Legal Issue around Wholesaling

[Andrew Yu]

I'm trying to be safe when I wholesale property. Right now when I market my lead, I always say "contract for sale", not "property for sale". I assign the contract when the buyer wants to move forward, generally within 30 or 45 days time window. 

But I also heard some people do Option to buy, then assign the option. Is that a safer way to wholesale? I guess it comes down to the Equitable Interest on the property. 

How about assigning Lease Option? Is that even safer way to wholesale? I know that's fundamentally different from just assigning the right to purchase a property...

[Anthony Davis]

Ultimately, it will be your decision on the Wholesaling method. By the way, it seems your current logic is in line with most wholesalers. 

Reading over every line of the particular state’s Purchase Contract is key to your success. 1) Find out if your state / ( area where the property is ) mostly uses a title company, or real estate attorneys. Even though title companies have particular legal sources to aid in closing transactions, I always recommend seeking a “full-time” real estate attorney’s office to close Wholesaling transactions. The attorneys know the current laws in the (area / state) and generally...have personal contacts in “all the proper places” for seamless transactions in a very timely manner.

2) Any line crossed through on the purchase contract....put your initials and have each “seller” put their initials somewhere next to each line that is crossed through also. ( The idea is to be totally transparent and signed by all parties in the transaction.) 

3) Put “and/or assigns”, or “and/or assignee” immediately after your or your business’s name on the Purchase Contract with the seller. ( You can find out if the state’s contract has any paragraphs concerning “Wholesaling” by reading each line, or consulting your chosen full-time real estate attorney. ) Your chosen Attorney can also give you a Free Consultation on how you should / can proceed with the lease option method.

4) The timeframe for closing is also up to you to offer and convince the seller to agree, the sign “to bind.” You May also word your timeframe as “until closed” ( as another closing “insert” ) in additional remarks area....but not on the same contract where you have stated an exact date or days.....and as always ( all sellers ) must initial special remarks that you insert...to show agreement and acknowledgememt.

You’re on the right path...just remain confident with all parties of your transactions....because you are the facilitator.