New Illinois WholeSale Law

Member since 2019 · 9 posts · 0 votes

I heard Illinois created a new law that was just passed a few days ago for wholesalers stating “Unless you have your realtors license wholesalers can’t perform anymore real estate deals” is this true??????

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

Also one of the movers and shakers in Chicago land I know that was big into wholesaling has got his license and has created basically a wholesale brokerage were those that want to do this business can work under his license as licensed agents and adhere to the laws.. so took him all of 2 weeks to hit the road running and be up and running legally and allow those that want to continue selling this stuff to do so.

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Zoran Stanoev
Real Estate Broker · Chicago, IL · Member since 2015 · 147 posts · 73 votes
7y
@Devin Howard
that's basically true. here's some more info. it was a hot topic at the local REIA's this month. This is from the CCIA. You should definitely consult with your attorney about it. The fine is substantial.
THE LAW:
ILGA.gov SB-1872 Read the new Law... pay attention to:
Page 3: "Section 1-10 (5) Whether for another or themselves, engages in a pattern of business of buying, selling, offering to buy or sell, marketing for sale, exchanging, or otherwise dealing in contracts, including assignable contracts for the purchase or sale of, or options on real estate or improvements thereon. For purposes of this definition, an individual or entity will be found to have engaged in a pattern of business if the individual or entity by itself or with any combination of other individuals or entities, whether as partners or common owners in another entity, has engaged in one or more of these practices on 2 or more occasions in any 12-month period."

THE PENALTY:
"Page 87 - Sec. 20-10. Unlicensed practice; civil penalty."
a) Any person who practices, offers to practice, attempts to practice, or holds oneself out to practice as a managing broker, broker, or residential leasing agent without being licensed under this Act shall, in addition to any other penalty provided by law, pay a civil penalty to the Department in an amount not to exceed $25,000 for each offense as determined by the Department
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Devin Howard
OP
Member since 2019 · 9 posts · 0 votes
7y
@Zoran Stanoev WOWWWWWWW!!!!! Appreciate the information.
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George SkidisPro Member
Rental Property Investor · Belleville, IL · Member since 2017 · 875 posts · 529 votes
7y
Zoran Stanoev got his information from a great source. Jane Garvey and the Chicago Creative Investors Association or CCIA. Other than knowing that Jane is brilliant she is also a great researcher. So basically the limit is 1 if you are noit a licensed realtor.
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Account Closed
Attorney · Skokie, IL · Member since 2016 · 270 posts · 109 votes
7y
State and local laws closely regulate who can advertise properties in order to protect local housing markets. Only a licensed real estate professional may market properties that he or she does not personally own. Thus, a wholesaler who actively markets a property that is not yet theirs may unintentionally be acting as an unlicensed broker.

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
Originally posted by @Account Closed:
State and local laws closely regulate who can advertise properties in order to protect local housing markets. Only a licensed real estate professional may market properties that he or she does not personally own. Thus, a wholesaler who actively markets a property that is not yet theirs may unintentionally be acting as an unlicensed broker.

this is true in most states actually just not enforced and the guru's preach equitable interest.. when they think equitable interest is 100 bucks EM and a contract.. which in fact in most instances is just a ruse to circumvent the current laws on the books.. its sweeping the nation right now. will be interesting to see what states do what.

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
Also one of the movers and shakers in Chicago land I know that was big into wholesaling has got his license and has created basically a wholesale brokerage were those that want to do this business can work under his license as licensed agents and adhere to the laws.. so took him all of 2 weeks to hit the road running and be up and running legally and allow those that want to continue selling this stuff to do so.
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Sam Shueh
Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes
7y
Perhaps this link helps.
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Steven Lowe
Real Estate Agent · Scottsdale, AZ · Member since 2019 · 448 posts · 320 votes
7y
Great information. I have a SFR deal in the Chicago area that I was considering wholesaling. This is quite helpful.
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Account Closed
Attorney · Skokie, IL · Member since 2016 · 270 posts · 109 votes
7y
There are a number of wholesalers out there who are helping homeowners in some difficult situations. I have represented many wholesalers in Illinois that have helped homeowners out in difficult situations. My non legal opinion is that wholesalers and wholesale deals in Illinois are unregulated and that may be a slippery slope. What we are seeing are the regulation catching up with the practice. There will still be a way to keep doing wholesale deals in a fair and legal way and this is the first step.
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TIm Harstead
Property Manager · Chicago, IL · Member since 2016 · 69 posts · 43 votes
7y
@Ahmed I couldn't agree more there is a place for it but as the practice has gotten more common unfortunately their are a lot of people out there that started taking advantage of others and people in bad positions were left in worse situations. I think having the law catch up and start to make it more regulated is a good thing
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
Originally posted by @TIm Harstead:
@Ahmed I couldn't agree more there is a place for it but as the practice has gotten more common unfortunately their are a lot of people out there that started taking advantage of others and people in bad positions were left in worse situations. I think having the law catch up and start to make it more regulated is a good thing
Yup closing attorneys are not going to look at the deals generally to determine who is getting the benefit or who maybe getting taken advantage of its just paper work for them and revenue..
I do know though on our market if sellers are elderly and the Senior escrow officers feels they may not be completely mentally with it.. they will not close the transaction without the seller coming in and if they think there is an issue will require 3rd party legal representation. Or other responsible family.

