Is Wholesaling Real Estate Legal In South Carolina? A 2024 Guide For Investors

South Carolina is a beautiful and diverse state steeped in history. Its picture-perfect small towns and friendly locals everywhere you go make it a great place to visit.

Many people call the Palmetto State home, and more people want to live here than ever before. The same holds true for the entire southeast United States, as more and more people migrate to nearby states such as North Carolina, Georgia, and Florida.

That means there are many opportunities to do well in the real estate industry. Many people make a great living as traditional agents and brokers, others as real estate investors.

Still, more and more, many people are looking for a flexible alternative, which is why many people are exploring real estate wholesaling as a possible career; this brings us to our most important question: Is wholesaling real estate legal in South Carolina? Let's find out more!

*Before we begin our guide on whether wholesaling real estate in South Carolina 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 Do You Need To Know About Wholesaling In South Carolina?

You need to know a few key points before considering wholesaling real estate in South Carolina.

First, wholesaling is legal, but you must follow certain statutes to comply with state law. They aren't complicated, but if you don't follow the letter of the law, you could face fines and penalties that could cause you big problems.

Compliance hinges on the type of wholesaling activity you pursue. The two primary ways to wholesale real estate are assigning a contract and double closing. Each method is structured differently, and you must acquaint yourself with its legalities before starting.

When you wholesale properties in South Carolina, you must also be transparent; this means disclosing your intentions as a wholesaler, much like a buyer who provides you with disclosures and contingency agreements required for both parties.

Realtor associations throughout South Carolina can be excellent places for wholesalers to make valuable contacts and gain critical knowledge about local market conditions. Consider contacting these larger regional associations when attempting to answer the question, "Is wholesaling real estate legal in South Carolina?":

• Coastal Carolinas Association of Realtors (CCAR)
• Central Carolina Realtors Association (CCRA)
• Charleston Trident Association of Realtors (CTAR)

State agencies can also provide an abundance of economic data. The South Carolina Department of Commerce is an excellent place to start. Here, you’ll get a bird's eye view of the state’s leading indicators.

Individual cities are also very helpful when you’re ready to drill down to a specific market.

Consider some key statistics about the state's five largest cities. According to Wikipedia, Charleston, Columbia, North Charleston, Mount Pleasant, and Rockfill are the five largest cities.

Read Also: The Pros & Cons Of Wholesaling Real Estate: An Investor's Guide

Is Wholesaling Real Estate Legal In South Carolina?

It is legal to wholesale real estate in South Carolina, but you must follow all real estate laws as laid out in Title 40 of the South Carolina State Code of Laws.

Also, all the statutes that apply to real estate licensing laws and policies in South Carolina are governed by the South Carolina Real Estate Commission, which is part of the state's Labor, Licensing, and Regulation Department (SCLLR), located in Columbia.

Visit the Commission's website for the latest information and learn more about how the Real Estate Commission regulates real estate brokers, salespersons, and property managers.

Wholesaling is also further validated under the South Carolina Code of Laws Section 36-2-210 Delegation of performance, assignment of rights, which states:

Unless otherwise agreed all rights of either seller or buyer can be assigned except where the assignment would materially change the duty of the other party, or increase materially the burden or risk imposed on him by his contract, or impair materially his chance of obtaining return performance. A right to damages for breach of the whole contract or a right arising out of the assignor's due performance of his entire obligation can be assigned despite agreement otherwise.

Do You Need A Real Estate License For Wholesaling In South Carolina?

The simple answer is "no," but it's good to know a few things about licensing requirements and wholesaling in South Carolina.

Most states use "for another" language in their licensing laws, meaning several activities require a license if you do them "for another."

However, South Carolina does not use this provision to set forth specific exemptions.

South Carolina real estate law states, in part:

"This chapter does not apply to…the sale, lease, or rental of real estate by an unlicensed owner of real estate who owns any interest in the real estate if the interest being sold, leased, or rented is identical to the owner's legal interest."

However, you must have an interest in the property before you sell it. Instead of a license, you can have a contract in place, giving you the right to purchase the property; this exempts you from licensing regulations.

A few states limit real estate activities, even if you are acting on a property in which you have an interest.

Maryland, Michigan, Minnesota, South Dakota, and Wisconsin limit the number and frequency of real estate transactions before you need a real estate license. For example, in Michigan, you're limited to four transactions annually before you must have a license.

You can't market a property without a license if you want to assign a contract. You can only market the rights to assign the contract. Understand this critical difference to stay on the right side of the law.

Many wholesalers get real estate licenses to avoid potential conflicts or constraints. The South Carolina Real Estate Commission website details the requirements to become a Realtor.

Read Also: How To Find Off-Market Properties In South Carolina: The 3 Best Sources

What Are The Wholesaling Laws In South Carolina?

There are no laws that specifically address wholesaling in South Carolina. That means general real estate laws will govern all state property transactions.

South Carolina Code of Laws

The South Carolina Code of Laws covers real estate laws. The 10-member South Carolina Real Estate Commission, under the auspices of the Department of Labor, Licensing, and Regulation, oversees the pertinent codes.

