@Steve G. Long time no talk.... how have you been? I hope things are going great for you! @Edward Mitchell let me start with the old CYA and say "I am not an attorney... I am not giving legal advice... I advise you to seek legal advice... wear your seat belt and eat your vegetables". Now that we got that out of the way.... I am under no impression that wholesaling is illegal in Illinois or any state for that matter assuming you are doing things right. Recently I came across this article on the Illinois Association of Realtors website about wholesaling and even listing that wholesale deal with a broker in the MLS. Read it as I think it will or should answer many questions you may have.
"3. I am a broker representing a buyer/developer. He is now under a contract to purchase the land for subdivision and he wants to "pre-market" the lots before closing on the land transaction. May he list them on MLS, or otherwise advertise them for sale?
The important fact to remember here is that title does not transfer till the purchase of the land is complete. In other words, the developer/buyer cannot transfer good title to the land, or any part thereof, to any subsequent buyer until the developer/buyer becomes the owner of the property. Title does not transfer until the land transaction closes. As any real estate practitioner knows, a lot can happen between the time a contract is formed and the closing of the transaction. (This is true especially in subdivision development where the developer must undoubtedly meet requirements of the Illinois Plat Act and any other applicable local regulations before the land can be successfully subdivided, which specific requirements will not be addressed for purposes of this question).
On the other hand, the developer could advertise what he does have for sale. At this point, on the facts above, he owns only rights in the contract to purchase the land. He could transfer those rights to a third party (assuming provisions in the land purchase contract would allow this). He, along with your help as his real estate representative, could probably even market this in some manner. However, you must keep in mind your duties under the License Act to avoid any advertising that would be in any way false, deceptive or misleading. Thus, you would want to be certain when doing any advertising that the ads contain clear language that sufficiently explains the situation. You might even do an ad campaign soliciting interest should the land transaction be consummated. This becomes the developer's business decision based on your advice and input from his other advisors.
Developers sometimes handle "pre-marketing" by taking deposits and contracts that are specifically conditioned upon the consummation of the first land sale from potential lot buyers. In addition, developers have actually sold options to potential lot buyers contingent upon consummation of the land sale.
Regarding your question about listing on the MLS, there are a couple concerns. First, under the License Act (and probably MLS rules), you must have the written consent of the owner to advertise the property for sale. Keep in mind, on these facts, you do not yet represent the owner. You represent the contract buyer. Second, if the land was listed with another brokerage company, that firm may have the exclusive right to market the property for sale pursuant to an exclusive right to sell agreement. As a result, without some agreement with the current listing broker, you could not expose the land (or subdivided lots) to the MLS until title transfers and your developer client owns the land.
The situation might also be that the developer went directly to the landowner that was not represented by another broker to effect the purchase of the land. In that case, you probably need to get permission of the landowner to list the land as available for sale. The terms of the purchase contract between the developer and the landowner may actually contain the necessary permission to list, so you should check that contract for such a provision."
