Florida Wholesale Contract

Wholesaling
9yFollow

Florida Wholesale Contract

Marc P.
Miami, FL · Member since 2008 · 11 posts · 1 vote
Hi BG!! Would anyone be so kind as to show me what a completed wholesale contract (obv omitting personal info) looks like once completed? I have a blank "Florida as-is residential contract for sale and purchase" but i am just wondering how local wholesalers are filling in the blanks and contingencies. I have drowned myself in books, blogs and podcasts for several months and its time to make my first deal happen but this has been the one thing that has kept me from actually pulling the trigger. Any mentors in South Florida willing to help me out i would gladly share 70% of any deal once locked in?
1Reply
231 views

Most Popular Reply

John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
9y

You have the right contract. I use that same contract. I use a five day inspection period and put down SUBSTANTIAL EMD to show intentions AND ability to close. There are lots of game players in the RE space. Do you intend to close and then flip? If so, disassociate yourself from the unlicensed brokers that violate the laws every day. See 475.43. Why would you call it a "wholesale" contract if you don't intend to try and assign. You can no longer sell properties by assigning without violating the laws unless you are a licensed agent or broker. I have an acquaintance that has filed a recent complaint on one such fraud. I suspect with his previous record for unlicensed brokering this won't make his day!

5Reply
See this reply in the discussion

32 Replies

Jump to latestLatest
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    9y

    apparently wholesaling in Florida is no longer legal unless you actually close on the deal.. you might want to check into this further before spending a bunch of money

    Podcast Guest on Show #222
    JLH Capital Partners51 Review
    WebsiteView Page
    1Reply
  • Marc P.
    OP
    Miami, FL · Member since 2008 · 11 posts · 1 vote
    9y
    Yes my intentions are to ethically close deals if not I will not be getting involved. Appreciate the heads up.
    0Reply
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    9y

    You have the right contract. I use that same contract. I use a five day inspection period and put down SUBSTANTIAL EMD to show intentions AND ability to close. There are lots of game players in the RE space. Do you intend to close and then flip? If so, disassociate yourself from the unlicensed brokers that violate the laws every day. See 475.43. Why would you call it a "wholesale" contract if you don't intend to try and assign. You can no longer sell properties by assigning without violating the laws unless you are a licensed agent or broker. I have an acquaintance that has filed a recent complaint on one such fraud. I suspect with his previous record for unlicensed brokering this won't make his day!

    5Reply
  • Marc P.
    OP
    Miami, FL · Member since 2008 · 11 posts · 1 vote
    9y
    John Thedford thanks for the response! I knew a license was helpful but i had no idea it was necessary now to assign. Thankfully I am about to take my state exam this month so finally i can call myself an agent. The substantial EMD is a great tip, provides an extra level of comfort for the seller and shows credibility and intent. Your path from agent to investor is exactly the goal im striving to achieve. Congrats on your success!
    0Reply
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    9y

    @Marc P.

    475.43. Note the part about all contract, options, or other devices employed to permit an unlicensed person to sell, etc. That pretty much closes the loophole so many frauds were using to broker without a license. Interesting: now you can kick them to the curb even if they have a contract and EM if they are trying to assign!

    The 2016 Florida Statutes

    Title XXXII
    REGULATION OF PROFESSIONS AND OCCUPATIONS    		Chapter 475
    REAL ESTATE BROKERS, SALES ASSOCIATES, SCHOOLS, AND APPRAISERS    		View Entire Chapter
    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. History.—s. 3, ch. 22861, 1945; s. 3, ch. 76-168; s. 1, ch. 77-457; ss. 27, 42, 43, ch. 79-239; ss. 2, 3, ch. 81-318; ss. 28, 30, ch. 88-20; s. 10, ch. 91-89; s. 4, ch. 91-429; s. 15, ch. 93-261; s. 376, ch. 97-103; s. 41, ch. 2003-164.
    1Reply
  • Marc P.
    OP
    Miami, FL · Member since 2008 · 11 posts · 1 vote
    9y
    John Thedford Maybe im wrong, but does the wording state that if the property is being sold in "as is condition", the contract is still valid?
    0Reply
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    9y

    Yes. That is why you have the inspection period. You can then decide to proceed or cancel the contract. You can always make a new offer based on the results of the inspection.

    1Reply
  • Marc P.
    OP
    Miami, FL · Member since 2008 · 11 posts · 1 vote
    9y
    Awesome John Thedford thank you!
    0Reply
  • Adriel Brown
    Wholesaler · Hallandale, FL · Member since 2009 · 43 posts · 12 votes
    9y

    @John Thedford I'm pretty sure that you're aware that the State of Florida Purchase and Sales Agreement has the ability to assign (which is a contradiction to 475.43). My question is this. In your professional opinion, what are the scenarios where you could see the contract being legally assignable?

