Assignments
Lets say i approach a distressed homeowner in preforclosure. They sell me their home well below fair market value because of their impending auction. We sign a sales contract. I then assign the contract to an investor. I get paid a finders fee ( consultant ) At closing. Is this legal if iam do not have a real estate sales license?
Also in California. Civil code 1695 says you have to have the sales contract written a certain way with a right of recission for the seller attached to the contract. Also 1695. 17 seems to say that i have to have a California real estate sales license and be bonded for double the amount of the subject property. I would appreciate an accurate response to this. Thank you.
Well I'm no expert in California law so I shall avoid the second paragraph questions alltogether.
However relative to paragraph one-- no you do not have to have a realtors license to do this. The reason is that by signing the contract to purchase you became a PRINCIPLE and as a principle you are allowed to dispose of your property (your interest in the contract) as you see fit. The compensation which you recieve in this transaction is not a finders fee it is an assignment fee-- it is the price you charge for selling your contract. As a rule finders fees are illegal (although see the discussion of how these are de miniumus vioulations somewhere else here. But when you sign the contract and assign it then you are not being paid a finders fee.
One of the reasons for this distinction is that by signing the contract you do accept certain liablities and those liablilites may remain with you even if you assign.
What liabilitys would those be?
In essence the responsibility to close under the contract-- to actually buy the property