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

Learning how to wholesale in today's real estate market can be a fantastic way to expand your investment portfolio or start a new business venture. However, many people are unsure about the legality of wholesaling, especially in specific regions like Florida. This article will address the question, "Is wholesaling real estate legal in Florida?" and provide you with a clear understanding of not only its legality but also the reasons why it is legal.

By the end of this article, you'll have a solid grasp of the legal landscape of wholesaling in Florida, helping you to move forward with confidence in your real estate endeavors. In doing so, we'll tell you everything you need to know, starting with the following:

• What Is Real Estate Wholesaling?
• What Do You Need To Know About Wholesaling Houses In Florida?
• Is Wholesaling Real Estate Legal In Florida?
• Do You Need A Real Estate License To Wholesale Houses In Florida?
• What Are The Wholesaling Laws In Florida?
• Is Co-Wholesaling Real Estate Legal In Florida?
• Is Reverse Wholesaling Real Estate Legal In Florida?
• Florida Real Estate Wholesale Contracts
• Legal Tips For Wholesaling Real Estate In Florida
• Final Thoughts

Once you are confident wholesaling real estate is legal in Florida, it’s time to turn that knowledge into action! Seize this moment and take the next step towards your real estate success. Enroll in Real Estate Skills' free training program to equip yourself with the skills and insights needed to thrive in today’s dynamic market. Don't miss out on the incredible opportunities waiting for you—start your journey to becoming a successful wholesaler today!

*Before we begin our guide on whether wholesaling real estate is legal in Florida, 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 Is Real Estate Wholesaling?

Real estate wholesaling is a quick and straightforward way to get into real estate investing. Essentially, it involves finding a property, getting it under contract, and then selling that contract to another buyer for a fee. You don't actually buy the property yourself; instead, you make money by being an intermediary between buyers and sellers.

There are three main strategies for wholesaling: assignment of contract, double closing, and wholetailing. For now, let’s focus on the most common method: contract assignment.

In contract assignment, you first find a property you think you can sell quickly, and you sign a contract with the owner to buy it. But instead of buying it, you sell your rights to buy the property to someone else, known as the end buyer. You make money by charging the end buyer a fee for this assignment. This works because of something called the doctrine of equitable conversion, which basically means that once you sign the contract, you have certain rights to the property that you can sell.

Now, you might wonder, is wholesaling real estate legal in Florida? Yes, it is, but you need to follow the rules. Florida law allows real estate wholesaling, but you have to make sure your contracts and business practices comply with state regulations. Even though this method is legal, some people still doubt its legality and worry about ethical issues. So, it’s important to do your homework and understand the legal aspects to avoid any trouble.

By focusing on learning and following the rules, real estate wholesaling can be a profitable and exciting entry point into the world of real estate investing.

What Do You Need To Know About Wholesaling Houses In Florida?

If you’re interested in wholesaling houses in Florida, it’s crucial to get a solid grounding in a few key areas first. Understanding the local real estate laws and the various wholesaling strategies—such as contract assignment, double closing, and wholetailing—is essential.

Let’s dig a bit deeper into the strategies we haven't discussed yet. Double closing involves you actually closing on the property yourself, only to sell it immediately to another buyer, which can help navigate any legal or financial nuances. Wholetailing is somewhat of a hybrid approach where you purchase a property, make minimal improvements, and then sell it, usually to a retail buyer.

Now, why is it a good time to start wholesaling in Florida? The market dynamics are favorable: median sales prices have risen by 5.4% year over year, and home sales have increased by 2.8%, according to RedFin. Although homes are staying on the market longer—up nine days from last year—there’s still a healthy turnover with four months of inventory available. These factors create a vibrant market for new wholesalers to step in and capitalize on the opportunities. Starting now could set you up for success in a thriving Florida real estate market.

Still, despite the market dynamics, people are still asking, "Is wholesaling real estate legal in Florida?" To clarify that wholesaling is, in fact, legal in Florida, aspiring investors should turn to the state's real estate trade professionals.

For example, Florida Realtors is the largest trade association in the state, with close to 200,000 members. Members and site visitors can network, track real estate-related legislation, pursue ongoing educational opportunities, and more. Some of Florida’s largest Realtor associations include:

• Daytona Beach Area Association of Realtors
• Miami Association of Realtors
• Orlando Regional Realtor Association (ORRA)
• Tallahassee Board of Realtors
• Greater Tampa Realtors (GTR)

All of these organizations can help answer the question, "Is wholesaling real estate legal in Florida?" However, the more serious you are about wholesaling properties in Florida, the more beneficial it is to learn why the practice is legal. A good place to start is with the laws that govern real estate transactions in the state.