    0Reply
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    9y
    Originally posted by @Adriel Brown:

    @John Thedford I'm pretty sure that you're aware that the State of Florida Purchase and Sales Agreement has the ability to assign (which is a contradiction to 475.43). My question is this. In your professional opinion, what are the scenarios where you could see the contract being legally assignable?

    It is assignable BUT using contracts as a business model to broker is illegal. I make all my contracts assignable. I do this so, at time of closing, I can elect to put it into my S corp, my LLC, or 401K. Other reasons may be on bigger deals where you decide to take on an equity partner and close in both names. 475.43 is NOT contradictory. Note where it states ADVERTISING property you do not own is not legal. It does NOT say you cannot assign, but closes the loophole most people were using to broker without a license. If you want to "wholesale" legally there are two ways:
    1. purchase then advertise and resell
    2. be licensed

    1Reply
  • David Faulkner
    Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
    9y
    Originally posted by @John Thedford:
    Originally posted by @Adriel Brown:

    @John Thedford I'm pretty sure that you're aware that the State of Florida Purchase and Sales Agreement has the ability to assign (which is a contradiction to 475.43). My question is this. In your professional opinion, what are the scenarios where you could see the contract being legally assignable?

    It is assignable BUT using contracts as a business model to broker is illegal. I make all my contracts assignable. I do this so, at time of closing, I can elect to put it into my S corp, my LLC, or 401K. Other reasons may be on bigger deals where you decide to take on an equity partner and close in both names. 475.43 is NOT contradictory. Note where it states ADVERTISING property you do not own is not legal. It does NOT say you cannot assign, but closes the loophole most people were using to broker without a license. If you want to "wholesale" legally there are two ways:
    1. purchase then advertise and resell
    2. be licensed

     Perhaps we are getting into semantics at this point, but what you call something is important ... to me:

    1. Is flipping, the actually property, not just the sales contract.

    2. Is brokering, or a listing agreement.

    Personally, I don't think either are technically wholesaling and would not call either one wholesaling ... I'd want to put as much distance between me and my profession and the word "wholesaling" as I possibly could. That's just me ... YMMV.

    1Reply
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    9y

    I call "wholesaling" where they are selling THEIR property flipping.
    Most unlicensed brokers use the term "wholesaling" where they are brokering using purchase and sales contracts. As I stated, advertising properties you do not own is illegal in FL.

    Brokering: licensees advertising, representing others, etc via listing agreements.

    I don't call what these unlicensed brokers do "wholesaling" I call it what it is: unlicensed brokering. Most don't like that fact.

    BTW--the word "wholesale" implies a value below market. I have often found this not to be true. 

    0Reply
  • Adriel Brown
    Wholesaler · Hallandale, FL · Member since 2009 · 43 posts · 12 votes
    9y

    @John Thedford I hear what you're trying to say, but it basically states that contracts that are "not based upon a substantial consideration are hereby declared void and ineffective" (shortening the sentence). Seems to me that "substantial consideration" is the kicker. For example, I've seen contracts drawn up where an individual is acting as a "consultant" and advising/assisting the seller who is selling their property FSBO by advertising it, where at that point I can fully see where "acting as a broker" could be the accusation. On the flip side, I really don't see where tying a property up with a "substantial" EMD and assigning (as the contract states you have the ability to) as a business model is weeded out. If a wholesaler has a few serious buyers who he/she can pass along deals to time and time again, that's not "advertising" the property like placing ads on craigslist etc. if you think about it, but passing along information. I think the only way it would stop is if a future statute puts a threshold on the amount of assignments you can do over the course of x amount of years, or something to that degree. Just my thoughts on it.

    1Reply
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    9y

    @Adriel Brown

    You are incorrect. Read the entire statute. It states clearly that if a part SELLS property they do not own. I know most unlicensed brokers want to interpret the statutes to their advantage to rationalize breaking the laws, but the statute is clear. A large EMD does not allow someone to broker without a license. A person acting as a consultant, for a fee, is brokering regardless if the seller agrees to the scheme.

    0Reply
  • Adriel Brown
    Wholesaler · Hallandale, FL · Member since 2009 · 43 posts · 12 votes
    9y

    @John Thedford I'm actually not incorrect because I didn't definitively say what is what and it actually may be the other way around as you are apparently rationalizing why you believe doing assignments as a business model is brokering and breaking the law. As I continue to reread 475.43, it isn't clear on doing assignments as a business model.

