is wholesaling real estate legal in new hampshire

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

contracts legal real estate investing strategies wholesale real estate wholesaling real estate May 03, 2024

Wholesale properties in New Hampshire offer a wealth of opportunities for local investors, but far too many people aren't even sure if this exit strategy is legal. As a result, we've developed this tool to examine the critical question: "Is wholesaling real estate legal in New Hampshire?" and guide you through the legal landscape, ensuring your investment efforts align with state regulations. Uncover essential insights and practical advice as we dive into licensing requirements and effective strategies to navigate and succeed in New Hampshire’s real estate wholesaling market. We'll tell you everything there is to know about wholesaling properties in New Hampshire legally and ethically, starting with the following:

*Before we begin our guide on whether wholesaling real estate in New Hampshire is legal, 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 strategy where an investor, known as a wholesaler, facilitates the sale of a property without actually owning it. This is typically achieved through three methods: 

  • Assigning contracts is the most traditional form of wholesaling. Here, the wholesaler doesn't buy the property but acquires the rights to purchase it. Using the doctrine of equitable conversion, they then transfer this right to an end buyer for a fee, essentially selling the contract.
  • Double closings involve the wholesaler temporarily purchasing the property and quickly reselling it to the final buyer. This method requires two sets of closing processes but allows the wholesaler to conceal the original purchase price.
  • Wholetailing combines wholesaling and retailing, where the wholesaler buys the property, may perform minor enhancements, and then sells it on the retail market, usually to an end user.

Each method provides a different approach to capitalizing on real estate investments without the need for significant upfront capital.

What Do You Need To Know About Wholesaling Houses In New Hampshire?

Before diving into the world of real estate wholesaling in New Hampshire, it’s essential to understand the local landscape. This section explores what every investor should know about the state if they're considering wholesaling. From demographics and population trends to the regulatory bodies overseeing real estate, we’ll cover the crucial factors that help answer the question: "Is wholesaling real estate in New Hampshire legal?"

New Hampshire At A Glance

According to the United States Census Bureau, New Hampshire has a population of approximately 1,402,054. Despite its relatively small size, however, New Hampshire’s gross domestic product is $88 billion annually. The median household income is about $90,845 per year, ranking it among the highest in the country and favorable for anyone who wants to flip properties. Subsequently, New Hampshire has a poverty rate of only 7.3%, well below the national average. Combined, these economic indicators work in favor of local real estate investors.

New Hampshire Real Estate Associations And Governing Bodies

The state's primary real estate trade association group is the New Hampshire Association of Realtors (NHAR). The organization has approximately 7,000 members and keeps all of them informed of housing sales data, emerging trends, and the status of proposed new laws that may impact the state’s real estate industry. NHAR also provides support and resources to members so they can serve consumers efficiently and ethically. Due to the NHAR's influence on the local housing sector has become a trusted source for anyone asking, "Is wholesaling real estate legal in New Hampshire?"

In addition to the statewide Realtor Association, there are also 14 local boards:

Under the New Hampshire Office of Professional Licensure and Certification (OPLC), The New Hampshire Real Estate Commission develops and maintains the ethical, professional, and educational standards for the licensure of salespersons and brokers in New Hampshire. In doing so, the commission regulates all of the following:

  • Salespersons
  • Associate Brokers
  • Managing Brokers
  • Principal Brokers
  • Real Estate Firms
  • Real Estate Firm Branches
  • Real Estate Trade Names

This government body also safeguards New Hampshire citizens by regulating real estate brokers and salespersons to ensure that they meet and maintain minimum standards that promote public understanding and confidence in the real estate brokerage business. Since a real estate license can influence wholesale practices, the New Hampshire Real Estate Commission is another great source of information for those asking, "Is wholesaling real estate legal in New Hampshire?"

New Hampshire Is An Attorney Close State

New Hampshire is one of many states that require an attorney to complete a real estate closing transaction. Due to the complexities of real estate investing, having an attorney close at hand is always a good idea anyway, but in New Hampshire, it's the law.

Other states with this type of regulation on the books include Alabama, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Kansas, Kentucky, Maine, Maryland, Massachusetts, Mississippi, New Jersey, New York, North Dakota, Pennsylvania, Rhode Island, South Carolina, Vermont, Virginia, and West Virginia. Therefore, many of the attorney laws that apply to New Hampshire also apply to these states.

Success Story: How Joe Went From Driving Uber To Wholesaling Houses In New Hampshire!

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Wholesaling real estate is legal in New Hampshire; however, you must conduct this type of business within the confines of state law. If you don’t, you could face several potential legal problems.

The first thing you must do is educate yourself about the different strategies associated with wholesale deals. Three primary strategies are used to wholesale properties in New Hampshire: assignment of contract, double closing, and wholetailing.

