Wholesaler · Charleston, SC · Member since 2015 · 21 posts · 23 votes
First, I'm a newbie and lately I've been stalled due to the ongoing conversation/discussion on whether or not wholesaling is legal. There have been a plethora of opinions and heated discussions surrounding this topic, which unfortunately leaves newbies like me at a standstill.
That said, I found this really great article, written by an attorney, and I thought I'd share.
First, I'm a newbie and lately I've been stalled due to the ongoing conversation/discussion on whether or not wholesaling is legal. There have been a plethora of opinions and heated discussions surrounding this topic, which unfortunately leaves newbies like me at a standstill.
Odd, when I do a search for this case, I come up with this article...
Unless I'm reading this incorrectly, in Appeals Court, Xarin Real Estate lost the case and was required to pay out $257,000.00. Additionally, using a case in Texas by a lawyer in Colorado in an attempt to justify wholesaling in Ohio is not a good legal opinion. Additionally, when I do a search for this attorney, he apparently fancies himself a real estate guru.
I really wish people would quit posting stuff like this - it is really misleading and clearly no research is done what so ever on the original article prior to posting.
Thank you for posting the article. As a newbie trying to put all the pieces together this helps. To me this is one area you have to be sure in, if you are going to wholesale.
I guess I get the argument that wholesaling is legal but it seems very gray to me. It seems it would open you up to lawsuits by your buyers and prosecution by the local authorities. Not to be critical buy why wouldn't you get your RE license instead? It would remove the doubt from your position and I fail to see a downside. Not that I am not willing to be enlightened on why you wouldn't get licensed.
Currently I'm a full-time student and about to begin a new full-time job. I certainly am interested in getting my RE license eventually but obviously that takes time and money, both of which are at a premium at the moment. If there is a way to get started sooner rather than later, I would like to explore it.
First, I'm a newbie and lately I've been stalled due to the ongoing conversation/discussion on whether or not wholesaling is legal. There have been a plethora of opinions and heated discussions surrounding this topic, which unfortunately leaves newbies like me at a standstill.
Odd, when I do a search for this case, I come up with this article...
Unless I'm reading this incorrectly, in Appeals Court, Xarin Real Estate lost the case and was required to pay out $257,000.00. Additionally, using a case in Texas by a lawyer in Colorado in an attempt to justify wholesaling in Ohio is not a good legal opinion. Additionally, when I do a search for this attorney, he apparently fancies himself a real estate guru.
I really wish people would quit posting stuff like this - it is really misleading and clearly no research is done what so ever on the original article prior to posting.
Considering that the common mantra is to find a "real estate investor friendly attorney" in order to get legal advice pertaining to the REI field, this was part of my ongoing research. Thanks for your opinion, but to be honest, the condescending negativity expressed in the prior post is a disservice to your agenda. A better way of contributing (good, bad or indifferent) would be to share your views without insinuating that someone else is ignorant. The source website for this information provides the following information:
William Bronchick, Host of Legalwiz.com is a nationally-known attorney, author, entrepreneur, and public speaker.
Mr. Bronchick has been practicing law and investing in real estate since the early 90’s, having been involved thousands of real estate transactions. He has trained countless people all over the Country to become financially successful, speaking to audiences of as many as 16,000 at mega-events, sharing the stage with names like Rudy Guliani, Steve Forbes, and Colin Powell.
His best-selling book, “Flipping Properties”, was named one of the ten best real estate books of the year by the Chicago Tribune. William Bronchick is also the author of the highly acclaimed books, “Financing Secrets of a Millionaire Real Estate Investor”,”Wealth Protection Secrets of a Millionaire Real Estate Investor”, “Defensive Real Estate Investing” and his latest work, “How to Sell a House Fast in a Slow Real Estate Market”.
William Bronchick is the co-founder and past President of the Colorado Association of Real Estate Investors and the Executive Director of the College of American Real Estate Investors. He is admitted to practice law before the bars of New York and Colorado and is a member of the Colorado and American Bar Associations. He is also a licensed real estate broker in Colorado.
Finally, I will be sure to take your "advice" to heart and research the source before I blindly believe what someone is telling me. So, what are your credentials and are they verifiable?
Most attorney opinions I have seen are similar to the one you posted. It all depends on how the wholesaler presents themselves and disclosure is essential.
I truly believe it comes down to disclosure if you are worried about it. Playing in grey areas is a common place for business. Maybe sad in your eyes but it's true. Look at all the banks and all the laws they break. They make a ton of money and get sued down the road but it's just part of their strategy. Look at wall street. It's crazy and no one is stopping them.
Really though if you are scared about the legal aspects of wholesaling write it in your contract and highlight an assignment clause into the contract and make sure the seller is aware of it. The end buyer should know what your doing. It's very common practice. Full disclosure let's both seller and end buyer know what your doing. If the deal works out best for both parties your just providing a service to both and they should have no reason to come after you.