    1. If the statute is against the practice of assignments as a business model, then there shouldn't be assignment language in the FL P&S Agreement AT ALL.

    2. If you are correct, and it is wrong to do assignments as a business model, then why isn't there restrictions on how many assignments are allowable during a certain time period or exactly HOW AND WHEN IT'S PERMISSABLE TO DO AN ASSIGNMENT? Good question, I know :)

    3. Again, it is the "substantial consideration" that seems to be the contingency.

    4. I'm curious to know what "substantial consideration" means to you?

    Also, it seems as if you think Licensed Realtors are the moral compass of the real estate world :)

    4Reply
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    9y
    Originally posted by @Adriel Brown:

    @John Thedford I'm actually not incorrect because I didn't definitively say what is what and it actually may be the other way around as you are apparently rationalizing why you believe doing assignments as a business model is brokering and breaking the law. As I continue to reread 475.43, it isn't clear on doing assignments as a business model.

    1. If the statute is against the practice of assignments as a business model, then there shouldn't be assignment language in the FL P&S Agreement AT ALL.

    2. If you are correct, and it is wrong to do assignments as a business model, then why isn't there restrictions on how many assignments are allowable during a certain time period or exactly HOW AND WHEN IT'S PERMISSABLE TO DO AN ASSIGNMENT? Good question, I know :)

    3. Again, it is the "substantial consideration" that seems to be the contingency.

    4. I'm curious to know what "substantial consideration" means to you?

    Also, it seems as if you think Licensed Realtors are the moral compass of the real estate world :)

    Maybe you should read the statute again. Selling property you do not own is not allowed. EMD has nothing to do with it. Assignments are legal in many cases. Using them as a business model (selling property you do not own) is not. I can assign contracts to my 401K, my LLC, or S corp. That is NOT selling real estate. There is no fee paid. It is simply an ability to choose what name I want to take title in. Taking that same contract, charging you 5K, and assigning to you is selling real estate. Got it? I know you claim to be a "wholesaler", so I understand why you may want to try and get around laws. I see many of this type frequently and I refer to them as FRAUDS AND SCAMMERS. Bill Gulley refers to them as a public nuisance. Either way, unless you are LICENSED or SELL WHAT YOU OWN, "wholesaling" is illegal in FL.

    And no, real estate agents are not the moral compass. However, they ARE licensed, can be fined, suspended, or revoked. Unlicensed brokers are not accountable. They CAN be arrested for brokering without a license though. 

    0Reply
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    9y

    @Adriel Brown

    From your post:

    2. If you are correct, and it is wrong to do assignments as a business model, then why isn't there restrictions on how many assignments are allowable during a certain time period or exactly HOW AND WHEN IT'S PERMISSABLE TO DO AN ASSIGNMENT? Good question, I know :)

    No--that wasn't a "good question"-it was a question disregarding major points in the statute-points which you don't want to accept to justify actions in violation of FL law. 

    IF YOU ARE GETTING A FEE, YOU ARE SELLING REAL ESTATE---which is a violation of statute and BROKERING WITHOUT A LICENSE. If you are assigning for personal benefit (taking on partners, using different entities you own) and NOT GETTING PAID---you are NOT SELLING REAL ESTATE you do not own and are NOT brokering. So, the state does not address the number of assignments, etc...but it DOES address SELLING RE you do NOT own, ADVERTISING RE you do NOT own, etc. So, you want to play your word games and try to get around the laws. You mentioned "passing along information". BS--it appears you are just another FRAUD AND SCAMMER. 

    0Reply
  • Adriel Brown
    Wholesaler · Hallandale, FL · Member since 2009 · 43 posts · 12 votes
    9y

    @John Thedford Whoa there big fella lol. It's simply a discussion, nothing more than that. So because an individual proclaims to be a wholesaler, that's indicative of them being a fraud and scammer, as if being licensed is indicative of a person being incapable of scamming? Smh. I plan on being licensed this year by the way, John.

    1. You didn't answer my question as to what "substantial consideration" means. That is important because 475.43 states "All contracts, options, or other devices NOT BASED upon a substantial consideration". Again, what does that mean?

    2. Lets forget assigning as a business model. Let's say a wholesaler makes double closing their business model via funding sources like transactional funders, does that still seem like it's scamming and fraudulent to you? 

