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

Are you curious about real estate wholesaling in South Carolina? Wondering if it's legal? Look no further. In this comprehensive guide, we'll answer the question, "Is wholesaling real estate legal in South Carolina?" We'll cover everything from regulations to practical tips for success. Jump ahead with these navigation links to learn about the legality of wholesaling in South Carolina, the process involved, common challenges, and how to navigate them effectively:

• What Do You Need To Know About Wholesaling Houses In South Carolina?
• Is Wholesaling Real Estate Legal In South Carolina?
• Do You Need A Real Estate License For Wholesaling In South Carolina?
• What Are The Wholesaling Laws In South Carolina?
• How Can I Legally Wholesale Real Estate In South Carolina?
• Is Co-Wholesaling Real Estate Legal In South Carolina?
• Is Reverse Wholesaling Real Estate Legal In South Carolina?
• Final Thoughts

South Carolina is a beautiful and diverse state steeped in history. Its picture-perfect small towns and friendly locals everywhere you go make it a great place to visit.

Many people call the Palmetto State home, and more people want to live here than ever before. The same holds true for the entire southeast United States, as more and more people migrate to nearby states such as North Carolina, Georgia, and Florida.

That means there are many opportunities to do well in the real estate industry. Many people make a great living as traditional agents and brokers, others as real estate investors.

Still, more and more people are looking for a flexible alternative, which is why many are exploring real estate wholesaling as a possible career. This brings us to our most important question: Is wholesaling real estate legal in South Carolina? Let's find out more!

*Before we begin our guide on whether wholesaling real estate in South Carolina 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 South Carolina?

You need to know a few key points before considering wholesaling real estate in South Carolina.

First, wholesaling is legal, but you must follow certain statutes to comply with state law. They aren't complicated, but if you don't follow the letter of the law, you could face fines and penalties that could cause you big problems.

Compliance hinges on the type of wholesaling activity you pursue. The two primary ways to wholesale real estate are assigning a contract and double closing. Each method is structured differently, and you must acquaint yourself with its legalities before starting.

When you wholesale properties in South Carolina, you must also be transparent; this means disclosing your intentions as a wholesaler, much like a buyer who provides you with disclosures and contingency agreements required for both parties.

Realtor associations throughout South Carolina can be excellent places for wholesalers to make valuable contacts and gain critical knowledge about local market conditions. Consider contacting these larger regional associations when attempting to answer the question, "Is wholesaling real estate legal in South Carolina?":

• Coastal Carolinas Association of Realtors (CCAR)
• Central Carolina Realtors Association (CCRA)
• Charleston Trident Association of Realtors (CTAR)

State agencies can also provide an abundance of economic data. The South Carolina Department of Commerce is an excellent place to start. Here, you’ll get a bird's eye view of the state’s leading indicators.

Individual cities are also very helpful when you’re ready to drill down to a specific market.

Consider some key statistics about the state's five largest cities. According to Wikipedia, Charleston, Columbia, North Charleston, Mount Pleasant, and Rockfill are the five largest cities.

Read Also: The Pros & Cons Of Wholesaling Real Estate: An Investor's Guide

Is Wholesaling Real Estate Legal In South Carolina?

It is legal to wholesale real estate in South Carolina, but you must follow all real estate laws as laid out in Title 40 of the South Carolina State Code of Laws. In particular, unlicensed wholesalers can't take any actions that require a license, like helping homeowners buy, sell, or market their properties. Instead, wholesalers can only secure the right to buy a home, and the market said right; that's an important distinction to make. Wholesalers are only marketing and selling their right to buy the property, not the property itself.

Also, all the statutes that apply to real estate licensing laws and policies in South Carolina are governed by the South Carolina Real Estate Commission, which is part of the state's Labor, Licensing, and Regulation Department (SCLLR), located in Columbia.

Visit the Commission's website for the latest information and learn more about how the Real Estate Commission regulates real estate brokers, salespersons, and property managers.

Wholesaling is also further validated under the South Carolina Code of Laws Section 36-2-210 Delegation of performance, assignment of rights, which states:

Unless otherwise agreed all rights of either seller or buyer can be assigned except where the assignment would materially change the duty of the other party, or increase materially the burden or risk imposed on him by his contract, or impair materially his chance of obtaining return performance. A right to damages for breach of the whole contract or a right arising out of the assignor's due performance of his entire obligation can be assigned despite agreement otherwise.

Do You Need A Real Estate License For Wholesaling In South Carolina?

You do not need a real estate license to wholesale real estate in South Carolina, but it's good to know a few things about licensing requirements and wholesaling within the state's borders.

Most states use "for another" language in their licensing laws, meaning several activities require a license if you do them "for another."

However, South Carolina does not use this provision to set forth specific exemptions.

South Carolina real estate law states, in part:

"This chapter does not apply to…the sale, lease, or rental of real estate by an unlicensed owner of real estate who owns any interest in the real estate if the interest being sold, leased, or rented is identical to the owner's legal interest."

However, you must have an interest in the property before you sell it. Instead of a license, you can have a contract in place, giving you the right to purchase the property; this exempts you from licensing regulations.

A few states limit real estate activities, even if you are acting on a property in which you have an interest.

Maryland, Michigan, Minnesota, South Dakota, and Wisconsin limit the number and frequency of real estate transactions before you need a real estate license. For example, in Michigan, you're limited to four transactions annually before you must have a license.

You can't market a property without a license if you want to assign a contract. You can only market the rights to assign the contract. Understand this critical difference to stay on the right side of the law.

Many wholesalers get real estate licenses to avoid potential conflicts or constraints. The South Carolina Real Estate Commission website details the requirements to become a Realtor.

What Are The Wholesaling Laws In South Carolina?

