Broker without a license in north carolina, Lease purchase?

[timmym22 0]

Hey all,

Did some investigating about needing a license in order to CA's, Leasing and sub leasing, getting an option then selling with owner financing, in the state of north carolina. I understand that you become a principal when you get a contract on a home and then you sell your rights to the contract. Here is something interesting I found while searching google about this subject. North Carolina is pretty strict. John "cash" locke does sub-2 deals, he actually contacted the North Carolina Real Estate Commission about this subject, here is how they responded:

 

B. M. Brogden, Jr.

Chief Deputy Legal Counsel

NC Real Estate Commission"

 

I emailed Mr. Brogden and requested his phone number so that we could discuss Subject To investing in North Carolina. He graciously responded with his phone number.

 

I called Mr. Brogden in the afternoon of August 24, 2004.

 

Here is a synopsis of our conversation and was reviewed by Mr. Brogden:

 

North Carolina has no problem with Subject To investing as long as the following guidelines are adhered to:

 

The problem with the use of a "Land Trust" as a means of concealing a violation of the "due-on-sale" (DOS) clause is that even where the designated trustee is a real person or entity, the identity of the actual beneficiary is concealed or obscured.

 

This can constitute a deceptive, misleading or unfair trade practice in violation of Chapter 75, N.C.G.S, and, in the opinion of the Commission legal staff, is a circumstance tending to show the person actually controlling the trust is attempting to act as a real estate broker without a license.

 

Much the same is true for agreements, such as installment land sale contracts or lease/option or lease/purchase arrangements that are not properly recorded in a timely manner in the chain of title. No reasonable person or prudent investor would fail to immediately and properly record a document transferring an interest in title due to the risk of loss associated with the failure to timely and properly record.

 

A person or firm truly dealing on their own account would typically obtain a deed, option or contract, properly notarized and recorded, in order to protect their investment. Failure to do so is very convincing evidence that there is no real investment and that such person or firm is no more than an agent without a license.

 

This is a little disturbing after I read this. So basically, if i don't record these documents at the public records it would appear that I am just trying to act like broker without a license? what do you guys think? Would it jsut be easier to get a license that way there is no question? From what I understand, if I did get a license I would have to team up with a broker or start my own brokerage. Would a broker be willing to assign my license to his brokerage if I am not going to be listing homes but just basically doing my own thing. He would be responsible for all of my activity with no financial incentive for him at all. Thanks for the help guys.

[<Steve> 82]

Much the same is true for agreements, such as installment land sale contracts or lease/option or lease/purchase arrangements that are not properly recorded in a timely manner in the chain of title. No reasonable person or prudent investor would fail to immediately and properly record a document transferring an interest in title due to the risk of loss associated with the failure to timely and properly record.

For SLOs record the simple one page Memorandom in the manual and your lease option is recorded. For CAs you can but you don't have them very long.

[Jonathan RexfordFL 8]

Nothing wrong getting licensed as a broker if you want. But I would have to agree with Steve on this one. Your agreement is a contract. Now what is interesting is that "this is an opinion of the AG. Not case law. I remember when John contacted the State concerning this. I have investor friends in NC that use land trusts to this day for sub2's and short sales. Don't fret about this. I don't like the idea of becoming licensed to do these deals. Representation is a FOGGY issue.

[stustanton 0]

(Michael, enjoyed talking to you over on facebook)

 

Jonathon is correct, you are looking at an opinion of an attorney that represents the Real Estate Commission. Look beyond his comments. I am very familiar with this action. The NC Bill 725 in session 2005-2006 was primarily designed to prevent investors from doing anything in NC without a license, including seminars. It has been, since 2005, sitting in the judiciary committee, not passed. It probably will stay there since many of its' provisions were in direct violation of federal law and possibly constitutional law.

 

Most of what this attorney was talking about was in reference to this bill that was never passed. We have several members of our network in NC doing land trust type transactions without any issues.

 

You should seek legal advice from an NC real estate attorney that is not affiliated with the NC RE commission to get an unbiased opinion.

 

I could write a book on this action that took place from 2004 to 2005, but, the bottom line is the state did nothing to change the current status of the investor, but they are aware and do scrutinize transactions brought to their attention. If you use a land trust method, make sure it is bullet proof.

 

In my opinion only, for what that is worth, as I understand your CA, if you do it properly, as designed, so that neither the seller nor tenant buyer have anything to complain about that is not in writing (you know someone will complain), you should be fine.

 

Stu Stanton

Specialist in the "Equity Holding Trust" method

[MichaelC 160]

HI, Stu. Thanks for stopping by and sharing your insights. I agree with your take on this and do not believe for a minute that an investor needs to be licensed to assign a deal. That's government run amok if it ever comes to this.

[bwalston 1]

Excellent post Stu! Thanks for the info. It's much appreciated. :-)