    2Reply
  • Account Closed
    Professional · Brooklyn, NY · Member since 2017 · 624 posts · 147 votes
    9y
    Originally posted by @John Thedford:
    Originally posted by @Adriel Brown:

    @John Thedford I'm actually not incorrect because I didn't definitively say what is what and it actually may be the other way around as you are apparently rationalizing why you believe doing assignments as a business model is brokering and breaking the law. As I continue to reread 475.43, it isn't clear on doing assignments as a business model.

    1. If the statute is against the practice of assignments as a business model, then there shouldn't be assignment language in the FL P&S Agreement AT ALL.

    2. If you are correct, and it is wrong to do assignments as a business model, then why isn't there restrictions on how many assignments are allowable during a certain time period or exactly HOW AND WHEN IT'S PERMISSABLE TO DO AN ASSIGNMENT? Good question, I know :)

    3. Again, it is the "substantial consideration" that seems to be the contingency.

    4. I'm curious to know what "substantial consideration" means to you?

    Also, it seems as if you think Licensed Realtors are the moral compass of the real estate world :)

    Maybe you should read the statute again. Selling property you do not own is not allowed. EMD has nothing to do with it. Assignments are legal in many cases. Using them as a business model (selling property you do not own) is not. I can assign contracts to my 401K, my LLC, or S corp. That is NOT selling real estate. There is no fee paid. It is simply an ability to choose what name I want to take title in. Taking that same contract, charging you 5K, and assigning to you is selling real estate. Got it? I know you claim to be a "wholesaler", so I understand why you may want to try and get around laws. I see many of this type frequently and I refer to them as FRAUDS AND SCAMMERS. Bill Gulley refers to them as a public nuisance. Either way, unless you are LICENSED or SELL WHAT YOU OWN, "wholesaling" is illegal in FL.

    And no, real estate agents are not the moral compass. However, they ARE licensed, can be fined, suspended, or revoked. Unlicensed brokers are not accountable. They CAN be arrested for brokering without a license though. 

    Sounds strict... do they usually enforce it? I guess in many ways it is similar to airbnbing without a hotel license. Are they equally emotional about illegal airbnb rentals? I though I saw of someone on here getting a letter about a felony charge for wholesaling.

    0Reply
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    9y
    Originally posted by @Adriel Brown:

    @John Thedford Whoa there big fella lol. It's simply a discussion, nothing more than that. So because an individual proclaims to be a wholesaler, that's indicative of them being a fraud and scammer, as if being licensed is indicative of a person being incapable of scamming? Smh. I plan on being licensed this year by the way, John.

    1. You didn't answer my question as to what "substantial consideration" means. That is important because 475.43 states "All contracts, options, or other devices NOT BASED upon a substantial consideration". Again, what does that mean?

    2. Lets forget assigning as a business model. Let's say a wholesaler makes double closing their business model via funding sources like transactional funders, does that still seem like it's scamming and fraudulent to you? 

     There are at two paragraphs. One states advertising, selling, etc without having title is not legal. Paragraph two talks about using contracts and other schemes to broker RE and states that lack of substantial consideration in contracts means they can be declared void in lawsuits. The state will tell you there is no specific definition of substantial consideration and each case will stand on its own merits. Double closing is legal.

    0Reply
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    9y
    Originally posted by @Account Closed:
    Originally posted by @John Thedford:
    Originally posted by @Adriel Brown:

    @John Thedford I'm actually not incorrect because I didn't definitively say what is what and it actually may be the other way around as you are apparently rationalizing why you believe doing assignments as a business model is brokering and breaking the law. As I continue to reread 475.43, it isn't clear on doing assignments as a business model.

    1. If the statute is against the practice of assignments as a business model, then there shouldn't be assignment language in the FL P&S Agreement AT ALL.

    2. If you are correct, and it is wrong to do assignments as a business model, then why isn't there restrictions on how many assignments are allowable during a certain time period or exactly HOW AND WHEN IT'S PERMISSABLE TO DO AN ASSIGNMENT? Good question, I know :)

    3. Again, it is the "substantial consideration" that seems to be the contingency.

    4. I'm curious to know what "substantial consideration" means to you?

    Also, it seems as if you think Licensed Realtors are the moral compass of the real estate world :)

    Maybe you should read the statute again. Selling property you do not own is not allowed. EMD has nothing to do with it. Assignments are legal in many cases. Using them as a business model (selling property you do not own) is not. I can assign contracts to my 401K, my LLC, or S corp. That is NOT selling real estate. There is no fee paid. It is simply an ability to choose what name I want to take title in. Taking that same contract, charging you 5K, and assigning to you is selling real estate. Got it? I know you claim to be a "wholesaler", so I understand why you may want to try and get around laws. I see many of this type frequently and I refer to them as FRAUDS AND SCAMMERS. Bill Gulley refers to them as a public nuisance. Either way, unless you are LICENSED or SELL WHAT YOU OWN, "wholesaling" is illegal in FL.

