The usual naysayer-types chimed in with the standard response to yesterday’s email about how to do Wholesaling with Assignment Contracts.
“Yes, but… Is it legal?” they screamed.
Sorry to break the news to you, but…
It is legal.
But I understand your concern, so let me answer the question properly.
Assignment of Contract is based on old English contract law.
Yes, that jolly old England.
The one that our country initially sprang from.
And so the basic elements of our laws have a long history.
Assignability of your “interest” in a real estate contract is one of them.
When you are the buyer on a contract, you have “equitable interest”. And you have the right to do with that interest as you please, which includes selling it for a profit. (The good ol’ American way!)
With real estate contracts, any contract is assignable, unless it specifically states otherwise.
The usual Realtor board contract says it isn’t assignable, therefore that specific contract therefore isn’t.
But that is just what they choose to do, it doesn’t make it illegal or immoral to do otherwise if all parties involved so choose.
And it isn’t “brokering without a license” because you are actually on the contract as the buyer, therefore you are not brokering it as a third party. (So don’t let any real estate agents bother you about this point either.)
Notice that I said “real estate contracts” are assignable. I didn’t say ALL contracts. There are types of contracts that are not assignable, like “Personal Services Contracts”. If I’m a jazz singer and you give me a personal services contract to sing at your club, I can’t assign that contract to anyone else. After all, you want my singing talents, not someone else’s.
But that’s Personal Services contracts, not real estate contracts.
So why do people refer to it as “illegal flipping”?
Well, it wasn’t the flipping that was illegal, it was what they did in the process.
Usually some sort of fraud.
Like a fraudulent appraisal.
Or fraudulent loan papers.
The FRAUD was the illegal part, not the flipping.
But the baby got thrown out with the bath water.
And misinformed or uninformed people therefore fell for the myth that wholesale flipping is illegal (and sometimes they continue to spread the myth). But it’s not true.
Does that make sense?
On top of it all, I close all my deals (and all my student deals) with a licensed settlement attorney.
I don’t do kitchen table settlements or go around taking deeds.
I want it all done out in the open and under the care and direction of a competent — and licensed — attorney.
That way there is no question whatsoever that the transaction was done right.
After all, an attorney won’t risk their license, reputation, errors and omissions insurance, AND their entire livelihood just to close an illegal deal for me.
Think about that.
They’d have to be insane and very stupid.
(all lawyer jokes aside for the moment…)
So yes, wholesaling is perfectly legal when you do it right.
Thanks for asking.
Traction Real Estate Mentors
PS — I almost forgot…
Obviously, none of this is legal advice. For that you should consult a lawyer, which I am NOT.
What I am is a very talented real estate mentor who can teach you how to build up a very profitable business doing wholesale flipping and rehabbing.
Take what I teach you and retire in 5 to 8 short years.
And you’ll be able to be free from your job much sooner than that.
Make your move here: come see me at MAREI on Tuesday February 14th to get my Rapid Cash Generator Blue Print and then on Saturday February 18th where we will dig in and give you the real estate and business principles you need to operate a profitable real estate investing business.