Fines/Penalties for Brokering Without a License
Specialist · PA · Member since 2018 · 85 posts · 122 votes
Fines/Penalties for Brokering Without a License
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Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes
7yOriginally posted by @Account Closed:
Originally posted by @James Wise:
Originally posted by @Alan Johnson:
One risk of wholesaling that is often mentioned is that it could be considered brokering real estate without a license. Is anyone aware of what the fines and penalties for brokering without a license might actually be by state, and/or provide me with links that could address this question?
Note:
- Please do not respond with opinions about the legality of wholesaling; there are many other threads that seem to endlessly discuss this.
- Also, please do not attach a link to a particular state's 5,000+ page website that contains all of the real estate statutes. I've already been there.... but I would appreciate a direct link that is targeted to this question that you may have picked up during, for example, your real estate license education and training.
Thanks for any assistance you can provide!
Here are some fine summaries for those engaging in unlicensed activity in Ohio. Fines as high as $1.5 Million.
(Click here or on the photo to link to the Ohio Division of Real Estate's full report)
@James Wise
Those were from 7 years ago. Ancient history. Do you have anything more current?
It used to be illegal to drive a car down the street in Ohio (1903) now it's illegal to ride a horse down the street.
If it isn't being enforced in today's climate, what's the big deal?
Let's be clear: There is a big difference between
1) Representing that you own a property while not having ownership or equitable interest in it (which is an unlawful & punishable act) (This is very Bad)
2) Representing that you have a validly signed contract and you are assigning the contract, which is legal. If indeed you do have a validly signed contract. (This is Good)
People confuse the two and I agree that trying to sell something you don't own or have equitable interest in, will cause a world of hurt to the smuck who gets involved in wholesaling and does the first example.
The ole' it's illegal to ride a horse down the street argument. That's what you're going with huh?
40 Replies
- Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes7y
Originally posted by @Jay Hinrichs:
@John Thedford@James Wise@Russell Brazil hey guys I think this wholesaling as tough as it is.
there are definitely some companies that have scaled it and make decent to very good money.
However those companies that do .. spend 20 to 50k a month in marketing have staff have buyers agents working for them so when a lead comes in someone is at the peoples home that day.. Then they have dedicated staff to resell the contracts or pipeline into the bigger turn key outfits who buy a lot if not a majority of their inventory through wholesale means.
However in my opinion these same folks if they put that much time and energy into really any business would be successful .. However its a small % that do this well.. and its very much market dominated .. in low value asset land IE homes that trade under 100k.. there is many more opportunities.. as markets firm up like whats happened there is simply less distressed real estate to go around.. Like when i was funding a big operator in Orlando they were buy from a very large wholesaler ( who was licensed) but as OREO dried up that wholesaler pivoted and is doing traditional real estate now..
Where I see a disservice to the public is the wholesale gurus the snap flip buys etc. who paint this as a way to make tons of money with no money and little effort.. when as we know there is really nothing harder in Real estate than to wholesale as folks do it.. which as we all know that have been in the business is a licensed activity whether they want to admit it or not.
One thing and a little off the subject but as it relates to Morris i read a few of the lawsuits against him and the plantiffs call him a marketer.. I suspect him having taken marketing fees for 500 plus homes with no license is going to come back and bite him as well.. LOL
Yea his excuse to get out of hot water was to admit that he never owned any of those homes that went south right? He just marketed them for OceanPointe or something? That's the story? If that's the case he's gonna get shredded for brokering without a license.
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @James Wise:
Originally posted by @Jay Hinrichs:
@John Thedford@James Wise@Russell Brazil hey guys I think this wholesaling as tough as it is.
there are definitely some companies that have scaled it and make decent to very good money.
However those companies that do .. spend 20 to 50k a month in marketing have staff have buyers agents working for them so when a lead comes in someone is at the peoples home that day.. Then they have dedicated staff to resell the contracts or pipeline into the bigger turn key outfits who buy a lot if not a majority of their inventory through wholesale means.
However in my opinion these same folks if they put that much time and energy into really any business would be successful .. However its a small % that do this well.. and its very much market dominated .. in low value asset land IE homes that trade under 100k.. there is many more opportunities.. as markets firm up like whats happened there is simply less distressed real estate to go around.. Like when i was funding a big operator in Orlando they were buy from a very large wholesaler ( who was licensed) but as OREO dried up that wholesaler pivoted and is doing traditional real estate now..
Where I see a disservice to the public is the wholesale gurus the snap flip buys etc. who paint this as a way to make tons of money with no money and little effort.. when as we know there is really nothing harder in Real estate than to wholesale as folks do it.. which as we all know that have been in the business is a licensed activity whether they want to admit it or not.