    And no, real estate agents are not the moral compass. However, they ARE licensed, can be fined, suspended, or revoked. Unlicensed brokers are not accountable. They CAN be arrested for brokering without a license though. 

    Sounds strict... do they usually enforce it? I guess in many ways it is similar to airbnbing without a hotel license. Are they equally emotional about illegal airbnb rentals? I though I saw of someone on here getting a letter about a felony charge for wholesaling.

     They enforce laws. Usually their first action is a cease and desist. If someone refuses to stop after that, they can charge them with a felony for brokering without a license. 

    0Reply
  • Adriel Brown
    Wholesaler · Hallandale, FL · Member since 2009 · 43 posts · 12 votes
    9y

    @John Thedford now here's an interesting question. So now  it's clear that you're issue is with wholesalers using assignments as a business model because you believe they have no intentions on utilizing their own funds to close on the property, but just to assign.

    My question is this, what makes double closing so much different from assignments because if a wholesaler gets a property under contract, circulate the deal to buyers, then double closes via a day funder, there still was no intent for that wholesaler to buy. So what's the difference between doing an assignment (where there was no intent to buy) and a quick, same day double closing with day funding (where there was still no intent to buy)? 

    0Reply
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    9y
    Originally posted by @Adriel Brown:

    @John Thedford now here's an interesting question. So now  it's clear that you're issue is with wholesalers using assignments as a business model because you believe they have no intentions on utilizing their own funds to close on the property, but just to assign.

    My question is this, what makes double closing so much different from assignments because if a wholesaler gets a property under contract, circulate the deal to buyers, then double closes via a day funder, there still was no intent for that wholesaler to buy. So what's the difference between doing an assignment (where there was no intent to buy) and a quick, same day double closing with day funding (where there was still no intent to buy)? 

     They are advertising properties they do not own. Illegal. NOT mentioned in 475.43 is FRAUD BY INDUCEMENT. There are lots of frauds walking away from deals they cannot assign. There is someone being sued in Collier County at this time with one allegation of FRAUD BY INDUCEMENT. I don't write the laws nor enforce them but I make SURE I STAY LEGAL. Others may not care. Some of these scammers will get caught and others won't. The last place I would want to see MY name is on the site with a final disposition of "cease and desist" or worse yet, be charged with a 3rd degree felony. And NO--I don't care for FRAUDS AND SCAMMERS--and there are LOTS of them in RE.
    Here is one guy that was playing games:
    https://www.myfloridalicense.com/sto/unlicensedact...

    Here is another one:
    https://www.myfloridalicense.com/sto/unlicensedact...

    I have helped victims of frauds file complaints several times. The public is the victim-not me.  Most of these illegal operators have gone underground. Word circulates fast when one of them gets in trouble:). I have to question anyone that must HIDE to transact business:)

    0Reply
  • David Faulkner
    Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
    9y
    Originally posted by @Adriel Brown:

    @John Thedford now here's an interesting question. So now  it's clear that you're issue is with wholesalers using assignments as a business model because you believe they have no intentions on utilizing their own funds to close on the property, but just to assign.

    My question is this, what makes double closing so much different from assignments because if a wholesaler gets a property under contract, circulate the deal to buyers, then double closes via a day funder, there still was no intent for that wholesaler to buy. So what's the difference between doing an assignment (where there was no intent to buy) and a quick, same day double closing with day funding (where there was still no intent to buy)? 

    There WAS intent, means, and execution for the wholesaler to buy in a double close, that is in fact what a double close is: close 1:Wholesaler buys the property, close2: Wholesaler sells to the end buyer/investor. It doesn't matter that these 2 closes in a double close happen hours or even minutes apart, nor does it matter that the intent was to sell immediately after buying. What matters is that the buyer (wholesaler) has the intent and means to close on the property (buy it) and actually owns it BEFORE he/she sells it. Now, there still could be some sticky legal issues even with this double-close deal if the wholesaler is advertising the property for sale on craigslist for example BEFORE the 1st close (ie: before they own it), but at least in a double close they have the means and intent to buy the property first. Make sense?

    0Reply
  • Adriel Brown
    Wholesaler · Hallandale, FL · Member since 2009 · 43 posts · 12 votes
    9y

    @David Faulkner Thank you so much for chiming in. I have EXACTLY the same perspective as you on this. Honestly and truly, thank you.

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free