Port Saint Lucie, FL · Member since 2016 · 9 posts · 1 vote
I've been reading a lot about wholesaling lately, and it seems like a great way to build some capital if you can hustle. My concern is the legality of wholesaling in FL, to cash buyers by assigning them contracts on deals i find. Does anyone have any prior experience they would be willing to share? Would i need to be a broker to do deals like this? If i did need to be a broker is there anyway i could use one i know and bring the deal to him/her along with a cash buyer to make it all legal? Just want to make sure i do things right before i start doing anything at all, thanks guys.
@Alexander Santini good move making sure you stay legal. Refer to chapter 475 FL statutes. If you do not have any financial interest in a property it is brokering without a license. That is a 3rd degree felony. My best suggestion is to contact DBPR with your questions to make sure your actions are legal. Assigning contracts that where you have equitable interest in is legal. The only question remains: what IS equitable interest. The state may be very subjective as to what is equitable interest. A $100 deposit on a $100K house may not cut it. Contracts full of weasel clauses probably won't work either. If you want to stay 100% legal, get title, then resell. No license needed, and no chance of felony charges either.
@Alexander Santini good move making sure you stay legal. Refer to chapter 475 FL statutes. If you do not have any financial interest in a property it is brokering without a license. That is a 3rd degree felony. My best suggestion is to contact DBPR with your questions to make sure your actions are legal. Assigning contracts that where you have equitable interest in is legal. The only question remains: what IS equitable interest. The state may be very subjective as to what is equitable interest. A $100 deposit on a $100K house may not cut it. Contracts full of weasel clauses probably won't work either. If you want to stay 100% legal, get title, then resell. No license needed, and no chance of felony charges either.
@Carlos Coppin: that depends on how one "wholesales". Some people are getting charged with felonies for brokering without a license. Re: chapter 475 FL statues it is a third degree felony to broker without a license. Going into that type of operation without knowledge of what is legal and what is not legal can have serious legal consequences. A blanket statement that "wholesaling is legal" should be prefaced with how to operate legal vs illegal.
I have been wondering the same thing. I am about to start a direct mail campaign primarily to find my own rental properties but if a deal come along that doesn't fit my criteria but would work for someone else I would like to be able to wholesale it.
Seems like there's a very blurred line here between it being legal or it being illegal with small chances of getting in trouble for it, at this point in time atleast. Remember all it takes is one or a few people in the right position to change enforcement standards. I've seen it happen in other industries.
I will be talking with a lawyer soon and will post back.
@Mike Waltman the "small chances" of getting in trouble can be a felony charge. Our local REIA just had an investigator with DBPR come speak on unlicensed activity. Bottom line: you need equitable interest in a property to market it. What does equitable interest mean? Depends on the examiner. However, they did state that $100 deposit on a 200K property probably would not meet their requirements. Also, they stated contracts that are so bogus and full of escape clauses usually won't fly as well. All you need is ONE complaint filed, with a finding of operating as a broker without a license, to be charged with a felony. We have a local person here that is facing 3 felony charges. Maybe they felt this was talking a small chance, but having 3 felony charges is nothing to ignore. Your best bet is to contact DBPR and make sure you are within the law. It's tough to make a living behind bars, and tough to recover thousands in legal fees for operating illegally. Get help, get educated, and then start making money WITHOUT the chances of legal issues.
Im sure its legal to wholesale in Florida you should look into getting one of Chris Bruce programs he Wholesales in Tampa Florida and has been very successful , Good luck and welcome to the real estate investing game!
Get your license! That will be one less thing to worry about. I was fighting over this as well. Is going over the speed limit on the highway against the law? Yes! does everyone get caught? No but it does suck if you are the one......Get your license and you will be around more deals as well.
Get your license! That will be one less thing to worry about. I was fighting over this as well. Is going over the speed limit on the highway against the law? Yes! does everyone get caught? No but it does suck if you are the one......Get your license and you will be around more deals as well.