One thing and a little off the subject but as it relates to Morris i read a few of the lawsuits against him and the plantiffs call him a marketer.. I suspect him having taken marketing fees for 500 plus homes with no license is going to come back and bite him as well.. LOL
Yea his excuse to get out of hot water was to admit that he never owned any of those homes that went south right? He just marketed them for OceanPointe or something? That's the story? If that's the case he's gonna get shredded for brokering without a license.
Ya I read the complaints he is toast.. you cant be a TV personality huge on U tube lead buyers to believe they are buying a "MORRIS HOUSE" as we saw the buyers who posted elude to.. I can see a AG or DA taking this guy on since he has such a big public presence you know they love to fry those guys.. But Morris only defense is like a 9 year old child.. I did not do it I did not do it.. Jimmy did it. :)
- Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes7y
Originally posted by @Jay Hinrichs:
Originally posted by @James Wise:
Originally posted by @Jay Hinrichs:
@John Thedford@James Wise@Russell Brazil hey guys I think this wholesaling as tough as it is.
there are definitely some companies that have scaled it and make decent to very good money.
However those companies that do .. spend 20 to 50k a month in marketing have staff have buyers agents working for them so when a lead comes in someone is at the peoples home that day.. Then they have dedicated staff to resell the contracts or pipeline into the bigger turn key outfits who buy a lot if not a majority of their inventory through wholesale means.
However in my opinion these same folks if they put that much time and energy into really any business would be successful .. However its a small % that do this well.. and its very much market dominated .. in low value asset land IE homes that trade under 100k.. there is many more opportunities.. as markets firm up like whats happened there is simply less distressed real estate to go around.. Like when i was funding a big operator in Orlando they were buy from a very large wholesaler ( who was licensed) but as OREO dried up that wholesaler pivoted and is doing traditional real estate now..
Where I see a disservice to the public is the wholesale gurus the snap flip buys etc. who paint this as a way to make tons of money with no money and little effort.. when as we know there is really nothing harder in Real estate than to wholesale as folks do it.. which as we all know that have been in the business is a licensed activity whether they want to admit it or not.
One thing and a little off the subject but as it relates to Morris i read a few of the lawsuits against him and the plantiffs call him a marketer.. I suspect him having taken marketing fees for 500 plus homes with no license is going to come back and bite him as well.. LOL
Yea his excuse to get out of hot water was to admit that he never owned any of those homes that went south right? He just marketed them for OceanPointe or something? That's the story? If that's the case he's gonna get shredded for brokering without a license.
Ya I read the complaints he is toast.. you cant be a TV personality huge on U tube lead buyers to believe they are buying a "MORRIS HOUSE" as we saw the buyers who posted elude to.. I can see a AG or DA taking this guy on since he has such a big public presence you know they love to fry those guys.. But Morris only defense is like a 9 year old child.. I did not do it I did not do it.. Jimmy did it. :)
You talking about this complaint or are there more?
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @James Wise:
Originally posted by @Jay Hinrichs:
Originally posted by @James Wise:
Originally posted by @Jay Hinrichs:
@John Thedford@James Wise@Russell Brazil hey guys I think this wholesaling as tough as it is.
there are definitely some companies that have scaled it and make decent to very good money.
However those companies that do .. spend 20 to 50k a month in marketing have staff have buyers agents working for them so when a lead comes in someone is at the peoples home that day.. Then they have dedicated staff to resell the contracts or pipeline into the bigger turn key outfits who buy a lot if not a majority of their inventory through wholesale means.
However in my opinion these same folks if they put that much time and energy into really any business would be successful .. However its a small % that do this well.. and its very much market dominated .. in low value asset land IE homes that trade under 100k.. there is many more opportunities.. as markets firm up like whats happened there is simply less distressed real estate to go around.. Like when i was funding a big operator in Orlando they were buy from a very large wholesaler ( who was licensed) but as OREO dried up that wholesaler pivoted and is doing traditional real estate now..
Where I see a disservice to the public is the wholesale gurus the snap flip buys etc. who paint this as a way to make tons of money with no money and little effort.. when as we know there is really nothing harder in Real estate than to wholesale as folks do it.. which as we all know that have been in the business is a licensed activity whether they want to admit it or not.
One thing and a little off the subject but as it relates to Morris i read a few of the lawsuits against him and the plantiffs call him a marketer.. I suspect him having taken marketing fees for 500 plus homes with no license is going to come back and bite him as well.. LOL
Yea his excuse to get out of hot water was to admit that he never owned any of those homes that went south right? He just marketed them for OceanPointe or something? That's the story? If that's the case he's gonna get shredded for brokering without a license.
