Originally posted by @Joe Splitrock:
Originally posted by @Victor S.:
Would double-closing this transaction appease Liam Neeson (aka John Thedford)?
If you are double-closing on the same day, then you are still marketing the property before you own it. It is impossible to close, find a buyer and close again in the same day. It just comes down to state laws. It has nothing to do with John Thedfold. He has no authority to prosecute anyone. You can mock him or ignore him. (Although as a mod I should remind everyone that personal attacks are prohibited on BP.)
I think the disconnect is people are confusing "I won't get caught" with "it is legal". Or it is just ignorance of the law? This is the reason so many states require licensing in a variety of professions. Licensing means you go through education that teaches you the law and professional ethics. In most states you need a license to do something as simple as cut hair. Why is it unreasonable to ask the same of people transacting tens or hundreds of thousands of dollars?
can't really find anything concrete on the double-close process. can you or John cite some statutes?
looks like the biggest beef stems from using buyer's funds to cover your A-B costs:
https://www.biggerpockets.com/...
From https://www.thewholesalerstool...
The Fine Print
But what they don't remember in their real estate training or research is the words "For Another" in the state's real estate statute. (Maybe they missed that day
of real estate class)Now what this means is if you're not doing it for another, you're doing it for yourself, and that makes it entirely legal for you to wholesale real estate. In addition to the "For Another" verbiage, many states additional say "For A Fee." Now don't confuse your assignment fee with what the state law is talking about here.
When they say "For A Fee," they're referring to someone (you) charging a fee for your services, and that's not at all what you're doing. In your transaction, the buyer/investor is paying you a fee to assign your contract to them, not for real estate brokerage or any real estate service you provided. Now there are a few states
that don't use the "For Another" verbiage, but in those cases, they typically add exemptions to their state real estate law's which will say "Except Property You Own." Now obviously, in a double closing, you will be closing on the property before you resell it to your investor/buyer so you will clearly have ownership in the property.
Equitable Rights
In an assignment however, we have to look at contract law, which says when you enter into a contract with someone you have what is called "Equitable Ownership"
or " Equitable Interest," which gives you the right to resell or assign the real estate contract. Although I don't advocate sitting down with your seller and explaining in-depth how you intend to contract the property, then immediately turn around and assign it to someone for a fee. I do suggest having verbiage in your contract that explains that you could assign the contract just to protect yourself. If you're doing a double closing this verbiage isn't necessary, but you might want to disclose to the buyer that you do not own the property yet, but you will have ownership prior to closing. (they should already understand this, but it's always best to cover your bases)
Statutes i was able to locate (i'm no legal expert):
http://www.leg.state.fl.us/sta...
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818.05 Sale, concealment, or disposal of property held under contract or conditional sale; penalty.—(1) No
person who is in possession of any personal property under and by
virtue of any contract or conditional sale or otherwise where the title
to said personal property does not vest in the possessor, shall sell,
conceal or dispose of such personal property without first having the
written consent of the person then having or retaining the bona fide
title to such personal property so to sell, dispose of, or conceal the
same.(2) Any
person who shall violate the provisions of this section shall be deemed
guilty of a misdemeanor of the second degree, punishable as provided in
s. 775.082 or s. 775.083.History.—ss. 1, 2, ch. 7860, 1919; CGL 7230, 7321; s. 891, ch. 71-136.
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http://www.leg.state.fl.us/sta...
475.42 Violations and penalties.—(1) VIOLATIONS.—(a) A
person may not operate as a broker or sales associate without being the
holder of a valid and current active license therefor. Any person who
violates this paragraph commits a felony of the third degree, punishable
as provided in s. 775.082 or s. 775.083, or, if a corporation, as provided in s. 775.083.
Looks like the biggest beef is operating as an agent (taking commission, etc.). however, aren't most wholesalers taking a fee for the contract itself (assignment) and not for their services?
Definition of who is considered a broker in FL: http://www.leg.state.fl.us/sta...
475.01 Definitions.—(1) As used in this part:(a) “Broker”
means a person who, for another, and for a compensation or valuable
consideration directly or indirectly paid or promised, expressly or
impliedly, or with an intent to collect or receive a compensation or
valuable consideration therefor, appraises, auctions, sells, exchanges,
buys, rents, or offers, attempts or agrees to appraise, auction, or
negotiate the sale, exchange, purchase, or rental of business
enterprises or business opportunities or any real property or any
interest in or concerning the same, including mineral rights or leases,
or who advertises or holds out to the public by any oral or printed
solicitation or representation that she or he is engaged in the business
of appraising, auctioning, buying, selling, exchanging, leasing, or
renting business enterprises or business opportunities or real property
of others or interests therein, including mineral rights, or who takes
any part in the procuring of sellers, purchasers, lessors, or lessees of
business enterprises or business opportunities or the real property of
another, or leases, or interest therein, including mineral rights, or
who directs or assists in the procuring of prospects or in the
negotiation or closing of any transaction which does, or is calculated
to, result in a sale, exchange, or leasing thereof, and who receives,
expects, or is promised any compensation or valuable consideration,
directly or indirectly therefor; and all persons who advertise rental
property information or lists. A broker renders a professional service
and is a professional within the meaning of s. 95.11(4)(a).
Where the term “appraise” or “appraising” appears in the definition of
the term “broker,” it specifically excludes those appraisal services
which must be performed only by a state-licensed or state-certified
appraiser, and those appraisal services which may be performed by a
registered trainee appraiser as defined in part II. The term “broker”
also includes any person who is a general partner, officer, or director
of a partnership or corporation which acts as a broker. The term
“broker” also includes any person or entity who undertakes to list or
sell one or more timeshare periods per year in one or more timeshare
plans on behalf of any number of persons, except as provided in ss. 475.011 and 721.20.
(3) Wherever
the word “operate” or “operating” as a broker, broker associate, or
sales associate appears in this chapter; in any order, rule, or
regulation of the commission; in any pleading, indictment, or
information under this chapter; in any court action or proceeding; or in
any order or judgment of a court, it shall be deemed to mean the
commission of one or more acts described in this chapter as constituting
or defining a broker, broker associate, or sales associate, not
including, however, any of the exceptions stated therein. A single such
act is sufficient to bring a person within the meaning of this chapter,
and each act, if prohibited herein, constitutes a separate offense.
They did pretty good on the language, but this "for another" talked about above is an interesting concept that I need more time to research.
