Is Wholesaling Real Estate Legal In Oklahoma? A 2024 Guide For Investors

Are you considering investing in real estate in Oklahoma? Wholesaling could be your ticket to lucrative opportunities, but many potential investors are held back by one crucial question: "Is wholesaling real estate legal in Oklahoma?" The answer is a definitive yes, but understanding the legalities surrounding wholesaling is paramount for success.

In this guide, we unravel the legal landscape of wholesaling in Oklahoma, dispelling myths and providing clarity on the regulations governing this investment strategy. Join us as we explore why wholesaling is not just legal but also a viable pathway to real estate success in the Sooner State, starting with the following:

• What Do You Need To Know About Wholesaling In Oklahoma?
• Is Wholesaling Real Estate Legal In Oklahoma?
• What Are The Wholesaling Laws In Oklahoma?
• Do You Need A Real Estate License To Wholesale In Oklahoma?
• Is Co-Wholesaling Real Estate Legal In Oklahoma?
• Is Reverse Wholesaling Real Estate Legal In Oklahoma?
• Oklahoma Wholesale Real Estate Contract
• Final Thoughts

*Before we begin our guide on whether real estate wholesaling in Oklahoma is legal, we invite you to view our video on How To Wholesale Real Estate Step by Step (IN 21 DAYS OR LESS)!

Host and CEO of Real Estate Skills, Alex Martinez, provides a comprehensive, step-by-step guide for beginners to start wholesaling real estate!

What Do You Need To Know About Wholesaling In Oklahoma?

Navigating wholesaling in Oklahoma requires understanding key legalities and strategies. Firstly, ensure compliance by knowing the answer to "Is wholesaling real estate legal in Oklahoma?" Yes, it is, but with caveats. Familiarize yourself with state laws and regulations governing real estate transactions to avoid legal pitfalls—next, master market dynamics, effective networking, property identification, and exit strategies for success. With a solid foundation of knowledge and adherence to legal guidelines, aspiring wholesalers can tap into Oklahoma's real estate market confidently, paving the way for lucrative opportunities and sustainable growth.

Investors should inquire with the most prominent real estate agents to fully understand Oklahoma's real estate laws. The Oklahoma Real Estate Commission (OREC) oversees real estate activities in the state, including real estate license, application, and exam oversight.

It does not assist consumers with questions about real estate agents and appraisers, attorneys, home inspectors, mortgage companies, or other providers. Also, the Commission doesn’t help tenants with disputes with landlords unless the landlord is a licensed real estate broker. Consumers must contact an attorney to represent their interests in these issues.

Potential wholesalers may find value in connecting with the Association of Real Estate License Law Officials (ARELLO). This industry organization supports jurisdictions in administrating and enforcing real estate laws. Members get access to materials, events, training, and certification programs and by facilitating collaboration related to best practices in real estate regulation.

Another potentially valuable resource is the Oklahoma Abstractors Board. Abstracting is a somewhat unique term to Oklahoma, but every state requires some form of "abstracting." The final product is the "abstract." Other states call it evidence of a title, title report, or title search. No matter what it's called, the search process is done in every state.

Several city and regional real estate trade groups in Oklahoma are members of the National Association of REALTORS (NAR). The Oklahoma Association of Realtors connects real estate professionals across the state with various resources and networking opportunities. There are several local Realtor associations as well. These include:

• Oklahoma City Metropolitan Association of Realtors (OKCMAR)
• Greater Tulsa Association of Realtors (GTAR)
• Norman Board of Realtors (NBR)
• Lawton Board of Realtors (LBR)
• Edmond Board of Realtors (EBR)

Oklahoma’s laws regulating real estate are detailed in the 2019 Oklahoma Statutes Title 60.

Licensing requirements are located in Oklahoma Statutes Title 59 (Professions and Occupations §59-858-301).

You can also access a complete library of all Oklahoma statutes at the Thompson Reuters online law library.

Is Wholesaling Real Estate Legal In Oklahoma?

Wholesaling in Oklahoma is legal as long as you follow state laws. In particular, assigning a contract is legal in Oklahoma because wholesalers are not engaging in activities requiring a real estate license. Instead, they secure the rights to purchase a home and transfer those rights through the doctrine of equitable conversion. This process does not involve buying or selling real property directly but rather the contractual rights to do so. As such, wholesalers operate within legal boundaries by facilitating transactions without the need for a license, making wholesaling a viable and lawful investment strategy in Oklahoma.