Ya I read the complaints he is toast.. you cant be a TV personality huge on U tube lead buyers to believe they are buying a "MORRIS HOUSE" as we saw the buyers who posted elude to.. I can see a AG or DA taking this guy on since he has such a big public presence you know they love to fry those guys.. But Morris only defense is like a 9 year old child.. I did not do it I did not do it.. Jimmy did it. :)
You talking about this complaint or are there more?
that's one and I have read another one. as these stack up they will all say the same basic things only thing that will change Is plaintiff and property address.. the theory of the case will remain the same.. Fraud Ponzi stolen rehab money.
- Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes7y
Originally posted by @Jay Hinrichs:
Originally posted by @James Wise:
Originally posted by @Jay Hinrichs:
Originally posted by @James Wise:
Originally posted by @Jay Hinrichs:
@John Thedford@James Wise@Russell Brazil hey guys I think this wholesaling as tough as it is.
there are definitely some companies that have scaled it and make decent to very good money.
However those companies that do .. spend 20 to 50k a month in marketing have staff have buyers agents working for them so when a lead comes in someone is at the peoples home that day.. Then they have dedicated staff to resell the contracts or pipeline into the bigger turn key outfits who buy a lot if not a majority of their inventory through wholesale means.
However in my opinion these same folks if they put that much time and energy into really any business would be successful .. However its a small % that do this well.. and its very much market dominated .. in low value asset land IE homes that trade under 100k.. there is many more opportunities.. as markets firm up like whats happened there is simply less distressed real estate to go around.. Like when i was funding a big operator in Orlando they were buy from a very large wholesaler ( who was licensed) but as OREO dried up that wholesaler pivoted and is doing traditional real estate now..
Where I see a disservice to the public is the wholesale gurus the snap flip buys etc. who paint this as a way to make tons of money with no money and little effort.. when as we know there is really nothing harder in Real estate than to wholesale as folks do it.. which as we all know that have been in the business is a licensed activity whether they want to admit it or not.
One thing and a little off the subject but as it relates to Morris i read a few of the lawsuits against him and the plantiffs call him a marketer.. I suspect him having taken marketing fees for 500 plus homes with no license is going to come back and bite him as well.. LOL
Yea his excuse to get out of hot water was to admit that he never owned any of those homes that went south right? He just marketed them for OceanPointe or something? That's the story? If that's the case he's gonna get shredded for brokering without a license.
Ya I read the complaints he is toast.. you cant be a TV personality huge on U tube lead buyers to believe they are buying a "MORRIS HOUSE" as we saw the buyers who posted elude to.. I can see a AG or DA taking this guy on since he has such a big public presence you know they love to fry those guys.. But Morris only defense is like a 9 year old child.. I did not do it I did not do it.. Jimmy did it. :)
You talking about this complaint or are there more?
that's one and I have read another one. as these stack up they will all say the same basic things only thing that will change Is plaintiff and property address.. the theory of the case will remain the same.. Fraud Ponzi stolen rehab money.
It's a rather large complaint. 36 pages or so but man if that's in fact a screen shot of a real email from Clayton Morris himself it looks like a major smoking gun that's going to bury him.
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@James Wise well not to hijack the thread.. but Morris does relate to fines for selling real estate without a license.
here is another good one to read..
Note how the lawsuit starts out with the real estate firm wholesaler sold properties to investors they did not OWN>>
its the basis of the theory then it gets into selling junk for more than its worth ( Morris) .. all this relates to selling real estate you dont own whether your wholesaling assigning etc. now granted these guys were one of the largest in the country.. and this will be a battle royal as Nudge has the money to defend..
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@James Wise and lastly on this subject but when you read the Morris complaint you will see that he is getting sued personally.. so for all of those that think an LLC is asset protection here is a classic example if your doing business does not matter your going to get tagged personally.
- Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes7y
Originally posted by @Jay Hinrichs:
@James Wise well not to hijack the thread.. but Morris does relate to fines for selling real estate without a license.
here is another good one to read..
Note how the lawsuit starts out with the real estate firm wholesaler sold properties to investors they did not OWN>>
its the basis of the theory then it gets into selling junk for more than its worth ( Morris) .. all this relates to selling real estate you dont own whether your wholesaling assigning etc. now granted these guys were one of the largest in the country.. and this will be a battle royal as Nudge has the money to defend..
That's some interesting stuff. Great share man.