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Lou Gonzales
Vendor · Chicago, IL · Member since 2015 · 82 posts · 22 votes
7y
So can we wholesale a property if we have a real estate agent market it for us?
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Jim S.
Flipper/Rehabber · Cleveland, OH · Member since 2018 · 80 posts · 51 votes
7y
Originally posted by @Jay Hinrichs:
Also one of the movers and shakers in Chicago land I know that was big into wholesaling has got his license and has created basically a wholesale brokerage were those that want to do this business can work under his license as licensed agents and adhere to the laws.. so took him all of 2 weeks to hit the road running and be up and running legally and allow those that want to continue selling this stuff to do so.
Jay, this is an interesting approach. I'm in Ohio but with the way things are going I wouldn't be at all surprised to see a similar law enacted here in the near future. I've been considering getting my license for a while now but what has been holding me back is that I would obviously need to work under a broker and since I have no intention of being a traditional realtor I would hate to go through the process and then not be able to find a broker to work under. This wholesale brokerage approach would certainly solve that problem.
In your opinion, do you interpret this new IL law to still apply to wholesalers who actually take title before marketing and selling? This is my method so my initial thought was that this law was to stop contract assignments and double closes & wouldn't apply to me. However after reading into it a little more and reading some legal experts' opinions it appears that it would apply to anyone trying to sell more than two houses per year- even if they actually OWN the houses. Do you thing I am interpreting that correctly?

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
Originally posted by @Jim S.:
Originally posted by @Jay Hinrichs:
Also one of the movers and shakers in Chicago land I know that was big into wholesaling has got his license and has created basically a wholesale brokerage were those that want to do this business can work under his license as licensed agents and adhere to the laws.. so took him all of 2 weeks to hit the road running and be up and running legally and allow those that want to continue selling this stuff to do so.
Jay, this is an interesting approach. I'm in Ohio but with the way things are going I wouldn't be at all surprised to see a similar law enacted here in the near future. I've been considering getting my license for a while now but what has been holding me back is that I would obviously need to work under a broker and since I have no intention of being a traditional realtor I would hate to go through the process and then not be able to find a broker to work under. This wholesale brokerage approach would certainly solve that problem.
In your opinion, do you interpret this new IL law to still apply to wholesalers who actually take title before marketing and selling? This is my method so my initial thought was that this law was to stop contract assignments and double closes & wouldn't apply to me. However after reading into it a little more and reading some legal experts' opinions it appears that it would apply to anyone trying to sell more than two houses per year- even if they actually OWN the houses. Do you thing I am interpreting that correctly?

only state that I heard you would need a license if you took title is Wisconsin.
in Oregon you need a developers license if you buy and resell to the public as a business.. if you do absolulty no work to the property there is a case that you may not need the develpers license.. but they are manic chasing people down on this one I have been fined twice for 6k LOL

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Jim S.
Flipper/Rehabber · Cleveland, OH · Member since 2018 · 80 posts · 51 votes
7y
@Jay Hinrichs Thanks for the feedback Jay. I like your interpretation better as it seems kind of far-reaching to not be allowed to sell something you own. The person who made it sound like you would need a license even if you took title compared it to selling cars. You can buy and sell the occasional car yourself but you can't run a car dealership out of your house (like a neighbor of mine used to do).
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
Originally posted by @Jim S.:
@Jay Hinrichs Thanks for the feedback Jay. I like your interpretation better as it seems kind of far-reaching to not be allowed to sell something you own. The person who made it sound like you would need a license even if you took title compared it to selling cars. You can buy and sell the occasional car yourself but you can't run a car dealership out of your house (like a neighbor of mine used to do).
I read part of the code and all they did was add in language to what defines brokerage activities in IL and that now includes assignments and advertising properties are not yet in title to.. which is the same in Oregon as well.

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
Originally posted by @Lou Gonzales:
So can we wholesale a property if we have a real estate agent market it for us?
once you own it sure.. I think you still run into the problem of advertising that your an owner when your not..
but do check with the local brokers they will get up to speed.

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Eric M.
Flipper/Rehabber · Louisville, KY · Member since 2008 · 1k+ posts · 1k+ votes
7y
Originally posted by @Jay Hinrichs:
Also one of the movers and shakers in Chicago land I know that was big into wholesaling has got his license and has created basically a wholesale brokerage were those that want to do this business can work under his license as licensed agents and adhere to the laws.. so took him all of 2 weeks to hit the road running and be up and running legally and allow those that want to continue selling this stuff to do so.