As a wholesaler, you must also understand the laws that govern real estate transactions in Florida. Many of these are found in Florida Statutes Chapter 475.

The bottom line is that to be successful as a wholesaler, you must set the table the right way by learning as much as you can instead of letting experience be a harsh teacher. Not unlike someone learning how to wholesale real estate in Florida, the more you know, the better off you'll be. Those who fully understand every aspect of the process are better equipped to navigate the industry successfully and mitigate risk.

Read Also: How To Get MLS Access In Florida

Is Wholesaling Real Estate Legal In Florida?

Yes, wholesaling real estate is indeed legal in Florida. Despite common misconceptions, wholesalers in Florida do not need a real estate license because they aren't acting as real estate agents. Rather, they operate as intermediaries.

Here’s how it works: Wholesalers contractually secure the rights to purchase a property. Rather than buying the property themselves, they then transfer these rights to an end buyer. In return for finding the property and securing the deal, wholesalers collect a fee. This process is known as an assignment of contract.

The legal foundation for this practice in Florida is the doctrine of equitable conversion. This doctrine allows the equitable interest in the property—essentially the right to buy—to be transferred from the wholesaler to the buyer before the legal title changes hands. It's this principle that enables wholesalers to operate without stepping into the traditional role of a real estate agent, making wholesaling a viable and legal real estate investment strategy in Florida.

What Are The Wholesaling Laws In Florida?

The laws governing real estate transactions in Florida are found under Title XXXII – Regulation of Professions and Occupations, Chapter 475 – Real Estate Brokers, Sales Associates, and Appraisers:

Contracts Of Unlicensed Persons For Commissions Invalid

One of the areas where a wholesaler can run into trouble is not fully understanding that in the assignment of a contract, the wholesaler can only market the contract and collect a fee for that service. Only a licensed Realtor or agent can market an actual property and collect a commission. Florida statute Chapter 475.41 states:

No contract for a commission or compensation for any act or service enumerated in s. 475.01(3) is valid unless the broker or sales associate has complied with this chapter in regard to the issuance and renewal of the license at the time the act or service was performed.

Violations And Penalties

Chapter 475.42 spells out the provisions for improperly conducting business without an active license. In part, it reads:

A person may not operate as a broker or sales associate without being the holder of a valid and current active license, therefore. Any person who violates this paragraph commits a felony of the third degree, punishable as provided in s. 775.082 or s. 775.083, or, if a corporation, as provided in s. 775.083.

This does not apply to wholesalers as long as they are not practicing real estate brokerage without a license.

Authorized Brokerage Relationships; Presumption of Transaction Brokerage; Required Disclosures

Chapter 475.278 pertains to disclosures and ethical behavior, including in part:

The duties of the real estate licensee in this limited form of representation include the following:

(a) Dealing honestly and fairly;

(b) Accounting for all funds;

(c) Using skill, care, and diligence in the transaction;

(d) Disclosing all known facts that materially affect the value of residential real property and are not readily observable to the buyer;

(e) Presenting all offers and counteroffers in a timely manner, unless a party has previously directed the licensee otherwise in writing;

(f) Limited confidentiality, unless waived in writing by a party.

Disclosure is important whether you are licensed or not. Transparency is one of the keys to a successful real estate wholesaler. You run the risk of legal problems unless you practice full disclosure.

If you are a wholesaler working with a licensed agent on a transaction, it’s important to understand the fiduciary duty that a licensed agent has. As an unlicensed wholesaler, you have certain limitations, but you are also not bound by this statute as well.

Dual Agency Representation

Chapter 475.278 also states:

FLORIDA LAW ALLOWS REAL ESTATE LICENSEES WHO REPRESENT A BUYER OR SELLER AS A SINGLE AGENT TO CHANGE FROM A SINGLE AGENT RELATIONSHIP TO A TRANSACTION BROKERAGE RELATIONSHIP IN ORDER FOR THE LICENSEE TO ASSIST BOTH PARTIES IN A REAL ESTATE TRANSACTION BY PROVIDING A LIMITED FORM OF REPRESENTATION TO BOTH THE BUYER AND THE SELLER. THIS CHANGE IN RELATIONSHIP CANNOT OCCUR WITHOUT YOUR PRIOR WRITTEN CONSENT.