There are no laws specifically addressing wholesaling in South Carolina. Therefore, general real estate laws govern all state property transactions.

South Carolina Code of Laws

The South Carolina Code of Laws covers real estate laws. The 10-member South Carolina Real Estate Commission, under the auspices of the Department of Labor, Licensing, and Regulation, oversees the pertinent codes.

You can find laws governing South Carolina Real Estate Licensing in Chapter 57 of Title 40 of the state's statutes. Similarly, laws governing real estate education are found in Chapter 105.

Read Also: How To Find Off-Market Properties In South Carolina: The 3 Best Sources

Real Estate Settlement Procedures Act (RESPA)

Wholesalers must also be aware of the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. § 2607 (2005). This act prohibits kickbacks and unearned fees, including any fee, kickback, or anything of value given to or received by anyone in any business incident to or part of a settlement service.

Violating RESPA can result in criminal penalties of up to $10,000 and one year in confinement. Private lawsuits can result in a civil penalty of up to three times the amount paid for the service.

According to the statute:

"Settlement services" includes any service provided in connection with a real estate settlement including, but not limited to, title searches, title examinations, the provision of title certificates, title insurance, services rendered by an attorney, the preparation of documents, property surveys, the rendering of credit reports or appraisals, pest and fungus inspections, services rendered by a real estate agent or a broker, the origination of a federally related mortgage loan (including, but not limited to, the taking of loan applications, loan processing, and the underwriting and funding of loans), and the handling of the processing and closing of settlement. "Thing of value" includes any payment, advance, funds, loan, service, or other consideration."

Other Legal Issues

When in doubt, it's always best to do additional research on the legalities of wholesaling or consult a real estate attorney to ensure you fully comply with all South Carolina real estate laws, especially if you are a new wholesaler.

Read Also: How To Wholesale Real Estate In South Carolina: Step-By-Step

How Can I Legally Wholesale Real Estate In South Carolina?

Learning the processes and following state laws is the key to legally wholesaling real estate in South Carolina.

You must be honest and transparent in your dealings. You must also be willing to spend a few well-placed dollars to get legal help when needed.

It is critical to fully understand the mechanics and legalities of how various types of wholesaling deals work.

*For in-depth training on real estate investing, Real Estate Skills offers extensive courses to get you ready to make your first investment! Attend our FREE training and gain insider knowledge, expert strategies, and essential skills to make the most of every real estate opportunity that comes your way!

Assignment Of Contract

For example, if you use the assignment of a contract method, you cannot market a property. You can only market the contract's rights to buy the property you have placed under a purchase agreement with the seller. You can only market a property in South Carolina if you have a real estate license.

Also, you are paid a fee when you assign the contract vs. receiving a commission, which would be the case if you were a real estate agent affiliated with a brokerage that sells a property on behalf of an owner.

The Double Close

If you wholesale a property using the double close method, you complete two separate transactions.

The double-close strategy requires the investor to buy the property and take the transaction to the closing table. The wholesaler does not collect an assignment fee. Instead, they collect a profit from the sale of the subject property when they sell it immediately after purchasing it. Consequently, a double close is when both transactions are completed in a day or two.

Buy & Sell

A buying and selling method is also two separate transactions, but the timing is spaced farther apart, sometimes days or weeks after the wholesaler completes the original purchase.

Wholesalers sell the property to an end buyer/investor who will rehab it and flip it. Sometimes, a wholesaler might perform minor maintenance or upgrades before selling to a final buyer.

While assigning a contract does not require an initial cash outlay, the wholesaler must disclose the amount of the fee they will collect upon completion of the assignment.

With the other two types of methods, since they involve two separate transactions, the wholesaler does not need to disclose how much profit they are making, giving them added leverage when putting together a deal.

Is Co-Wholesaling Real Estate Legal In South Carolina?

In South Carolina, co-wholesaling real estate is generally considered legal because it falls under the same regulations that govern traditional real estate wholesaling. Co-wholesaling involves two or more wholesalers who collaborate to find a buyer for a property under contract, often splitting the profits.

The legality hinges on how the transaction is structured and whether the wholesalers are conducting activities that require a real estate license. In traditional wholesaling, the wholesaler puts a property under contract with the intent to assign that contract to an end buyer, making a profit from the assignment fee. The critical legal point is that the wholesaler must not engage in activities that constitute acting as a real estate agent, such as marketing the property itself, without a license.

For co-wholesaling, as long as the parties involved are essentially assigning their rights to the contract rather than selling the property itself, and they comply with any applicable disclosure requirements, their activities can be legal. However, wholesalers should be cautious to ensure that their actions do not cross into areas that would require a real estate license.

It is advisable for those involved in wholesaling and co-wholesaling to consult with a legal expert familiar with South Carolina real estate laws to ensure all transactions are compliant with state regulations and licensing requirements.

Is Reverse Wholesaling Real Estate Legal In South Carolina?

Reverse wholesaling real estate is legal in South Carolina, as it falls under the same regulations that govern traditional wholesaling. In reverse wholesaling, the wholesaler first finds potential buyers and then seeks out properties that match their criteria, essentially reversing the typical wholesaling process. As long as the transactions comply with South Carolina's real estate regulations and licensing requirements, reverse wholesaling is permissible. Always consult a legal expert to ensure compliance.

Final Thoughts

Is wholesaling real estate legal in South Carolina? Yes, it is, as long as wholesalers strictly adhere to local state laws and avoid engaging in activities that require a real estate license when they are not licensed. Unlicensed wholesalers are permitted to acquire, market, and sell only the rights to purchase a property.

Now that you know wholesaling is legal in South Carolina, it’s the perfect time to explore it yourself and tap into its profit potential. Real Estate Skills offers a free training program that can help you get started today.

*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.