Of the three, most wholesalers often encounter legal problems using the assignment of contract strategy. To be clear, assigning contracts is legal in New Hampshire, but it needs to be done correctly. Wholesalers need to understand that when they enter into a contractual agreement with a property owner, they can only market the rights to the contract’s ownership; they can't market the actual property itself. Only a licensed real estate salesperson or broker can publicly advertise a piece of real estate for sale.

Most people first decide to enter wholesaling using the assignment of contract strategy because it provides them with the lowest barrier to entry into this profession. With an assignment of contract, you are not buying or selling a property, so there are usually no costs involved, such as putting down earnest money or paying for repairs, even if the property is in foreclosure or a fixer-upper.

All you are doing is facilitating the transfer of the rights to purchase a piece of real estate through an assignment of contract. You are not collecting a commission for your efforts. Instead, you collect an assignment fee when the contract is transferred to a new buyer. You do not have a role in the sale of the property from the person who owns the property and the person who owns the rights to buy the property as indicated in the contract.

The circumstances are different for a double closing or wholetailing strategy. In both scenarios, the wholesale deal involves an investor purchasing a home and quickly selling it through two distinct transactions. Initially, the investor closes on the property with the seller, taking legal ownership. Almost immediately afterward, the investor sells the property to the end buyer in a separate, second closing. This process ensures that both transactions are independent and legally clear, allowing the investor to swiftly move the property without holding it for a long period.

The upside is that you can generate large profits if you can cut a deal that involves buying a property at a low price and then reselling it at a much higher price. The trade-off is that you often have to come up with funding to facilitate the transactions. Most wholesalers utilize private money lenders, lines of credit, hard money lenders, and transactional funding to capitalize on these wholesale deals.

The New Hampshire Real Estate Practice Act defines regulated and prohibited activities regarding real estate transactions in the state. As a result, aspiring investors must abide by these laws when wholesaling. The New Hampshire Real Estate Commission also has a detailed list of practices, procedural rules, and regulations that real estate wholesalers should familiarize themselves with.

Read Also: How To Wholesale Real Estate In new Hampshire: Step-By-Step (2024)

What Are The Wholesaling Laws In New Hampshire?

The New Hampshire State Constitution of 1783 is the primary governing legal document of the state, followed by the New Hampshire Revised Statutes Annotated and the New Hampshire Code of Administrative Rules.

Under Title XXX of the New Hampshire Revised Statutes Annotated (RSA), RSA 331a covers real estate transactions and is separated into 35 subchapters, 331a:1 to 331a:35.

RSA 331a is also the main resource of regulations for the New Hampshire Real Estate Commission.

Section 331-A:16-b goes into detail to define who is eligible for commission payments, which is an important consideration for wholesalers. Among several other requirements, the key provision states:

"All of the partners, members, officers, or shareholders of any unlicensed business entity, including a partnership, association, limited liability company, limited liability partnership, or corporation, hold a valid and active license issued under this chapter."

Section 331-A:25-b defines seller agent duties. This section says, in part, that one of the seller agent's duties is to perform the terms of the written brokerage agreement made with the seller or landlord.

Perhaps the most important Section is Section 331-A:26, which addresses prohibited conduct. This section has 38 parts, and whether or not you are a licensed wholesaler, you must understand several provisions, many of which involve the prohibition of clearly defined illegal activities.

Section 331-A:34 also defines unlawful practices and the potential for penalties if violations occur. In part, the Section reads:

  1. "Whoever, not being licensed or otherwise authorized according to the law of this state, shall advertise oneself as engaging in real estate brokerage activity, or shall engage in real estate brokerage activity, according to this chapter, or in any way hold oneself out as qualified to do so, or call oneself a "real estate salesperson,” "real estate broker,” or "real estate licensee,” or whoever does such acts after receiving notice that such person's license has been suspended or revoked, is engaged in unlawful practice."
  2. "Any person who engages in unlawful practice shall be guilty of a class A misdemeanor if a natural person, or guilty of a felony if any other person."

Section 331-A:10 deals specifically with Qualifications for Licensure and will be discussed separately in the section below.

Although it doesn’t directly affect licensed real estate professionals and wholesalers, you should at least be aware that the New Hampshire Real Estate Appraisers Board regulates appraiser activity in the state. It is governed by RSA 310-B and Rab 100-500.

Disclosure Obligations

When you sell a home in New Hampshire, you are bound by certain disclosure obligations as part of your due diligence. Residential real estate sellers must tell prospective homebuyers important information to ensure no deception occurs.

Sellers who make disclosures as part of the purchase agreement will prevent the buyer from suing them after closing if they discover any hidden defects that were previously revealed.

Most states require a detailed written disclosure report to potential buyers that identifies several things. However, in New Hampshire, the disclosure laws are relatively limited.