FLORIDA LAW REQUIRES THAT REAL ESTATE LICENSEES WHO HAVE NO BROKERAGE RELATIONSHIP WITH A POTENTIAL SELLER OR BUYER DISCLOSE THEIR DUTIES TO SELLERS AND BUYERS.

*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!

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

No, you don't need a license to wholesale real estate, but there are some critical guidelines you must follow.

As a wholesaler without a license in Florida, your legal activities are specific. You are allowed to market the rights to purchase a property that you have under a contract with the seller. This means you can sell the rights included in your purchase agreement, but remember, you're not selling the property itself. Instead, you're transferring your contractual position to another buyer for a fee.

However, without a license, you cannot engage in activities typically reserved for licensed real estate agents, such as listing the property or representing the seller. Once they have an agreement with the seller, licensed agents have the flexibility to market the property and handle sales in various ways.

This distinction is crucial and often where many unlicensed wholesalers in Florida find themselves facing legal issues. Understanding these boundaries can help you navigate wholesaling successfully and legally.

Read Also: How To Become A Real Estate Agent In Florida

Also, in the interests of transparency, you do need to disclose upfront whether you are a licensed Realtor or not.

As an unlicensed wholesaler, when you complete the assignment of the contract, you collect an assignment fee for your efforts. As a licensed Realtor, you are paid a real estate commission when a property is sold.

Because disclosure is required regarding the amount of your wholesaling fee, in some cases, a seller or a buyer may try to negotiate a lesser fee as a means of closing the deal.

Although there are time and expense involved in getting a Florida real estate license, some wholesalers prefer to go this route.

With a double closing or buy and sell arrangement, because there are two separate transactions, you are free to negotiate the best possible deals; this means buying the property at the lowest price and then selling it for the highest price to maximize profits. You do not need to disclose what these profits are because you are engaged in two independent transactions.

The only downside is that you must have the financial resources to facilitate the initial purchase, either your own money or that of a real estate investor; this can be a limiting condition for some Florida wholesalers who are just starting out.

Is Co-Wholesaling Real Estate Legal In Florida?

Co-wholesaling real estate is legal in Florida because it operates under the same legal framework that governs traditional wholesaling. Just like with traditional wholesaling, co-wholesalers can legally assign contracts and transfer their equitable interest in a property without needing a real estate license.

Some people prefer to pool their resources and enter into co-wholesaling business arrangements. Typically, one partner will work on finding distressed properties or investment property deals, and the other partner will concentrate on other aspects of the deal. Most times, this centers on deal financing, but it can also include contract and legal work or other relevant expertise.

Florida does not place any particular restrictions on co-wholesaling. You simply need to make sure you comply with all laws and statutes related to wholesaling and real estate transactions, and you should have no problems with this type of partnership.

To protect both partners' interests, it’s a good idea to get the nature of your business relationship in writing. The Small Business Administration is a good source for a standardized co-wholesaling joint venture template. You can also draft a more customized version if you prefer.

Is Reverse Wholesaling Real Estate Legal In Florida?

Reverse wholesaling is legal in Florida, functioning under the same principles that govern traditional wholesaling. In reverse wholesaling, investors first establish relationships with potential buyers to understand their purchasing criteria, and then they find properties that match these specifications. This approach still involves assigning contracts or selling the equitable interest in the property, adhering to the legal framework that allows for the transfer of these rights without the wholesaler needing a real estate license.

The benefit of reverse wholesaling is that it creates a more stable exit strategy for a wholesaler. Working from a buyers list, with pre-qualified end buyers lined up, either ready to receive an assigned contract or complete the second half of a double close or buy and sell method, there are less likely to be problems in finalizing agreements.

Wholesalers find it easier to build long-term relationships this way. The pre-alignment with private and hard-money lenders creates an efficient process and more reliable outcomes.

Florida Real Estate Wholesale Contracts

The Florida Bar and Florida Realtors have created standardized forms to facilitate various real estate transactions. Two forms are available for wholesalers to utilize.

