REMINDER: THE PRACTICE OF MARKETING AND/OR ADVERTISING RESIDENTIAL WHOLESALE DEALS IS REGULATED BY LLR SCREC AS REQUIRING A BROKER LICENSE, AND A BROKER FIRM AND ITS SUBAGENTS ARE PROHIBITED FROM ENGAGING IN, REPRESENTING OTHERS IN, OR ASSISTING OTHERS IN THE PRACTICE OF RESIDENTIAL WHOLESALING.

ASSIGNING OF CONTRACTS, OR THE OFFERING TO ASSIGN CONTRACTS, ON RESIDENTIAL PROPERTY IS NOT WHOLESALING.

HOWEVER, LLR SCREC LIKELY MAY OPINE THAT THE MARKETING AND/OR ADVERTISING OF THE ASSIGNMENT OF THE RESIDENTIAL CONTRACT SANS THE RESIDENTIAL REAL ESTATE UNDERLYING THE CONTRACT IS SO DIFFICULT THAT IT IS VIRTUALLY IMPOSSIBLE.

SECTION 40-57-350. Real estate brokerage firm duties to client; agency relationship; applicability of common law.

(A) A real estate brokerage firm that provides services through an agency agreement for a client is bound by the duties of loyalty, obedience, disclosure, confidentiality, reasonable care, diligence, and accounting as set forth in this chapter. Pursuant to the aforementioned duties owed to a client, a real estate brokerage firm and its subagents are prohibited from engaging in, representing others in, or assisting others in the practice of wholesaling. The following are the permissible brokerage relationships a real estate brokerage firm may establish:

(44) "Wholesaling" means having a contractual interest in purchasing residential real estate from a property owner, then marketing the property for sale to a different buyer prior to taking legal ownership of the property. Advertising or marketing real estate owned by another individual or entity with the expectation of compensation falls under the definition of "broker" and requires licensure. "Wholesaling" does not refer to the assigning or offering to assign a contractual right to purchase residential real estate.

Duty to Ensure Written Agreements and Provide Copies to All Parties

Facts:

Realtor® represented Investor B as a "buyer-seller-flipper" in a "wholesale" real estate transaction where an offer from Buyer C was negotiated and accepted.

Investor B held a contract with deeded owner Seller A at a lower purchase price, which was immediately followed by a second contract where Investor B resold the property to Buyer C at a significantly higher price.

Realtor® facilitated this contract with middleman Investor B between Seller A and Buyer C.

Realtor® misrepresented the identity of Investor B and the necessity of their insertion into the transaction, driven by a primary focus on maximizing their own commission.

Throughout these multi-stage transactions, the involved parties made repeated requests to Realtor® for the transaction documentation.

However, Realtor® failed to produce or maintain written copies of the listing agreement with the deeded owner, Seller A, the listing agreement with Investor B, the sales contract between Investor B and Buyer C, or a formal written release of the original contract.

An ethics complaint was subsequently filed by a cooperating professional, alleging a violation of Article 9.

Conclusions of the Hearing Panel:

The Hearing Panel concluded that the Realtor® was in clear violation of Article 9 of the Code of Ethics.

The panel determined that Realtor® failed to carry out the mandatory duty to assure that all agreements related to the real estate transactions were maintained in writing, expressed in clear and understandable language, and properly furnished to each party upon signing or initialing.

The panel emphasized that prioritizing personal financial gain or commission structures does not relieve a Realtor of the strict obligation to protect all parties through complete, transparent, and written contractual documentation.

Posted by: Byron King on 7/17/26 (This information is only accurate as of 7/17/26. You must contact SCR for updates and changes to this information after 7/14/26, as laws and regulations may change over time. SCR 803-772-5206 or email info at screaltors.org or email byron at screaltors.org)

This information is not legal advice. This information is intended only to provide general information and may not be relied upon as specific legal guidance. Legal counsel should always be consulted before acting in reliance on this information.