Good on him, but in reality, the actual rules for this new law won't even be written for months so we don't really know what it will require to be "in compliance".
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
Originally posted by @Eric M.:
Originally posted by @Jay Hinrichs:
Also one of the movers and shakers in Chicago land I know that was big into wholesaling has got his license and has created basically a wholesale brokerage were those that want to do this business can work under his license as licensed agents and adhere to the laws.. so took him all of 2 weeks to hit the road running and be up and running legally and allow those that want to continue selling this stuff to do so.

Good on him, but in reality, the actual rules for this new law won't even be written for months so we don't really know what it will require to be "in compliance".
Interesting he is already blasting it out on social media.. sure would be nice if the states would clarify this stuff.

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Eric M.
Flipper/Rehabber · Louisville, KY · Member since 2008 · 1k+ posts · 1k+ votes
7y
Originally posted by @Steven Lowe:
Great information. I have a SFR deal in the Chicago area that I was considering wholesaling. This is quite helpful.

If you want to wholesale it, send the details my way but why not just partner? Let me know. I am looking for a deal right now.
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Eric M.
Flipper/Rehabber · Louisville, KY · Member since 2008 · 1k+ posts · 1k+ votes
7y
Originally posted by @Zoran Stanoev:
@Devin Howard
that's basically true. here's some more info. it was a hot topic at the local REIA's this month. This is from the CCIA. You should definitely consult with your attorney about it. The fine is substantial.
THE LAW:
ILGA.gov SB-1872 Read the new Law... pay attention to:
Page 3: "Section 1-10 (5) Whether for another or themselves, engages in a pattern of business of buying, selling, offering to buy or sell, marketing for sale, exchanging, or otherwise dealing in contracts, including assignable contracts for the purchase or sale of, or options on real estate or improvements thereon. For purposes of this definition, an individual or entity will be found to have engaged in a pattern of business if the individual or entity by itself or with any combination of other individuals or entities, whether as partners or common owners in another entity, has engaged in one or more of these practices on 2 or more occasions in any 12-month period."

What I am curious about is that entities can enter into contracts and can "wholesale" but entities can't be licensed. So if I wholesale with partners in an entity do we all have to be licensed. Can only one of us be licensed and be the one who signs the contracts? If my unlicensed partner engages in the activity of buying and selling contracts as described in the law but I sign the contract as a licensee is he still in trouble?
Its going to be interesting.

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Devin Howard
OP
Member since 2019 · 9 posts · 0 votes
7y
@Eric Michaels Great question. That was my next move!!!!! I’m afraid to make steps now just Incase it is illegal.
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Steven Lowe
Real Estate Agent · Scottsdale, AZ · Member since 2019 · 448 posts · 320 votes
7y
Originally posted by @Eric M.:
Originally posted by @Steven Lowe:
Great information. I have a SFR deal in the Chicago area that I was considering wholesaling. This is quite helpful.

If you want to wholesale it, send the details my way but why not just partner? Let me know. I am looking for a deal right now.

Send me a PM and let's talk about it.
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Zoran Stanoev
Real Estate Broker · Chicago, IL · Member since 2015 · 147 posts · 73 votes
7y
Originally posted by @Eric M.:
Originally posted by @Zoran Stanoev:
@Devin Howard
that's basically true. here's some more info. it was a hot topic at the local REIA's this month. This is from the CCIA. You should definitely consult with your attorney about it. The fine is substantial.
THE LAW:
ILGA.gov SB-1872 Read the new Law... pay attention to:
Page 3: "Section 1-10 (5) Whether for another or themselves, engages in a pattern of business of buying, selling, offering to buy or sell, marketing for sale, exchanging, or otherwise dealing in contracts, including assignable contracts for the purchase or sale of, or options on real estate or improvements thereon. For purposes of this definition, an individual or entity will be found to have engaged in a pattern of business if the individual or entity by itself or with any combination of other individuals or entities, whether as partners or common owners in another entity, has engaged in one or more of these practices on 2 or more occasions in any 12-month period."

What I am curious about is that entities can enter into contracts and can "wholesale" but entities can't be licensed. So if I wholesale with partners in an entity do we all have to be licensed. Can only one of us be licensed and be the one who signs the contracts? If my unlicensed partner engages in the activity of buying and selling contracts as described in the law but I sign the contract as a licensee is he still in trouble?
Its going to be interesting.

It'll definitely be interesting to see how the law is applied and enforced. If there's one thing you can be certain of, if there's a chance the state can make some money, they'll be pursuing its enforcement.

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Account Closed
Flipper/Rehabber · Nashville, TN · Member since 2018 · 23 posts · 24 votes
6y
I went to a different part of town the other day, outskirts, to get a permit for their county to place yard signs. You know, to work with the county, not against them. They wouldn't give it to me. It's getting stricter, and rightfully so. I'm tired of the spammy, trashy bandit signs everywhere and the free-wheeling reputation wholesaling has tagged to it. Legislation is the future and only aides this service niche.
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New Illinois WholeSale Law

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Zoran Stanoev got his information from a great source. Jane Garvey and the Chicago Creative Investors Association or CCIA. Other than knowing that Jane is brilliant she is also a great researcher. So basically the limit is 1 if you are noit a licensed realtor.