Attorney who knows wholesaling laws in ohio

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Attorney who knows wholesaling laws in ohio

Adam PasternackPro Member
Real Estate Investor · Columbus, OH · Member since 2014 · 9 posts · 1 vote

I am looking to wholesale a few deals in Columbus but am having trouble getting sound accurate legal advice to the legal/ethical ways I can do this.

From what I have learned so far there seems to be at least two concrete ways to do this

1) I can do a double closing which requires me to have or borrow the money for the day

2) Contract assignment

I have had conflicting advice from people I trust on the legality of #2 in ohio.  If there is a way to do it legally/ethically I want to do that since it does not require purchasing the property myself.  Any recommendations on an attorney which knows the case law in this area and is investor friendly, best case an investor his or her self??

Thanks!

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Rob Mcclellan
Realtor · Rootstown, OH · Member since 2018 · 98 posts · 39 votes
7y

Hi Adam,

#1 is legal. #2 may be legal. It is all about intent. If you never intend to buy the home you can not wholesale the contract. to Wholesale a contract you have to have a contact. If you enter into a contract to buy a home with no means to buy it and then try to wholesale the contract you have violated Ohio law. There is a video on YouTube from the division of real estate that talks specifically about this.

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  • Ed W.
    Investor / Landlord · Columbus, OH · Member since 2015 · 276 posts · 174 votes
    7y

    Adam, I am not an attorney nor an agent but, among other real estate activities, I do wholesale.  I've been very cautious over the years and have always worked hard to stay on the right side of the law.  I don't hesitate to spend money on attorneys if I am uncertain.  

    The two methods you cited above are the two methods I employ (except that I use my own funds and don't borrow).  I have it on good authority that those methods comply with Ohio law.  You can also become an agent and employ a 3rd strategy but, as noted above, I am not an agent.   If you want to talk to an attorney, PM me and I will give you a name or two.

    My understanding (again, this is not legal advice) is that in method number one, since you are the owner, you don't need a license to sell your own property.  You DO need to be very careful about the language you use when talking to (or otherwise communicating with) both buyers and sellers so that you never suggest you are "helping" anyone or acting on behalf of anyone or representing anyone but yourself.

    My understanding is that since contracts are personal property (not real property; i.e., not real estate), the selling of a contract does not come under the authority of the Division of Real Estate.  

    Again, what you say verbally, in marketing materials, in contracts, etc. MATTERS A LOT.  You need to be consistent with the premise of your activities.

    You should NOT use my understandings as a basis upon which to act but, rather, as a basis upon which to have a conversation with a KNOWLEDGEABLE attorney and then follow their advice.

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  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y

    @James Wise would know.  from what has been talked about on this site.. OHIO is one of the more aggressive states when it comes to selling real estate without a license.

    and so the act of bringing a buyer and seller together for compensation is a licensed activity.. and I have yet to see a wholesaler that can do this without some sort of E mail blasts websites or craigslist adds advertising the homes. bed bath pictures etc.. 

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  • James Wise
    Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
    7y
    Originally posted by @Jay Hinrichs:

    @James Wise would know.  from what has been talked about on this site.. OHIO is one of the more aggressive states when it comes to selling real estate without a license.

    and so the act of bringing a buyer and seller together for compensation is a licensed activity.. and I have yet to see a wholesaler that can do this without some sort of E mail blasts websites or craigslist adds advertising the homes. bed bath pictures etc.. 

     The business of assigning contracts is simply earning money, a fee, a commission  or whatever you want to call it for bringing a buyer & seller together to sell a property. This activity is brokering real estate, which requires a license.

    On top of that it's a poor business model with a low probability of success. If you want to make money seeking out distressed sellers grab a yourself a license & sling the deals that way. Much more sophisticated way to go about it. Just because you become an agent doesn't mean you need to drive families around town shopping for houses. I don't do anything remotely close to what a "normal' agent does & have transacted over $100M in sales.

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  • Rob Mcclellan
    Realtor · Rootstown, OH · Member since 2018 · 98 posts · 39 votes
    7y

    Hi Adam,

    #1 is legal. #2 may be legal. It is all about intent. If you never intend to buy the home you can not wholesale the contract. to Wholesale a contract you have to have a contact. If you enter into a contract to buy a home with no means to buy it and then try to wholesale the contract you have violated Ohio law. There is a video on YouTube from the division of real estate that talks specifically about this.

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