All Forum Posts by: Shane H.

Man I dont know about that , Here in Florida are plenty of board certify attorneys with the understanding of the wholesaling process and some with their own title company , they wont be risking their license Just like that, please I know that in the FREC (Florida Real Estate Commission) within board members They also have their understanding of proper way of doing it. 

The fact that sadly 80% wholesalers are doing it wrong that doesn't mean is illegal . Also Wholesaling doesn't mean the end buyer is going to get a quitclaim deed title full of liens  and other issues, Attorneys can proceed normally and defend you if something pops as an issue in title or lien search. I heard more sad stories from the bank auction than wholesalers and people still buy in the bank because is the bank.

I Guarantee Thousands here in this platform have benefited from wholesaling transaction (SELLERS AND BUYERS) , whether we like it or not is the yin yan of the RE market. SO hard to get good profitable margins on MLS and seller always want a million dollars for its property and the buyer for 0 . Proper Wholesaling is the medium.

He can make all the demands he wants to the owner of the property regarding his tenants, but until he owns it himself I can't imagine he can give a tenant '10-14' days to vacate. He has no relationship with and no written or oral lease with this woman. All he has is a contract to purchase the property as some point in the future from the owner, who also happens to be the landlord. He is free to make his purchase contingent upon the house being vacant at closing, but I don't see any scenario where this woman would be subject to eviction by someone who doesn't own the property, have the rights to lease the property out, or has ever had any sort of agreement with her. 

Think about if we were to look at it from a different point of view. Does this guy have any obligations to the tenant during the contract period? If the furnace explodes and injures the tenant, is the prospective buyer liable for those damages? No - that problem lies with the owner/landlord/person in charge of the property. You say he's selling his own property, but it's not his property unless he actually closes on it. 

@John Thedford Why are you threatening @Jacob Kline? If he has a legal binding contract to purchase with the seller and known buying partners that he can choose what's the problem?   He is not doing anything wrong, You don't need a license to wholesale in Florida. ( Obviously, there are rules and proper way to do it) . though I don't see the need for threating. Jacob is trying to do the best he can  and asking for advice, ( and trying to make it, like anybody here in this platform at some point) .

As far as your question @Jacob Kline Be honest with Seller, I will suggest not to demand her to vacate the property, because you don't have any legal rights to do that ( just after closing) ( Or if your buyers really trust you and you have a good amount of pictures showing all repairs try to see if they might buy sight unseen. Or send cancelation and move on to the next one. cos every time you spend focusing on this one, you are missing other opportunities.  

@Victor S. you are trying to make it sound like the laws are unclear. In reality you are just trying to exploit some loophole, but even if you try to stretch interpretation, that doesn't mean any judge is going to agree with it. 

One thing to clarify is that every state has different laws, so what is allowed in one place may not be allowed in another.

There is a two major issues that wholesalers can run into:

1. Marketing a property without a license and without ownership.

2. Selling a property and collecting a fee without ownership.

You mention a double closing (simultaneous closing). This is when three parties are involved. Seller, intermediary and buyer. You execute paperwork so that the intermediary becomes the owner and then execute paperwork so that the buyer (third person) becomes the owner. This doesn't require any money for the intermediary, because the buyers funds go to the seller. People argue that this type of transaction gets around issue 2, because the intermediary is the owner right before the final buyer takes possession. Others argue they since they pay no money, but take a fee, that this is simply an attempt to skirt the law. Regardless, in a simultaneous closing, you are in violation of issue 1. It is impossible to setup a closing with a seller and buyer unless you have marketed to the buyer before you owned the property. That is just a fact. The buyer is identified before you own the property, therefore you marketed it before you owned it.

Some wholesalers buy and hold properties for a few days, then resell. In that situation they take ownership and there is time to market the property. I think that would be considered legal in every state, provided they are not marketing before they own it. 

The rub in many states is that they consider an "assignment fee" an agent fee or commission. The logic is that the contract and the property are inseparable. It is hard to argue you are selling just a contract, when you are showing the property to the buyer.

There is "spirit of the law" and "letter of the law". Spirit of the law is actual intent. Letter of the law is the wording. Same theory applies in contract law with a lease. I may not specially state you cannot pour concrete down the drain. You may argue you had no knowledge it would cause damage, therefore you are not liable under a damage clause. The judge will rule that the spirit of the clause is anything that is foreseeable to cause damage.  You can argue the concrete wasn't solid when you poured it, but that is a red herring argument. You can try to hang your hat on on creating your own definition of "for another" of "for a fee", but ultimately the spirit of the law is very clear.

If you are confused about your state law, call the real estate commission or the attorney general. Explain what you are doing and get their position. If you are unwilling to do this, that should answer your question.

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...

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.

She has showed no signs of getting ready to move out even though I’ve told her she’s got 10-14 days to vacate.

What am I missing here? I don't understand how someone who does not own the property can tell a tenant to vacate, regardless of her relationship to the home owner. That seems wildly inappropriate and not within the authority of merely being under contract to buy a property. My gut says this should be responsibility of who ever owns the property, whether that's her dad, your eventual buyer after they close, or the bank after they foreclose. 

that's what Illinois did.. I think they said you can do ONE.. but double check if your in that state.

that's a good analogy.. I mean you would not go fishing without getting a fishing license right ?  or hunt without a license right. 

or in my world of private aviation the YAHOO who gets a student ticket and then flys as a student for 30 years.. when really he or she is pilot in command and is required to have a license.. Although I suspect very FEW female pilots would do this. Just the Yahoo males.