It should be noted, however, that the method used to market the rights to buy the property have changed under the Predatory Real Estate Wholesaler Prohibition Act. The Act limits the ability of wholesalers to publically market their rights to the property. As a result, wholesalers must discuss the contract with investors on their pre-screened buyer's list with whom they already have a relationship.

Some wholesalers can place a property under contract and then market and assign the right to buy the property to a third-party end buyer in what is known as an Assignment of Contract. They can also buy and sell a property in a single day (known as a Double Closing) or take longer to flip the property using the buy-and-sell method, which is sometimes referred to as Wholetailing.

Although it’s not required, many wholesalers opt for an Oklahoma real estate license, creating a different set of rules that wholesalers must follow. However, there are several benefits to going this route, so it’s something to consider if you want to make that kind of investment in your career.

Read Also: How To Wholesale Real Estate In Oklahoma: Step-By-Step (2024)

What Are The Wholesaling Laws In Oklahoma?

Oklahoma currently does not have any laws specifically related to wholesaling, but that could change. That said, let's take a look at the current state of real estate laws.

Predatory Real Estate Wholesaler Prohibition Act

The Predatory Real Estate Wholesaler Prohibition Act (House Bill No. 3104) has recently changed how wholesaling is conducted in Oklahoma. In particular, Section 858-301 formalizes that “It shall be unlawful for any person to act as a real estate licensee, or to hold himself or herself out as such unless the person shall have been licensed to do so under the Oklahoma Real Estate License Code."

According to the OREC Code & Rules, however, "nothing in this section shall prevent any person, partnership, trust, association or corporation, or the partners, officers or employees of any partnership, trustees or beneficiaries of any trust, association or corporation, from acquiring real estate for its own use."

House Bill 3104 highlights a key difference between wholesaling real estate and acting as a broker. Wholesalers enter into purchase agreements to acquire real estate on their behalf, which remains unrestricted. Real estate brokers act on behalf of another party, which requires licensing.

In addition, House Bill 3104 also limits the ability to publicly market for sale and equitable interest in a real property between an owner and prospective purchaser.

However, as a wholesaler, you can still privately discuss the contract with investors on your pre-screened buyer's list with whom you already have a relationship; this is the critical provision of the new law.

Also, this law only potentially impacts wholesalers who want to use the assignment of contract method. You can still assign a contract, you just need to be more careful how you market your rights. Because double closing and wholetailing each involve two separate transactions, this law does not apply in those circumstances.

Just to be clear, the Predatory Real Estate Wholesaler Prohibition Act in Oklahoma aims to regulate the activities of real estate wholesalers to prevent predatory practices. While the Act imposes certain restrictions and requirements on wholesalers, it does not explicitly prohibit the assignment of contracts without a real estate license. However, wholesalers must ensure compliance with all provisions of the Act, including transparency in transactions and avoidance of deceptive practices. It's crucial for wholesalers to understand the legal implications of the Act and operate within its parameters to conduct assignments legally and ethically. While a real estate license may provide additional credibility and resources, wholesalers can still assign contracts in Oklahoma if they adhere to the requirements outlined in the Predatory Real Estate Wholesaler Prohibition Act.

Legal Definitions

In general, it’s also critical to understand the laws that regulate real estate professionals in Oklahoma. Defining the basics is a good place to start.

Real estate laws are covered extensively under Oklahoma Statutes, Title 59 regulating Professions and Occupations.

Under Title 59, §858-102, the term real estate is defined very specifically, including what a real estate broker and broker associate are.

Marketing & Advertising

The rules for advertising real estate for sale in Oklahoma are very clear and are found in Section 605:10-9-4 - Advertising.

Among other things, unless you have a real estate license, you can’t market and advertise any real estate for sale on behalf of a third-party owner. As a wholesaler, you can advertise the right for a potential end buyer to assume ownership of a contract you have in place with the owner under an Assignment of a Contract agreement.

Do not attempt to market a property you do not own if you don’t have a license. Understand the difference between advertising rights and advertising the actual property.

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Do You Need A License To Wholesale Real Estate In Oklahoma?

No, you do not need a real estate license to wholesale properties in Oklahoma. Although a license is not required to wholesale property in Oklahoma, many people who get into wholesaling choose to get their license; this gives them a deeper understanding of real estate laws and can give them greater latitude when it comes to marketing a property vs. only marketing the rights to a contract they want to assign.

Many wholesalers like that getting a license gives them access to the Multiple Listing Service (MLS) and makes it easier to network with other real estate professionals in their local market.

