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State of Florida cracking down on unlicensed real estate activity

By Rob Arnold

Real Estate Agent with Sand Dollar Realty Group, Inc. BK627826

December 23, 2008 08:49 AM

I have said it before and I will say it again. If you are an investor working short sales, doing property management, or taking options on property in order to shop it around, be very very careful. You probably need a real estate license regardless of what your attorney or investor mentor guru is telling you.

The State of Florida is watching you. The real estate and mortgage industry is all under a huge microscope right now and they are catching people and making their lives miserable.

drago (photo of DBPR Secretary Charles Drago)

The Florida Department of Business & Professional Regulation chief Charles Drago just wrote in a letter to the editor re-emphasizing this today. Orlando Sentinel commentary regarding unlicensed activity. People are getting busted left and right.

I hate to sound like I am scaring people, but this is serious business. Unlicensed activity is a 3rd degree FELONY in Florida which could even lead to jail time. Please be careful and think twice before you get too "creative" in your deals. You might need a real estate license to do what you are doing. Begging for forgiveness may not work with the DBPR.

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Rob Arnold - Your full service and investor friendly Realtor ® in Orlando and Central Florida.

ABR, CPL, CRB, CSP, GRI, Managing real estate broker, Notary Public

407-389-7318 / 1-877-389-7318 www.SDRhouses.com/ We Buy Houses Florida

We sell foreclosures, short sales, and bank owned REO properties throughout Central Florida. We sell and list Central Florida real estate and Orlando real estate. Free list of foreclosure and short sale houses available.

I also provide flat fee MLS listings, For Sale By Owner, and menu-based services in most parts of Central & South Florida, the Space Coast, and the Treasure Coast including Orlando, Winter Park, Maitland, Ocoee, Winter Garden, Apopka, Altamonte Springs, Casselberry, Longwood, Winter Springs, Oviedo, Lake Mary, Sanford, Deltona, Debary, Deland, Mount Dora, Eustis, Clermont, Kissimmee, Winter Haven, Lakeland, Tampa, Sarasota, Bradenton, Miami-Dade, Fort Lauderdale, West Palm Beach, Port Saint Lucie, Melbourne, Daytona Beach, Ocala, Gainesville, Volusia, Brevard, and more.

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Lenn Harley

Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA

Real Estate Broker - Virginia & Maryland

Interesting. From what I hear around, this is very much needed enforcement. The short sale mania has brought some snakes out from under some rocks.

Dec 23, 2008 08:54 AM

Michael Wayne Jackson

Coldwell Banker - Novato, CA

Broker - Seniors Real Estate Specialist Novato

This is great news to hear. Hopefully it will duplicate everywhere in the US.

Dec 23, 2008 08:55 AM

David M. Childress

Howard Hanna Real Estate Services - Akron, OH

I would love to be your Realtor® in Akron Ohio!

That is scary. Ohio laws are pretty strong and operating without a license is caught very easy here. Hope Fla. keeps it up, you don't need bad competition!! Have a great 2009!

Dec 23, 2008 09:03 AM

Bryant Tutas

Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL

Selling Florida one home at a time

Rob, I have always been a big fan of clamping down on thsi stuff. If folks want to be a middle man then go get a license. Heck it only takes a couple of weeks to get one.

Have a great Christmas Rob.

Dec 23, 2008 09:29 AM

Anonymous

Brett Wilson | Real Estate Radio USA

Umm...I'm confused...there was absolutely no mention of anything having to do with short sales or investors anywhere in the link you provided.

Competent and experienced investors know the law all too well. Not sure if you wrote this maybe hoping it would be directed at investors or short sales but that is pretty much wishful thinking.

Investors, those who are competent and experienced, know how to earn profits legally and do not have any need to skirt the law.

Maybe the DBPR should clean internally BEFORE looking outside. Do you have any idea how many agents are misrepresenting Seller's on short sales without a clue as to what they are doing?

In any event, if people are outside the realm of the law then they will get their just deserts.

Lastly, an option is a legal interest in a property and was formed SPECIFICALLY to be a negotiable item of interest. Once you have actually paid your consideration (which is where some err), you have the legal ability to sell that interest accordingly.

Now if the paperwork is not in order, that's one thing. But if the investor is competent and experienced, the Option is ironclad and would never fall under the auspices of unlicensed activity.

Dec 23, 2008 02:39 PM

Sharon Alters

Coldwell Banker Vanguard Realty - 904-673-2308 - Fleming Island, FL

Realtor - Homes for Sale Fleming Island FL

This is a very interesting subject. What exactly constitutes 'unlicensed' activity? I thought people were allowed to buy and sell their own real estate if they wanted to. Perhaps this is too simple a concept? I agree with Bryan that they should just be required to get their license if they are going to do it as a business. Unscrupulous investors doing business in real estate hurts the image of licensed Realtors, as though we needed any ore help!

Dec 23, 2008 03:58 PM

Anonymous

Brett Wilson | Real Estate Radio USA

@ Sharon..."Unscrupulous investors doing business in real estate hurts the image of licensed Realtors"

Has having a licensed curtailed the "unscrupulous" activity of Realtors. Most of the competent and experienced investors that I know actually know more about real estate than most agents. Why? Becasue they have a vested interest in the transaction and know many different ways to facilitate a transaction.

