Do I Need A License To Do Lease Options?

15 Replies

Which states do I need a license to lease option and which states dont I? I was going to do lease options in Florida but I heard I need a license to do it. Which states are best for lease options? Thanks for any help BP can give me!

I coach lease options so here is the skinny on FL

If you want to do one or two lease-option assignments or  wholesaling lease options, you're probably not going to get a lot of complaints from realtors and brokers about brokering without a license

The big thing in Florida is advertising properties for lease option if you don't have title without a license

You want to act as a principal not as agent for or as an agent; with license you can act as a principal and not "agent for"

the department of Florida real estate want you to be licensed if you're doing lease-option assignments even if you are a principal

In a sandwich, staying in the middle, if you can have 3 months reserves in case the tenant buyer does not pay and you have to evict, that is prudent.  Things can go wrong in a sandwich.

I recommend people in Florida get licensed and act as a principal and do lease-option assignments and get out of the deal.

@Brian Gibbons

Thanks for the response. 

I some questions just so I know I'm on the right track. I can do lease options in FL if it's 5 or less deals. Anymore and I would need a license? How would the realtors find out I don't have a license? 

What do you mean by acting as principal? 

And if Florida is too tough to lease option because of the laws and regulations, what state would be the best in terms of profit and laws? Thanks

Just getting your license and acting as a principal meaning as a buyer, seller, lessor, lesse e, optionor, optionee 

Acting as a principal and being licensed is the best way to go

Originally posted by @Brian Gibbons :

I coach lease options so here is the skinny on FL

If you want to do one or two lease-option assignments or  wholesaling lease options, you're probably not going to get a lot of complaints from realtors and brokers about brokering without a license

The big thing in Florida is advertising properties for lease option if you don't have title without a license

You want to act as a principal not as agent for or as an agent; with license you can act as a principal and not "agent for"

the department of Florida real estate want you to be licensed if you're doing lease-option assignments even if you are a principal

In a sandwich, staying in the middle, if you can have 3 months reserves in case the tenant buyer does not pay and you have to evict, that is prudent.  Things can go wrong in a sandwich.

I recommend people in Florida get licensed and act as a principal and do lease-option assignments and get out of the deal.

In other words, "you will be violating both state and federal law, so let's hope those whom you're competing against don't complain."  The nice part about it, if you're a borrower who discovers the loan you took was unlicensed, is that the maker becomes liable for repayment of the entire amount paid into the loan (principal and interest), in addition to the possible loss of the collateral interest in the property.

The question to ask yourself, whenever someone says "you can probably get away with it if you limit the number of transactions you do" is... what are your morals?

@Lew Payne

I am advising folks in FLA, OH and CA to have a real estate sales license and use a RMLO to screen their tenant buyers as per the Ability to Repay Rules of the CFPB and the Dodd Frank law.

Don't understand your post.

I don't have a license, and no state requires it if you structure it properly, but the only reason not to have a license is if you market to listed houses like I do. 

Not sure if licensees are allowed to participate in lease/options without the seller working with an attorney.

Originally posted by @Brian Gibbons :

@Lew Payne

I am advising folks in FLA, OH and CA to have a real estate sales license and use a RMLO to screen their tenant buyers as per the Ability to Repay Rules of the CFPB and the Dodd Frank law.

Don't understand your post.

Brian - you just happened to be the response I quoted... I wanted to expand on what you had already said; I should have made that clear.  I have found that, depending on the state (as you already seem to know), the requirements and "seriousness" of enforcement varies.

There are ways (as another respondent posted) to structure such transactions such that they legally circumvent the applicable legislation.  However, depending on which entity is looking at you, doing so could be construed as circumventing the law (and proving otherwise could be a costly lesson, even if you win).

The moral of the story... when there's a licensing issue, proceed with caution and err on the side of licensing (as you have already pointed out).  At the same time, be aware of the "gurus" who spring up touting ways to circumvent certain laws (such as the due-on-sale clause by use of a land trust which privately assigns its beneficial interest to someone else without properly informing the lender - despite the fact that your contract and federal law requires YOU to contact your lender when such changes occur).

Sorry for the initial (and subsequent) rambling... I'm trying to make too many points at once.

@Lew Payne

There's a sub2 wrap Dos clause thread here that is very good - search on BP

I like wraps & sub to to buy and sell fast in 6 mo to 12 mo

Never had the loan called in 30 years of doing them

And never buy sub to and sell on a wrap, terrible idea

As a licensed Realtor/Investor, I am investor friendly and represent investors so they  comply with license law making it a non-issue.

Looking to talk to an investor friendly realtor (one who is familiar with lease options) who can discuss the broker sponsoring license process. How eager would a broker be to sponsoring someone who does not want to work as an actual real estate agent but rather as a "Sandwich lease" investor. Of course, the broker would get his/her percentage.

I should have mentioned that I'm in the Cleveland, OH area.

Originally posted by @Brian Gibbons :

I coach lease options so here is the skinny on FL

If you want to do one or two lease-option assignments or  wholesaling lease options, you're probably not going to get a lot of complaints from realtors and brokers about brokering without a license

The big thing in Florida is advertising properties for lease option if you don't have title without a license

You want to act as a principal not as agent for or as an agent; with license you can act as a principal and not "agent for"

the department of Florida real estate want you to be licensed if you're doing lease-option assignments even if you are a principal

In a sandwich, staying in the middle, if you can have 3 months reserves in case the tenant buyer does not pay and you have to evict, that is prudent.  Things can go wrong in a sandwich.

I recommend people in Florida get licensed and act as a principal and do lease-option assignments and get out of the deal.

Hi Brain,

Came across this post right now - 

Is there a need to be a real estate broker license or  a florida real estate sales associate license will do?

Thanks

Why would you need a license to LO? You have an option to purchase the property and are not acting as an agent for the seller. You have equitable interest, so a license would not be required.

@Alexander Cameron ,

In Texas we always refer to @John Jackson as far as "compliance" goes so I fully endorse what he has to say on the subject.  You definitely don't want to act as an "agent" anywhere (unless you are) as that's going to get you in trouble.  Too many points to address in this response but I agree with the just of what you're saying.

Chris Pre

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