BiggerPockets

This is mainly directed at Ohio Investors, but anyone is free to chime in on this. I think that we have established thoroughly that wholesaling a property is not illegal in any state. (when I say wholesaling, I am referring to contracting a property and then either assigning the contract or double closing the transaction). However, let me ask you this:

What if my partner and I are working together and I contract the property in my name but when we wholesale the deal out we split the profit. If he receives that profit split from me, is he breaking the law?

Let me take it a step further:

My partner and I find a house, we close on it in my name with my money and have it rehabbed by contractors (i.e. we don't do any work on it ourselves). We then sell the house and split the profit 50/50. Is this illegal?

Thanks in advance for your input!

Sometimes he finds buyers and sometimes I do. Sometimes he buys the houses and I find the buyers. However, we don't have anything in writing.

Looks like the partner would bring teh buyer to the table justifying a split and in other cases, the roles reverse and thus the partnership evens out in this scenario.
(Hope I answerd their questions correctly Gary!)

Illegal, I don't see how. As you stated, wholesaling is not illegal and having a partner would not make the transaction illegal.
The ONLY thing I could think of is if your partner was a licensed agent and then got paid from this transaction while circumventing the broker. That could potentially be a problem as the broker wants his/her share of commissions earned and the state/fed wants a paper trail of record for taxing of the income.

It would seem like you formed a general partnership, which can be done with merely a verbal agreement, and so even if its in your name and with your money I think you can sleep soundly that no prosecutor will be coming after you or your partner.

Any written contract can "justify your splits", you don't necessarily need an entity to do that although you should consult a RE attorney on that topic to see what is the best fit for your particular partnership.