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Florida laws with lease option


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#1 marquis

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Posted 23 August 2017 - 07:50 PM

Really want to do this right. Does anyone know the actual facts behind whether if it's legal to do Lease Option without the need for a license here in Florida?

 

I'm basically at a point where I can't even afford anything and actually find it important to get things up a notch by at least making one deal to help my family. Get us out of the situation we're in at the moment. But I don't want to be put in a deeper rabbit hole by going for lease options without proper due diligence, since it looks like it has a much larger market than wholesaling [because it can touch homes that don't necessarily have to be distressed] and due to the fact that there's more wholesalers than sellers here in Florida.

 

I definitely can't afford an attorney or a mentor to make the ride easier. Pretty much on my last leg. So I'm in a pickle until I make this one deal to actually afford the attorney for the next issue lol. But if there's any helpful answers for me before I jump the gun, please let me know...



#2 m1ch311e

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Posted 23 August 2017 - 08:04 PM

Hi marquis,

 

So sorry to hear about your situation. I was just in the middle of posting a very similar question myself! I am not "new" to this game, having been wholesaling in Florida for the past 18 months, however lease options are the new direction in which I would like to take my business, so I am keen to find out more about the legals. 

 

I am a practicing lawyer/attorney in New Zealand (where I am located) so for me the legal side of things is slightly easier to understand and more interesting. From my wholesaling business I know that as long as you hold an equitable interest in the property in Florida, you are not considered to be brokering without a licence (a very general statement). Therefore, our wholesaling contracts (which we assign to the buyers), are perfectly legal because we get an equitable interest at the time we sign the sale and purchase agreement with the seller.

 

Lease options are slightly different. We are also working in the Texas market with these - in Texas, lease options for longer than 6 months are considered "executory" contracts, and are subject to a whole different set of rules. I'm interested to find out if a similar situation applies in Florida? 

 

I'm looking specifically at lease option assignments. Through my research I've come across a lot of debate about using a single "Lease Option" contract vs. two separate "Lease" and "Option" contracts in Florida. I have been gearing my strategy around the second option, as there is then a clear demarcation between the two. Primarily we (and then our assignees) are leasing the property. Then, in 12 to 24 months, a decision is made about whether the property is purchased under the Option.

 

Would be interested to hear any further comments anyone may have on this subject. 

 

Michelle



#3 MichaelC

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Posted 24 August 2017 - 08:47 AM

Hello to both of you, and welcome to The Naked Investor.  The issue of needing to be licensed to do what we do is one I hear probably on a weekly basis.

I understand the confusion.  If you spend much time reading the various postings on the multitude of internet forums and blogs, or you have viewed the hundreds of podcasts that are up and running, your head must be spinning from the variety of opinions, the negativity, the horror stories about the Real Estate Police dragging away unsuspecting investors in the middle of the night.  

My opinion is just that, my opinion.  I'm not smart enough to be an attorney, (sorry, mom), and so I won't hold myself out here as the last word on these things.  However, I am an investor with 25 years experience doing these very lease option deals we are talking about.  I started out in my home state of New York.  Moved to New Mexico where I got into this strategy in a big way, and now find myself in Florida for the past 17 years.  I am not licensed.  I have never been licensed.  I'm not anti-realtor.  I have just never personally felt comfortable working in a cubicle in an office.  I'm pretty sure I'd be the world's worst employee.  So, based on my experience, I will say we do not need to be licensed to do our deals the way we do them.  I am a principal in every deal I do.  I have an agreement between myself and the homeowner, with the right to assign to a third party.  That is not brokering real estate without a license.  Personally, I'm glad to read all the naysayers scaring people away from these deals.  Less competition and more deals for us.
Marquis, don't let fear hold you back.  You can do this.  I've been doing these deals for 25 years and no one has ever said the words Michael Carbonare and genius in the same sentence.  The next time someone tells you that the law requires you to be licensed, ask them to show you the specific paragraph in the law that confirms this.  I suspect you'll never hear back from them.


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#4 marquis

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Posted 05 September 2017 - 06:02 PM

Thank you! It looks like I have a lot less worry than I realized.

 

Now I'm on my way to a motivated INVESTOR.



#5 transactionsengineer

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Posted 16 September 2017 - 08:44 AM

MichaelC, Looks like I'm late to the party on this question.

 

Anyway, I am a graduate of Golden Gate University School of Law but it doesn't take a lawyer to read what the law says.  In this particular case, the 2017 Florida Statute, Chapter 475.01 (1)(a) answers your question. Carefully read the definition of a broker.  

 

Even before you leave the first line, you'd read, "“Broker” means a person who, FOR ANOTHER, and for a compensation..."  I've purposely capitalized what you need to know.

 

Here is a link to the 2016 Florida Statute PDF, which holds the same definition.

http://www.myfloridalicense.com/dbpr/servop/testing/documents/printable_lawbook.pdf

 

Good luck.






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