N.H. Rev. Stat. Ann. § 331-A:25-b says that agents have a duty to sellers to act on behalf of all prospective buyers and disclose to them "any material physical, regulatory, mechanical, or on-site environmental condition affecting the subject property of which the licensee [the agent] has actual knowledge."

Disclosures required by New Hampshire law by sellers are found in N.H. Rev. Stat. Ann. § 477:4-d. It requires that prior to any buyer’s sales offer of sale by the buyer, the seller must disclose, in writing:

  • Information about the type of private water supply system, including its location, malfunctions, date of installation, date of most recent water test, and whether there have been problems, such as an unsatisfactory water test or a water test with notations.
  • Information about the private sewage disposal system, including its location, malfunctions, the date it was most recently serviced, and the name of the contractor who services the system.
  • Information about a home's insulation, including its type and location.
  • If no information about the private water system, sewage system, or insulation is available, it must be disclosed in writing. Remember, many homes will not have "private" water or sewer systems; they'll use public ones, so this disclosure may not be needed.

N.H. Rev. Stat. Ann. § 477:4-a requires sellers to give the buyer specific radon gas, lead paint, and arsenic notices.

An experienced real estate attorney will have detailed knowledge about disclosures and should be able to provide you with legal advice and any forms you'll need, along with assistance on completing those forms properly.

Do You Need A License To Wholesale Real Estate In New Hampshire?

A license is not required to wholesale real estate in New Hampshire. However, many flippers do indeed decide to get a real estate license. Although real estate agents and those with a broker's license must follow a different set of rules, they often view this as a way of protecting themselves from potential legal pitfalls.

Wholesaling real estate in New Hampshire

There are several steps you'll need to follow to get a license.

The New Hampshire Real Estate Commission requires all salesperson exam applicants to complete a pre-licensing course before taking a real estate examination. You must take the course from a school or person accredited to teach the pre-licensing course.

Candidates for the salesperson’s examination shall show proof of completion of 40 hours of approved study before the date of examination according to RSA 331-A:10, I(b) and administrative rule Rea 301.03(o) and (p) consisting of the following:

Evidence of beginning and completing 40 hours of accredited pre-licensing education consisting of the following:

  • "(1) New Hampshire accredited pre-licensing course with a minimum of 32 hours of classroom attendance and no more than 8 hours of distance education within 1 year prior to the date of examination; or"
  • ("2) A minimum of 32 hours of classroom attendance and no more than 8 hours of distance education within 1 year prior to the examination date consisting of 34 hours of accredited national material completed in another state and a minimum of 6 hours of New Hampshire accredited state material."

New Hampshire Real Estate Examinations are administered by computer at four PSI Test Centers in New Hampshire – Concord, Manchester, Nashua, and Portsmouth. Detailed directions and maps are provided at GoAmp.

The national salesperson portion of the test consists of 100 multiple-choice questions. The New Hampshire state portion of the test has an additional 40 questions you'll need to answer.

To be eligible to apply for a salesperson license, you must pass both the National and State portions of the examination. The passing score for each portion is a scaled score of 70.

Candidates who pass any portion of the examination but fail to satisfy the education requirement before the examination will be required to retake it.

Also, pursuant to RSA 331-A:10-a, all applicants for a new salesperson or broker license “shall submit to the New Hampshire Department of Safety, Division of State Police, a notarized criminal record release authorization form, along with the appropriate fee, prior to applying for a real estate license.”

You will need to complete a Salesperson Application after you pass your course. The fee to take the exam is $155, and it is non-refundable.

Next, mail your completed application, required forms, and payment to the Office of Professional Licensure & Certification.

If you already have a license and want to renew it, go to Online Applications for Renewal. Paper renewal applications are not accepted.

Wholesale Real Estate Contract New Hampshire

You must be familiar with two primary contracts as a New Hampshire wholesaler.

The first is the Purchase And Sales Agreement; the New Hampshire Association of Realtors makes this standard 5-page fillable agreement available for use and suitable for most real estate transactions.

wholesale real estate contract pdf

The second document is a standardized contract assignment; this is sometimes used as an addendum to the purchase contract. In other cases, a party to the transaction may prefer a more customized and specific form to assign the contract.

A typical assignment contract looks like this:

assignment of contract

Suppose you're not experienced or comfortable dealing with real estate investors, cash buyers, or any parts of real estate law. In that case, it's always a good idea to seek legal advice from an experienced real estate attorney.

Final Thoughts

Not only is wholesaling real estate legal in New Hampshire, but it also presents a lucrative opportunity for those who adhere to legal guidelines. By understanding and complying with local real estate laws, investors can capitalize on the benefits of wholesaling, turning it into a profitable venture. Remember, success in wholesaling hinges on conducting transactions within the bounds of the law. With all this said, it's time to stop asking, "Is wholesaling real estate legal in New Hampshire," and start looking into how to do it yourself.

*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

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