All Forum Posts by: Terry Portier

It depends on the renovation contract you sign with the GC. For one if that contracts states the contract or warrant can not be assigned within the warrant period the GC can not be sued. If it is past GC is not at fault, too late.

That is why when you set up your LLC, get commercial liability insurance with a "Products/Completed Operations Aggregate" limit of at least 2 mil, since you sold the defective product the liability falls back on you.

Of course your insurance may try and indemnify, and hold harmless you, but that may be difficult unless it is stated in your contract, and that the GC is to endorse you for a period of time for product or operations. It can get messy when it comes to liability, the GC insurance can go after subs same stipulations based on contracts.

Even if they get to the GC, his contract with you should state he is not liable for damages beyond materials and labor for the work "performed", agreed to per contract...not beyond it.

Originally posted by Marc R.:
Thanks all for the replies. I would be very interested to hear from any wholesalers in Ontario who have an attorney on their team who is actively helping them close assignments.

Belinda D, thanks for the input. I'm not so sure about your contract notion, however, as the section I mentioned in the Act very clearly states in the definition of trade: “ 'trade' includes a disposition or acquisition of or transaction in real estate by sale, purchase, agreement for purchase and sale, exchange, option, lease, rental or otherwise". While I am by no means a legal expert, I would have a very hard time believing that generic contract law would supersede a specific clause such as this one which explicitly names every type of contract one could hope to use in a wholesaling deal. As a side note, do you have any attorneys you can recommend in Ontario?

Right now the only interpretation I can think of that would make sense to me is that the actual action of 'trading' refers to the party who actually closes the deal Of course you need an attorney or agent to close, you can't just close a deal yourself so that would make sense to me. I believe there's a stipulation further down which explicitly mentions that attorneys have the right to act as the agent in order to facilitate the transaction. So maybe all this section is saying is that you can't close a deal yourself? I would have a hard time believing that the hundreds or thousands of investors across Canada who are engaged in wholesaling activities are acting illegally and in ignorance of the law.

I'm currently trying to arrange a consultation with some other attorneys. I'll keep this post updated with my progress and anything I learn.

Marc

I agree with your interpretation, it seems clear you can only act on your behalf, not 'others'. The big question now is can you contractually skate around this Act, further do you want to. I would not believe everything attorney's tell you, they provide no guarantee you make out well in court and know all areas of law. Perhaps as mention get your license. You should look for one that practices contract law as @Belinda D. pointed out, ask to see a statue or case that challenges this Act contractually, please post it up so we can see it. Me, I keep files on law that affect my business at my disposal, and try to stay current on them at my states website.

BTW: Great job and making sure your legal basis are covered first, I wouldn't be surprised if alot of folks that follow others don't know the law or stay up on it and find out when they end up in court charged.

Looks like another area of hyper complex laws(like LLCs) that are directed to other laws, RE, contract, trade, etc.....One thing I like about this thread compared to the many other OPINION threads out there is the Act that governs the RE law in the OP, and the OP discussed it with an Attorney that said NO! Not that this attorney knows everything but, I would venture to say that based on the lack of statues and case law posted in other threads they are more opinion based.

If your read this act, it may be broad in nature, but one thing is very clear the exemptions that does not include 'contracts'. No investor, or for that matter ten other 'investor friendly" attorneys, can argue them. Getting another attorney will not change the Act, getting more BP opinions will not either, it is what it is.

If you can find an Attorney that has been in court representing a wholesaler that is charged with violating this act and somehow won, now that be one to hire and an opinion worth listening to :)

@Marc R. You're right, very broad definition of 'trade' in the Act. I think it boils down to this under "Exemptions", (h) states if you act on your own account and interest, so you would have to own the property before you sell (double close). You can not assign or trade your interest without a license as a non-owner, nor another party's.

(h) a person, on the person’s own account, in respect of the person’s interest in real estate unless,

(i) the trade results from an offer of the person to act or a request that the person act in connection with the trade or any other trade, for or on behalf of the other party or one of the other parties to the trade, or

(ii) the interest of the person in the real estate was acquired after the offer or request referred to in subclause (i) whether or not the trade is the result of the offer or request;

@Steven Hamilton II I'll take it then you stay current on tax code in IL, but definitely not a rule of thumb for all states. Here in KS in 2013 new code passive from corp income including LLC are not taxed nor is there a franchise tax.

Only question left is there a better legal process in another state like NV/DE/WY, taxes and fees are second too, if you are out mainly to protect your career/assets. DE and NV has a long history of judge(no juries) ruled corporate law, WY is up and coming. Those states have seen alot of 'flexability' and WY created the LLC.

If you have a solid LLC with solid contracts, business practices, and know what you are doing with sub-contractor/employee agreements/contracts, and commercial liability and WC insurance you should be fine in IL. Read your commercial insurance policies in depth. Read the labor laws in your state/fed as to how to treat subs or employees.

You don't need an attorney to register that part is easy, to get the Articles of Organization. You may need one for an Operating Agreement and all related contracts to the LLC.

Good luck!

Call the IL dept of revenue and ask if corporate pass through income is taxed and is there a franchise tax. If the answer is no like here in KS, DE, NV, and WY to name a few, it is a no brainer file domestic, unless your state is hard on corporate law and you are worried about being sued.

If the answer is no to foreign, yes to domestic and W2 wage, file in another state, but look at WY it has more benes.

https://www.myusacorporation.com/articles/delaware-vs-nevada-vs-wyoming.html

You don't need professional(s) for answers to basic questions, your state should have a tax assist as does the IRS. Go find a case where real property was forced back to it's resident district court state in the case of builder's foreign LLC, with a charging order or land-lord tenant judgement, if you find it please post it up Id like to see it ;)

Question is NC taxing pass through income from a corporation like an LLC, or just W2 wages? And is there a franchise tax? If the answer to both is yes you could register your LLC in Wyoming where neither exist then the question becomes will NC tax wages earned from a foreign LLC if the wages are earned in NC?..if yes there are ways around that, how to pay yourself and where.

My state use to prior to 2012, in 13 in an effort to get more corps to register here they do not for both foreign and domestics. You might want to check this out, I don't think my CPA even knows so I am going to call them Monday. No state tax is sweet!

Only reason left despite the taxes and fees either way would be great corporate judicial system and asset protection in those states, like no juries, etc.....I've thought about it and since there is no tax here and my fees are low too, I'll just watch my Ps and Qs and stay domestic. I may decide on Wyoming if and when I start branching out to other states, from what I read it is more small business friendly than DE, NV.

If you think your need to pay top dollar for an “agency” to do what a good GC that knows what they are doing does think again, if you don’t understand the meaning of “a good GC” that’s your own fault, as is the lack of understanding of WC that started this thread, labor laws, and whom is responsible for liability given a specific personal injury law suit.

Lots of wrong info on this thread(you don't have to nor do I want you to PM me for) I will try and straighten out soon as I got time. Running a live and well business is my top priority right now, sorry I'm too swamped right now! :)

@Pat L.

I’m not getting this, so, if your job site has hazards that cause personal injury the contract between you and the agency states you are not liable?

The agency is nothing more than potentally adding a layer of cost above hiring a GC with liability and WC. The same labor laws/tax codes still apply to the home owner whether they hire an agency, GC, or manage subs themselves. If the agency or GC hires employees or subs those specific labor laws and tax codes apply.

Sounds like a great idea, I as an insured GC create an separate "agency"/co to hire myself add another layer of cost, problem is I'd price myself out of the market, a creative use for a series LLC. :) .......only in the Big Apple NY ;)