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
here is another one Chad Deucher another Utah based operator.. these guys came into my office in about 2012 wanting me to fund their deals.. I looked at Clatfelter and told him DUDE this no work.. your going to get into major trouble if you try that model in the inner city urban cores.. and sure enough. Robbing peter to pay paul.. now morris those guys just flat stole the money.. But still did the Ponzi of paying for vacant houses. Deucher got 9 years in the slammer. Clatfelter got no jail time but wiped out financially and professionally.
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
@James Wise sorry that one above did not work
here is the one on Marquis and Duecher
- Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes7y
Originally posted by @Jay Hinrichs:
@James Wise sorry that one above did not work
here is the one on Marquis and Duecher
Pretty decent chunk of jail time for this guy. In your opinion do you think that Morris is going to face criminal charges like this or will it all be civil?
- 7yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Originally posted by @James Wise:
Originally posted by @Jay Hinrichs:
@James Wise sorry that one above did not work
here is the one on Marquis and Duecher
Pretty decent chunk of jail time for this guy. In your opinion do you think that Morris is going to face criminal charges like this or will it all be civil?
Very possibly. Too many innocents lost life savings following this in licensed marketer whose description of what was selling even if they did not rip off all the rehab money was just not at all accurate you cannot market d class as safe stable investments. New investors just don’t really k ow what d class is.
- Real Estate Broker · Chicago, IL · Member since 2015 · 1k+ posts · 2k+ votes7y
In Illinois, its as little as a slap on the wrist ("Don't do it again" injunction) to fines in excess of $45k. Depends on if you've been warned before, how egregious the violation was, and how much you cooperated with the IDFPR investigation. If you want to view the official monthly enforcement reports see here: https://www.idfpr.com/
It is a bizarre argument from wholesalers that they somehow can provide something above and beyond licensed agents, or that they are somehow filling a void. How so? We have access to close-quick cash buyers as well, on top of the market of 10k+ agents (just here in the Chicagoland area), on top of being professional marketers. And don't think cash buyers live in a bubble, they are for sure looking at MLS properties as well. Just because a property goes on the MLS doesn't mean its a "traditional sale" - I've sold multiple properties with NO interior inspections allowed, cash only, close in less than 2 weeks.
Licensing is mostly to ensure that the behavior of the licensee is in line with the law. IE if I don't follow the law and act unethically, my livelihood is at stake. So that's a pretty good motivator to do things right. The law here in Illinois is due to be re-written in the coming year, and I'll for sure be pushing for ownership to be well-defined as holding title and not some silly equitable interest argument.
- Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes7y
Originally posted by @Jay Hinrichs:
Originally posted by @James Wise:
Originally posted by @Jay Hinrichs:
@James Wise sorry that one above did not work
here is the one on Marquis and Duecher
Pretty decent chunk of jail time for this guy. In your opinion do you think that Morris is going to face criminal charges like this or will it all be civil?
Very possibly. Too many innocents lost life savings following this in licensed marketer whose description of what was selling even if they did not rip off all the rehab money was just not at all accurate you cannot market d class as safe stable investments. New investors just don’t really k ow what d class is.
It's gonna be very interesting to see how it all plays out.
- Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes7y
Originally posted by @Matthew Olszak:
In Illinois, its as little as a slap on the wrist ("Don't do it again" injunction) to fines in excess of $45k. Depends on if you've been warned before, how egregious the violation was, and how much you cooperated with the IDFPR investigation. If you want to view the official monthly enforcement reports see here: https://www.idfpr.com/
It is a bizarre argument from wholesalers that they somehow can provide something above and beyond licensed agents, or that they are somehow filling a void. How so? We have access to close-quick cash buyers as well, on top of the market of 10k+ agents (just here in the Chicagoland area), on top of being professional marketers. And don't think cash buyers live in a bubble, they are for sure looking at MLS properties as well. Just because a property goes on the MLS doesn't mean its a "traditional sale" - I've sold multiple properties with NO interior inspections allowed, cash only, close in less than 2 weeks.
Licensing is mostly to ensure that the behavior of the licensee is in line with the law. IE if I don't follow the law and act unethically, my livelihood is at stake. So that's a pretty good motivator to do things right. The law here in Illinois is due to be re-written in the coming year, and I'll for sure be pushing for ownership to be well-defined as holding title and not some silly equitable interest argument.
lol the filling the void or providing an increased level of service argument is almost as ridiculous as the horse walking down the street argument from earlier in the thread. If you want to buy low & sell high close so you aren't brokering & own that you are a capitalist who's got more knowledge then the person you bought from. That's fine. We are all adults here, nobody says you need to run a charity. Real Estate is a tough biz. What bugs professionals is when they try to circumvent license law & of course say ridiculous things like providing a needed service to the public.
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