone could provide atleast a template.

[Jerry Puckett]

Hi Larry,
Go to the TREC website, or just Google TREC contract. They have all the standard contracts, addendum and amendments in PDF format you can easily down load and print.We use the "One to Four Family Residential Contract" These are the standard in Texas.

Under section 11, type or write in "Buyer reserves the right to assign this contract" Our attorney told us that in Texas all contracts are assignable, but spelling it out in plain language makes for smoother sailing, Whenever I have special clauses to add, I also reiterate this in my Exhibit 1. Nothing wrong with redundancy.

I went to the trouble of converting to a Word doc so I could fill in all the blanks, then removed the blanks also.When you have blanks and check boxes, you leave yourself more open to having to negotiate each point. People tend to question less when it's all standard

One other thing, limit the sellers remedy to retention of the earnest money. Let me know if this helps.

[Jaremy Moritz]

Larry,

You can always just use a one page Option Agreement until you know whether or not you can get the deal done. It's much easier to explain an option agreement to a seller than a full 8 page TREC contract, especially if you're new and are still learning. Yes, a TREC contract is the better way to secure your position, but it can also be pretty daunting if you don't fully understand it yourself. You can also get into a bind if it's not written properly. Better to be safe than sorry.

[Diane J.]

You can always just use a one page Option Agreement until you know whether or not you can get the deal done.

This seems like the easiest way to go but some other opinions say to get it under contract with the TREC.

Can you use the one page option agreement and then when you find a buyer convert that paper to a standard TREC contract for the double close?

Or just tear up the option and write a new purchase contract? I think my wholesaling fee will vary and while the end buyer might be comfortable paying a 3-5K fee they may not like deals with higher margins.

Also, I've read here on BP that a wholesaler can get cut out of the deal by the buyer's financier if it's an assignment rather than a purchase contract/double close.

Jeremy, what option agreement do you use and is it available somewhere online?

Thanks!

[Rudy Munoz]

Had the same exact question, which I found my answers from Jerry! Thanks everyone of posting on this thread, now is anyone here aware of any law changes that may have happened which would prevent wholesalers from closing deals in Texas or is this still happening legally? 

Thank you,

Rudy Muñoz 

[Antonio Evans]

Rudy,

Did you ever find the answer to your last question regarding law changes in the state of Texas?

[Lataya Spikes]

I just went to a Real Estate event 2 days ago here in Houston, TX and everyone said they were doing wholesale deals like crazy there was even a title company at the event that worked with wholesalers to complete their deals, I am not aware the  law you are referring to but if there is one it doesn't apply to Houston, TX.

[Charles Brooks]

Hi Lataya

What is the name of the title company that works with wholesalers in Houston.

[Nyia Morgan]

I read an article on the recent changes in the law for Texas. I'm not an attorney but it seems like more of a clarification to me. You have to make sure that the are perfectly clear with the seller from the beginning. So long as it is disclosed in your contract you should be fine. (For example: Buyer is agreeing to purchase this property to rent, lease, assign, or sell for a profit. - Sean Terry) I'm still drafting my contract so an attorney hasn't reviewed it yet. Again I'm not an attorney so please, please correct me if I'm wrong.

Sec. 1101.0045. EQUITABLE INTERESTS IN REAL PROPERTY. (a) A person may acquire an option or an interest in a contract to purchase real property and then sell or offer to sell the option or assign or offer to assign the contract without holding a license issued under this chapter if the person:

(1) does not use the option or contract to purchase to engage in real estate brokerage; and

(2) discloses the nature of the equitable interest to any potential buyer.

(b) A person selling or offering to sell an option or assigning or offering to assign an interest in a contract to purchase real property without disclosing the nature of that interest to a potential buyer is engaging in real estate brokerage.

Added by Acts 2017, 85th Leg., R.S., Ch. 974 (S.B. 2212), Sec. 1, eff. September 1, 2017.

[Jonathan Peck]

@Jerry Puckett If you are still wholesaling, how have you amended your TREC assignment contract to abide by the new wholesale laws that went into effect in TX, on Sept 1, 2017?

[Jerry Puckett]

Hi @Jonathan Peck

The ruling does not effect the mechanics of buying, and there is no need to alter the contract. (BTW, there is no such thing as a "TREC assignment contract"...Contracts are either assignable or they're not, the Assignment itself not a part of the contract. An assignment is basically closing instructions for the title company, and they wouldn't care if it was written on toilet paper as long as it was legible and you spelled all the names correctly.)

The ruling I believe you are referring to has an effect on the way your contract is marketed rather than the actual nuts and bolts of the sale.

If assigning, you cannot market the property itself, as you do not own it. But you can market the interest you have in the contract. In other words, your end buyer needs to know that signing the assignment DOES NOT transfer title, only the interest in the contract.....(duh!!)....which will conclude in a closing where the buyer will take title.

[Jonathan Peck]

@Jerry Puckett Awesome Jerry! That makes total sense. Thank you for taking the time to respond!