You can find laws governing South Carolina Real Estate Licensing in Chapter 57 of Title 40 of the state's statutes. Similarly, laws governing real estate education are found in Chapter 105.

Real Estate Settlement Procedures Act (RESPA)

Wholesalers must also be aware of the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. § 2607 (2005). This act prohibits kickbacks and unearned fees, including any fee, kickback, or anything of value given to or received by anyone in any business incident to or part of a settlement service.

Violating RESPA can result in criminal penalties of up to $10,000 and one year in confinement. Private lawsuits can result in a civil penalty of up to three times the amount paid for the service.

According to the statute:

"Settlement services" includes any service provided in connection with a real estate settlement including, but not limited to, title searches, title examinations, the provision of title certificates, title insurance, services rendered by an attorney, the preparation of documents, property surveys, the rendering of credit reports or appraisals, pest and fungus inspections, services rendered by a real estate agent or a broker, the origination of a federally related mortgage loan (including, but not limited to, the taking of loan applications, loan processing, and the underwriting and funding of loans), and the handling of the processing and closing of settlement. "Thing of value" includes any payment, advance, funds, loan, service, or other consideration."

Other Legal Issues

When in doubt, it's always best to do additional research on the legalities of wholesaling or consult a real estate attorney to ensure you fully comply with all South Carolina real estate laws, especially if you are a new wholesaler.

Read Also: How To Wholesale Real Estate In South Carolina: Step-By-Step

How Can I Legally Wholesale Real Estate In South Carolina?

Learning the processes and following state laws is the key to legally wholesaling real estate in South Carolina.

You must be honest and transparent in your dealings. You must also be willing to spend a few well-placed dollars to get legal help when needed.

It is critical to fully understand the mechanics and legalities of how various types of wholesaling deals work.

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Assignment Of Contract

For example, if you use the assignment of a contract method, you cannot market a property. You can only market the contract's rights to buy the property you have placed under a purchase agreement with the seller. You can only market a property in South Carolina if you have a real estate license.

Also, you are paid a fee when you assign the contract vs. receiving a commission, which would be the case if you were a real estate agent affiliated with a brokerage that sells a property on behalf of an owner.

The Double Close

If you wholesale a property using the double close method, you complete two separate transactions.

The double-close strategy requires the investor to buy the property and take the transaction to the closing table. The wholesaler does not collect an assignment fee. Instead, they collect a profit from the sale of the subject property when they sell it immediately after purchasing it. Consequently, a double close is when both transactions are completed in a day or two.

Buy & Sell

A buying and selling method is also two separate transactions, but the timing is spaced farther apart, sometimes days or weeks after the wholesaler completes the original purchase.

Wholesalers sell the property to an end buyer/investor who will rehab it and flip it. Sometimes, a wholesaler might perform minor maintenance or upgrades before selling to a final buyer.

While assigning a contract does not require an initial cash outlay, the wholesaler must disclose the amount of the fee they will collect upon completion of the assignment.

With the other two types of methods, since they involve two separate transactions, the wholesaler does not need to disclose how much profit they are making, giving them added leverage when putting together a deal.

Is Co-Wholesaling Real Estate Legal In South Carolina?

Co-wholesaling is the act of partnering with one or more other entities to complete wholesaling transactions.

People often choose to work on wholesale deals because they want to do a greater volume of deals or want added muscle in areas where they are weak. For example, one partner will often search for properties to place under contract while the other partner provides financing resources, works with lenders, seeks legal advice, determines market value, or assists in negotiating a purchase price.

While you should always vet potential partners in a co-wholesaling arrangement, it is also smart to create a legal and binding co-wholesaling agreement that protects your interests and spells out the expectations for each co-wholesaler.

It's also important to be transparent with any seller that you have additional partners working on your deal.

Is Reverse Wholesaling Real Estate Legal In South Carolina?

Reverse wholesaling in South Carolina is exactly what it sounds like. You simply reverse the steps in a wholesaling deal to facilitate a real estate transaction.

Essentially, this means lining up potential buyers before you find a suitable property and execute a purchase contract. Many wholesalers have created buyer lists to move quickly when deals arise; this creates more stable and long-term relationships with buyersandg a more stable exit strategy for the wholesaler.

Reverse wholesaling is legal and legitimate if you follow the laws and processes regarding wholesaling activities in South Carolina.

Final Thoughts

Charleston, Columbia, Myrtle Beach, and other real estate markets throughout South Carolina offer wholesalers excellent opportunities to structure real estate deals, find motivated sellers, and place properties under contract.

But under the right circumstances, you can put together a deal just about anywhere and with pretty much any property.

Like any other endeavor, running a wholesale business requires dedication, knowledge, and hard work to produce results over time.

Understand the state laws and statutes, get legal and contract help when it's prudent, and you should enjoy a rewarding wholesaling experience in South Carolina. When all is said and done, it's time to stop asking, "Is wholesaling real estate legal in South Carolina?" and start looking into how to wholesale real estate.

*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.