FAR/BAR “AS IS” Contract and the FAR/BAR Standard Contract

There are some important differences to note between the FAR/BAR “AS IS” Contract and the FAR/BAR Standard Contract before deciding which one is best for you.

As a wholesaler, most times you will use the “As Is” contract since the majority of deals involve purchasing distressed properties that need repairs. A wholesaler is often able to negotiate a favorable deal by accepting and assuming these problems and, in some cases, making repairs before selling the property to a third party.

These forms standardize most of the key elements in a real estate transaction. It makes it much easier for people without legal expertise to prepare and complete a real estate transaction.

The main difference between the FAR/BAR “AS IS” contract and the Standard contract is that no repair obligations are placed on the seller. The Standard contract, by default, includes terms that require the seller to make certain types of repairs up to a specified dollar amount.

The other difference is that an AS IS contract gives the buyer a chance to inspect a property for 15 days following the effective date of the contract. By contrast, in the Standard contract, the buyer has 15 days unless specified, after the effective date of the contract, or five days before closing, to complete a property inspection and notify the seller of any deficiencies. After the seller has been notified, he or she has ten days to obtain repair estimates for the buyer or to order a second inspection if there is disagreement with the inspection report.

If there is still a disagreement between the buyer and seller, the contract states that both parties will share the cost and enter into binding inspection results.

Paragraph 10 of both contracts also contains critical language related to disclosures. It states, “Seller knows of no facts materially affecting the value of the Real Property which are not readily observable and which have not been disclosed to Buyer.”

However, in the AS IS contract, there is additional disclosure language that states the seller “extends and intends no warranty and makes no representation of any type, either express or implied, as to the physical condition or history of the Property.”

Contract Assignment

Under Florida law, most real estate contracts have provisions related to the buyer’s right to assign the contract. It is legal for a buyer to transfer his or her rights to an independent third party.

There are some instances where contract assignment is prohibited. These include:

• There is language in the contract that prohibits it in that particular deal
• If the assignment would violate public policy in some way
• If it violates some state or federal law or statute

One other possible limitation of assigning a real estate sales contract is that it may not be assigned if the seller has agreed to sell to a particular buyer because of an explicit reliance on that buyer’s personal credit to cover the transaction.

Florida real estate laws can be complicated at times. If you feel like you’re not clear on some parts of the law or you encounter unforeseen legal issues, it’s always best to get legal advice from an experienced real estate attorney to protect your interests.

You can also check out our video on Wholesale Real Estate Contracts!

Legal Tips For Wholesaling Real Estate In Florida

Contingency Clauses

Buyers and sellers will build in contingency clauses to real estate deals as a way to legally protect themselves from entering into a bad deal. When a contingency isn’t met, either party can consider the purchase contract null and void.

Some of the most common contingency clauses are:

• Inspection Contingency
• Appraisal Contingency
• Financing Contingency
• Clear Title Contingency
• House Sale Contingency
• Proof of Lease Contingency

Disclosures

Transparency is critical in any real estate transaction. By law, many disclosures that could materially impact the value or desirability of a home are required to protect both the buyer and the seller.

Some of these disclosures include:

• Radon
• Lead Paint
• Erosion (for coastal properties)
• Condo or HOA Membership
• Termites
• Sinkholes
• Court proceedings
• Structural
• Agency/License

The Florida Association of Realtors provides a standard form that covers many of the disclosure obligations. It is separate from the contracts used in most real estate transactions.

Marketing & Advertising

As a wholesaler, unless you have a real estate license, you cannot market a property. You can only market the rights to the contract and your ability to assign it.

If you are not the seller or a duly contracted agent for the seller, you are not allowed to post For Sale signs, list the property for sale, or offer the property to others.

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

Final Thoughts

So, is wholesaling real estate legal in Florida? Wholesaling real estate remains a legal and viable investment strategy in Florida primarily because it does not involve activities that require a real estate license. Wholesalers focus on acquiring the rights to purchase properties and then assign these rights to another buyer for a fee, a process made possible by the doctrine of equitable conversion; this allows them to facilitate real estate transactions without ever holding the actual title to the property.

Now that you understand the legality of wholesaling in Florida, why not leverage this opportunity to enhance your investment portfolio? Enroll in Real Estate Skills' free training program to capitalize on the numerous opportunities in today's dynamic market; this could be your gateway to success in real estate investment, offering you practical skills and insights to thrive in the industry.

*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.