That is the exact analogy I was going to post. Blanket statements of "wholesaling is legal" without prefacing them with HOW TO DO IT LEGALLY can leave the wrong impression. It is legal? Yes, done correctly. Is it a felony? Yes, done the wrong way. Anyone wanting to operate as a "wholesaler" really needs to learn how to do it legally. Advertising a property you don't have equitable interest in IS a felony. If YOU have equitable interest, and another person chooses to advertise it, that third person IS committing a felony. DBPR is not out to hang anyone. Got questions? Contact them.
Florida Statute 475.43 read it for yourself, then report back.
475.43 Presumptions.—In all criminal cases, contempt cases, and other cases filed pursuant to this chapter, if a party has sold, leased, or let real estate, the title to which was not in the party when it was offered for sale, lease, or letting, or such party has maintained an office bearing signs that real estate is for sale, lease, or rental thereat, or has advertised real estate for sale, lease, or rental, generally, or describing property, the title to which was not in such party at the time, it shall be a presumption that such party was acting or attempting to act as a real estate broker, and the burden of proof shall be upon him or her to show that he or she was not acting or attempting to act as a broker or sales associate. All contracts, options, or other devices not based upon a substantial consideration, or that are otherwise employed to permit an unlicensed person to sell, lease, or let real estate, the beneficial title to which has not, in good faith, passed to such party for a substantial consideration, are hereby declared void and ineffective in all cases, suits, or proceedings had or taken under this chapter; however, this section shall not apply to irrevocable gifts, to unconditional contracts to purchase, or to options based upon a substantial consideration actually paid and not subject to any agreements to return or right of return reserved.
So i looked up the statute which i posted above and it seems that the legality can really depend on how a person is perceiving the the property that is being wholesaled. "Based upon a substantial consideration" is used a lot in this statute. Is substantial consideration equity interest?
But from what I am getting out of this is that a party who does not own the title to property but is advertising it, or attempting to sell it is brokering (which i already knew), and if contracts are written between a property owner and a wholesaler that have conditional circumstances, you are still brokering. So would this mean that if a contract is written with a fixed price for the property, which could not be negotiated after the contract is signed, that this would be a legal wholesale? So I would no longer be negotiating a deal, what the property will be bought/sold at is determined, i would have a deposit factored into the contract (maybe 5-10%?) to cover having equity interest, so i would just be selling the rights of purchasing the property at that price?
I will have to sit down and speak to an RE attorney before i do anything so i have a clear understanding of how to do this legally, but i'd love to hear the BP communities opinion's. Am i understanding this correctly?
Also, i will be getting my real estate license in the couple of months, if i had that would i have more options to how i could wholesale? Or would a Florida's brokers license be the silver bullet to all my questions (which i will also be getting in a couple years once i qualify)?
The state basically says: if you have legal title or equitable title you can advertise the property, the exception being a licensee. So, your buddy has a house under contract. You want to make 2K assignment fee and advertise the house. Felony. Suppose, you have the house under contract. You never paid any consideration but did sign a contract. You advertise the house. Felony. Suppose, you put down $100 on a 200K house and advertise it. The state says: that's bulloney, $100 is not valuable consideration for a 200K house. Felony. Suppose you put down 5K on a 100K house, having escrowed the funds, and then advertise the house. The state, in their wisdom, would say that is equitable title or equitable interest, and give you their blessing. Bottom line: tying up properties and putting none to little at risk and then advertising them is a felony in FL. They also frown on the popular BS contracts promoted on BP "wholesaling" forums where they use 30-60 inspection periods, fake partners, all the garbage. From my experience, most "wholesalers" are pushing overpriced houses and will say anything to anyone to make a buck. Recently, I had some guy call me with a "deal". He was trying to make a 27K fee on a property he didn't have the contract on (no equitable title). Turned out I had seen the house days earlier for substantially less money:) Other guys try selling properties listed on the MLS with huge markups:) Guess sooner or later, you put enough hooks in the water, you catch a fish!