Considering that the common mantra is to find a "real estate investor friendly attorney" in order to get legal advice pertaining to the REI field, this was part of my ongoing research. Thanks for your opinion, but to be honest, the condescending negativity expressed in the prior post is a disservice to your agenda. A better way of contributing (good, bad or indifferent) would be to share your views without insinuating that someone else is ignorant. The source website for this information provides the following information:
Finally, I will be sure to take your "advice" to heart and research the source before I blindly believe what someone is telling me. So, what are your credentials and are they verifiable?
I wasn't giving you an opinion or advice, I was stating a fact and providing the link to the appeal of the court case in question that your 'guru' suggests is proof of wholesaling being legal. I was, however, trying to provide the evidence softly, so you could look it up yourself, verify the facts, and acknowledge that the link in your original post should be taken with a grain of salt. I bet you think Bernie Madoff was a great investment adviser too - he had great credentials, a cool website, and a great track record.
My credentials are irrelevant. Any reasonably intelligent person with average reading comprehension can read the article for themselves. The article details the case being overturned and the Defendant had to shell out ton of money. If I have somehow misread the article, please let me know and I'll be happy to apologize. You can't, however, justify a legal position with a court ruling which was not upheld. You also can't take a ruling from one state court, even if it is an outcome you desire, and directly apply it to another state.
Unfortunately, I think you misunderstood the 'common mantra'. Nowhere does it say to seek out a real estate guru who is peddling his own wares. Anyone who is selling you something is going to be interested in promoting what they are selling, regardless of how good, bad, or indifferent it is. The state in question (OH) has outright said that wholesaling is illegal. Please see the link in the other two topics on this same subject.
Finally, I have no agenda, other than trying to educate new investors. Real Estate Investment has been exceptionally good to me and allowed me to retire at 35. I'm trying to provide advice based on what I've learned over the last 14 years so others can benefit and improve their lives. My personal position is that wholesaling can be legal, however, most newbies are following ridiculous strategies, advice, and sometimes outright ignoring state laws. At some point in the future, this is going to end terribly for them.
It's actually quite simple....read Your state statutes. Some states, including Ohio and FL, in addition to the "....for another" language go on to specifically mention the selling of options, assignments, etc.
Unless I'm reading this incorrectly, in Appeals Court, Xarin Real Estate lost the case and was required to pay out $257,000.00.
(In line emphasis my own, for easier reading only.) Thank you for directing me to this article. After reading the entire case text (which was quite interesting and informative, by the way) it actually does state that the finding was reversed. Thanks again for the clarifying article!
This appeal involves the construction of the Texas Real Estate License Act1 . The jury found that plaintiffs Larry Baker and Empire Real Estate, Inc. (hereinafter Baker) and Dr. and Mrs. Jose Gamboa (hereinafter Gamboas) had been damaged by the actions of appellant Xarin Real Estate, Inc. (hereinafter Xarin) in the amount of $232,000.00 and $25,000.00, respectively. In its judgment, the trial court trebled the Gamboas' amount and doubled Baker's under Section 19(b) of the Act. Additionally, the jury found that Baker's action against the Gamboas was brought in bad faith and *8282 awarded the Gamboas attorney's fees against Baker for $67,500.00 plus additional attorney's fees in the amount of $25,000.00 for appeal. We reverse and render.
While the various parties raise numerous points of error, the initial question which we must resolve concerns construction of the Texas Real Estate License Act. It is appellant Xarin's position that, for a variety of reasons, it was not subject to the provisions of the Act; therefore, the findings by the jury that it had violated the Act were, as a matter of law, incorrect.
The portion of the trial court's judgment awarding Baker and the Gamboas recovery from Xarin under the Real Estate License Act, and the portion of the judgment awarding Baker attorney's fees against Xarin, are reversed and rendered that the Gamboas and Baker take nothing.
Also, in case you missed the other thread, here is the link that contains an interview with the Ohio Division of Real Estate. Please take a minute to watch the videos, I think you'll info them useful. I know they aren't for SC, but it helps illustrate what is and is not acceptable in a state that is currently cracking down.
Just to be clear, by finding reversed, I mean the original finding that the wholesaler was guilty was reversed. He was found to not have broken the law in question and the amount he was ordered to pay was reversed so that the plaintiffs got nothing.
Just to be clear, by finding reversed, I mean the original finding that the wholesaler was guilty was reversed. He was found to not have broken the law in question and the amount he was ordered to pay was reversed so that the plaintiffs got nothing.
You are correct and I apologize, but you still can't apply this ruling outside of TX. It also apparently hinges on the idea that you don't have a buyer, which means you would need to have the capability of closing yourself.
Agreed. Thanks again. I've saved this article for future reference and after reviewing the laws/statues specific to my state, they are in fact very similar.
I guess I get the argument that wholesaling is legal but it seems very gray to me. It seems it would open you up to lawsuits by your buyers and prosecution by the local authorities. Not to be critical buy why wouldn't you get your RE license instead? It would remove the doubt from your position and I fail to see a downside. Not that I am not willing to be enlightened on why you wouldn't get licensed.
Neither side is clear cut but the downside you don't see is that as a licensed agent the seller legitimately has an expectation of a fiduciary relationship.