Originally posted by
@Randy Thomason:
Thanks @Mark Rogers for that overview but that was not all that was conveyed in the meeting I interviewed the Commissioners in. Here is the additional info for everyone.
They hate the term "Wholesaling" and would prefer that we use a different term for what we are doing.
They do not believe wholesaling is illegal in and of itself, but unfortunately a lot people are doing it illegally in this state. Understand that the people they see usually are the worst of the worst offenders and not the run of the mill assigner that we are mostly familiar with.
When I described my personal business model to the Commissioners, as I buy rentals, I buy rehabs, I buy flips where I double close, and I assign some, they said that is what they wished everyone was doing. The Commission does NOT have a problem with assignments IF and I say IF again, that is not your whole business model. If you are doing 100% assignments then they believe that is a blatant attempt to circumvent licensee law and you should have a real estate license to do that.
There was a lot more discussed after my discussion ended with the full Commission. The Executive Director and I had some off record conversations immediately after to clarify several things. For example, You Can place a lien on a property to secure your contract or option agreement, but when your contract expires and you didn't close or is cancelled by both parties agreement then the lien should be extinguished also.
Here is the bottom line:
Standard contract law states you must have capacity and intent to have a valid contract. If you don't have the money somehow, i.e. private lender, bank line of credit, partner, etc., then you don't have capacity. If you never plan to close a deal, then you don't have intent. If you have "weasel clauses" to cancel the contract up till day of closing, then the red flag goes up for intent.
And for those who think that because you are out of state and never setting foot here that the Commission doesn't or can't punish you, you are wrong. Class D Felony. The State's Attorney General's Office is the prosecutor. If they get the verdict then they notify your states law enforcement. If it is a fine then they garnish. If a jail sentence then you get extradited if you don't surrender on your own.
Here is the KICKER: If you have a Felony record you can't own a gun, you can't hunt, you can't vote, you can't get a passport to travel out of the country, you can't get a real estate license, you might not be able to be a teacher or child care worker. Lots of restrictions on your life from that point forward.
Do things right and you don't have to worry.