Another difference is that you can collect a commission with a real estate license. You can only collect an assignment fee without a license when you assign a contract.

Title 59 §858-302 outlines the license requirements: eligibility for a license as a real estate provisional sales associate, Qualifications, and Examination.

It’s also important to understand that Oklahoma does allow exceptions for licensing. Those exceptions include:

• If real estate is being acquired for personal use

This is an essential yet common exception to licensing, as it allows real estate investors and wholesalers to acquire property for personal use. Wholesalers who act as principal buyers and offer to acquire property for their own purposes are exempt from licensing requirements.

If you decide to become a licensed real estate professional, the Oklahoma Real Estate Commission will regulate you, and you can be fined when statutes are violated.

These fines could be in addition to any criminal penalties or civil actions as provided for by state and federal laws.

Read Also: Oklahoma Real Estate Courses Online: Wholesaling, Flipping & Licensing

Is Co-Wholesaling Real Estate Legal In Oklahoma?

Co-wholesaling is exactly what it sounds like. Under this arrangement, two or more wholesalers work together on one or more deals. A co-wholesaling venture can be an ongoing partnership, or the investor team may come together for a one-time deal.

Typically, the partners will bring individual skills or areas of expertise to the partnership. One could be an expert in financing real estate deals or have deep pockets to facilitate the money part of the deal, and the other partner may be the networking expert or the resource who actively seeks out deals and brings them to the team for consideration.

For a co-wholesaling partnership to work smoothly, it’s best to vet any partner thoroughly before deciding to do deals together. No matter what, you need to protect your interests. Another way to do this is to enter into a formal joint venture agreement.

Also, consider seeking legal advice from a seasoned contracts or real estate attorney who understands the nuances of partnerships and real estate law.

Above all else, remain ethical not only when complying with Oklahoma real estate laws but also when treating your co-wholesaling partner(s) with honesty and transparency.

Is Reverse Wholesaling Real Estate Legal In Oklahoma?

Reverse wholesaling is legal in Oklahoma. It simply involves reversing the order compared to how a typical wholesale deal is executed. In other words, reverse wholesalers find end buyers first and then work to find properties that fit the end buyer’s goals and objectives.

Many wholesalers prefer reverse wholesaling because it lets them build long-term relationships with cash buyers who are ready to move quickly on deals. These buyers can become private money lenders when the wholesaler cherry-picks the best deals to BRRRR or fix and flip themselves.

Over the long term, this streamlines the lending process and creates a more solid foundation for doing more deals as these relationships strengthen over time.

Oklahoma Real Estate Wholesale Contract

The Oklahoma Real Estate Commission has created a standardized purchase agreement for real estate transactions. The first page of the 7-page agreement looks like this:

Purchase contracts are legally enforceable documents, and wholesalers often work with real estate attorneys to ensure all language is correct, thus avoiding any issues as the deal progresses.

Unless a contract’s language specifically prohibits the assignment in the agreement, it’s assumed the contract is assignable; this does require a separate agreement, and it may also be advisable to work with an attorney to draft this document. A typical assignment contract looks like this:

Several disclaimers and disclosures are also required in an Oklahoma real estate transaction. The OREC has also created a standardized form to ensure that these disclosures have been discussed.

Specific properties may have additional disclosures, but the following will give you a good overview of what the most common disclosures are:

• Residential Property Condition Disclosure of Disclaimer Form
• Lead-Based Paint/Hazards Disclosures

Final Thoughts

Is wholesaling real estate legal in Oklahoma? Yes, wholesaling real estate is legal in Oklahoma despite the regulations imposed by the Predatory Real Estate Wholesaler Prohibition Act. While this Act may place limitations on certain marketing practices and transactions, it does not prohibit wholesaling altogether. Wholesalers can navigate the legal landscape ethically and responsibly by ensuring compliance with state laws and regulations. So, is wholesaling real estate legal in Oklahoma? Yes, it is, and with a solid understanding of the legal requirements and a commitment to transparency and fairness, wholesalers can continue to thrive in the Oklahoma real estate market while operating within the bounds of the law.

*Disclosure: Real Estate Skills is not a law firm, and the information contained here does not constitute legal advice. You should consult with an attorney before making any legal conclusions. The information presented here is educational in nature. All investments involve risks, and the past performance of an investment, industry, sector, and/or market does not guarantee future returns or results. Investors are responsible for any investment decision they make. Such decisions should be based on an evaluation of their financial situation, investment objectives, risk tolerance, and liquidity needs