I need your help with something and I’m having a hard time finding help at the local level. Some people say it’s legal, some say it’s not, some have ideas on how to make it legal, which I’ll love to here and will address later. I want to make sure my understanding of this potential legal issue is accurate and that I can collect as many viewpoints as possible to weigh what my next step may be, which might as well be just getting a brokers license. I was hoping to avoid this since I just want to get my feet wet without taking such a formal commitment, not to mention more time, energy, and expenses.

Getting a license seems to be the surest answer to avoid broker license issues. However, having anticipated this scenario and doing research studying contracts, I would need to have all of my contracts say something along the lines of “Even though I’m a licensed agent, I’m acting on my own behalf as a principle in the transaction and am not representing the buyer in any way”. Okay. Great. But why am I going to go through all the trouble of getting licensed when all the contracts I’ll be using state I’m not asking as a realtor but towards my own personal interest as a principle in the transaction. That line essential negates being a broker to begin with and then relies on the soundness of simply being a principle in the transaction, in which case, why even get a license to begin with, and simply rely on just being a principle in the transaction?

Basic question is this: Is it permissible for a person to market and assign a lease option contract which that person holds as a principle to buy a house without a brokers license?

License law states one does not need a license as long as one is a principle, so you would think the answer is clear cut, but is not. You’ll get different answers depending on who you ask.

What I’m trying to do. I want to assign lease options to a tenant buyer from a seller on a contract that is assignable and doesn't tie up the property (they can cancel anytime or find there own buyer). I do not have a brokers license at the moment.

Since I do not have a broker's license, I need to be a principle in the transaction, and the lease option memo agreement they sign makes me a principle. Having the right to buy a property makes me a principle in the transaction. This gives me the right to sell or market the property, the same way they have the right to sell the property FSBO. If this weren't possible, no one could sell their property without being on the deed free and clear. It is also assignable and says I have the right to charge a fee to assign the property.

More details. I’m only selling my option, my right to buy, I’m not closing the deal and my signature is not on the resident documents only the addendum. I should be in and out of the deal and won’t have to worry about responsibility or liability because I didn’t close the deal and my signature is not on the rental agreements and documents.

Points of consideration. Being a principle is enough. You don’t have to be on the deed because the Land Contract or Contract for Deed owners are also considered to be owners. The license law actually says that you become a principal when you sign the purchase agreement. You’re a principal in the transaction. What that means is that a purchase agreement or an option, which is what we’re doing here, makes you a principal in the transaction.

Is this legal or does it sound like I’m trying hard to find a way around the law?

Ways to stay legal

1. Get an attorney to find a tenant buyer after getting your lease option memo signed with the seller.
2. Close on lease option yourself, then assign it. (Normally, my signature wouldn’t be on 12 page resident documents/option/acknowledgment documents, only the tenants and sellers)

About the first way. If it turns out I need a license, I’ll still like to try putting some deals together but with the help of a licensed agent this time, ensuring there is no license law issues. I've read that it's a good idea to stay in control of finding the lease option sellers, so it might be a good idea just to get an agent to find a tenant buyer.

On the logistics of this arrangement, what role do they play? What if I already have a tenant buyer and just need an agent to close, but close what? It's all done at the kitchen table, right? Or, is the point not to look for a tenant buyer, but leave that part up entirely to the agent?

I’d love to hear your guys thoughts and ideas on this. Particularly, your take if its legal or if I need a license after all, despite other investors doing it everywhere apparently (this is so weird how ambiguous this is). Also, if there or any ways to ensure its legal.

Argument for needing a license.

1. Using being a principle as an excuse to bypass license laws?
2. Can you demonstrate intent and ability to close? However, we are dealing with lease options, so what would this mean? It’s an option to buy the house, not an obligation.
3. Are you hindering or aiding the seller? This is a good thought to ask. In my case, the contract is not binding. It doesn’t tie the property up. They can get out of it anytime. I’m not recording the option. They can find there own tenant/seller, while I’m marketing. They wouldn’t have equity, so a realtor couldn’t help them anyways. I think the argument can be made I’m helping this people more than anything.
4. The issue or marketing a property one does not own. Even having it written in contract, seller gives me the right to market the property, would not negate contract law which opposes this. I would need to market it carefully, marketing my contract only.

This post is long. If I don’t get any replies, I’ll try condensing it.

If I need to, I’ll pay for help on this matter.