The owners of my company actually TEACH realtors how to do business. There are bad apples on both sides. My guys upstairs have bought and sold nearly 1,000 homes over the last 10 years or so and have never been licensed. Every home or property has been one that they had a contractual interest in. Realtors for the most part, seldom have a contractual interest in the properties they represent.

I would also venture a guess that 50-60% or more of the business that my guys do has been with utiliizing an agent on one side of the transaction or the other. By the way, we have an agent on staff and now that number is up to I'd say 80% or more.

Most experienced investors already work with agents or have one in the fold.

Dec 23, 2008 11:56 PM

Rob Arnold

Sand Dollar Realty Group, Inc. - Altamonte Springs, FL

Metro Orlando Full Service - Investor Friendly & F

Sharon - Certainly you don't need a license to sell your own property. Some "investors" however want to sort of own the property or have an interest in the property so that they can basically act as a real estate broker. They put the property under a purchase contract, option contract, or deed it into a land trust and leave the current owner with some sort of beneficial interest, and then use that agreement to do things that only someone with a real estate license would normally be able to do. They claim that the way they structured their paperwork gives them an equitable interest in the property and thus an expemption from the licensing laws. At the end of the day if they get caught, the State doesn't buy it and the "investor" gets charged with unlicensed activity. The "investor" forgets that the #1 reason the State requires anyone to get a license is to supposedly protect the public from unscrupulous people.

Dec 23, 2008 11:59 PM

Rob Arnold

Sand Dollar Realty Group, Inc. - Altamonte Springs, FL

Metro Orlando Full Service - Investor Friendly & F

Brett - Most of the investors I hear of that are doing this questionable activity don't have any "substantial consideration" into the deal which is what Florida law requires to make an option valid. They think putting up $10 or no dollars but having a signed agreement is good enough to allow them to do whatever they want with a property. Yes you can assign a contract you own. Yes if you have an agreement and the seller gets 1% or more of the price as non-refundable money, then that would make an option valid. Having no "substantial consideration" in the deal is basically acting as a real estate broker especially if you never intend on closing unless you find a buyer. There is a fine line. I am sure you do business above board and legitimately, but many people don't. Certainly there are plenty of dumb or bad real estate agents, but at least they are policed by the State to some degree.

Dec 24, 2008 12:13 AM

Anonymous

Brett Wilson | Real Estate Radio USA

Rob you are right..lot of guys running around fresh from the most recent "course" trying to be millionaires waving 1o dollar bills around as some form of a big deposit...ridiculous!

Although th 1% figure you mention may be a bit high. Our standard is $1,000.00 no one, seller or banks, have had a problem with that. Especially on short sales where we may have 10-20 deals in play at any one time. Banks understand that.

Dec 24, 2008 05:07 AM

#10

Gene Allen

Fathom Realty - Cary, NC

Realty Consultant for Cary Real Estate

A lot of back and forth going on. I don't know enough about the investors out there but can certainly there and good and bad ones on both sides.

Dec 24, 2008 07:48 AM

Rob Arnold

Sand Dollar Realty Group, Inc. - Altamonte Springs, FL

Metro Orlando Full Service - Investor Friendly & F

Brett - Thanks for sharing. 1% is kind of a relative figure. The main thing is that for an option there has to be substantial consideration on the line. I do know from speaking with several Florida legislators that short sales are going to probably get some sort of regulation passed in 2009.

Dec 24, 2008 11:40 AM

Sharon Alters

Coldwell Banker Vanguard Realty - 904-673-2308 - Fleming Island, FL

Realtor - Homes for Sale Fleming Island FL

Brett, I wasn't intending to slam investors who are knowledgeable and do business above board. I'm talking about the people who have gone to the millionaire courses and really do not understand our business. Most definitely there are investors who know more about our business than many Realtors. If they do a good volume of business it makes sense to have a broker working with them to turn properties more quickly.

Dec 26, 2008 05:02 AM

Jim Frimmer

HomeSmart Realty West - San Diego, CA

Realtor & CDPE, Mission Valley specialist

Same thing in my neck of the woods here. Flippers -- while not many in this market -- have also come under the gun recently.

Best wishes for health, happiness, peace, and prosperity in 2009.

Dec 26, 2008 05:36 PM

Cyd Weeks

Palmcoasting.com Real Estate Corp - Palm Coast, FL

Realtor Palm Coast, Fl

I'm sure they are looking at the real estate industry but I was under the impression from reading other articles that mainly the dbpr was taking down the unlicensed contractors of all types...roofing, lawn maintenance, that type of thing. I didn't hear anything about an investor sting.

Dec 27, 2008 01:18 AM

Sandy Shores FL Realtor®, Melbourne Real Estate

M & M Realty of Brevard Inc. - Melbourne, FL

Brevard County Real Estate, Florida's Space Coast

Hi Rob, I think it's good that the state is cracking down on unlicensed individuals. Good post!

Dec 27, 2008 07:41 AM

Chris Brown- Florida Home Loan Specialist | Certified Mortgage Planner

Chris Brown | Certified Mortgage Planners - Orlando, FL

Chris Brown 407.367.2974

so that is what the guy trying to make peoples life miserable looks like. LOL - in all seriousness, it is probably a good thing that they are being more vigilent.

chris the implementer

Dec 29, 2008 11:25 PM