is wholesaling real estate legal in Vermont

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

legal real estate investing strategies wholesale real estate wholesaling real estate May 10, 2024

The terrain of real estate investment offers a diverse array of strategies, among which wholesaling stands as a notable approach for investors aiming to navigate transactions without direct property ownership. Against this backdrop, investors often inquire: "Is wholesaling real estate legal in Vermont?" This query underscores the pivotal importance of understanding the legal framework surrounding real estate wholesaling, as compliance with state regulations is paramount for investors seeking to operate within the confines of the law.

Investing in real estate wholesaling holds significant allure, characterized by its potential for swift returns and comparatively low capital requirements. This strategy empowers investors to act as intermediaries, facilitating transactions between property sellers and buyers without assuming ownership. However, the legality of wholesaling real estate hinges upon adherence to Vermont's specific regulatory provisions, necessitating a thorough grasp of legal statutes, contractual obligations, and licensing prerequisites.

*Before we begin our guide on whether wholesaling real estate is legal in Vermont, 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 an investment technique that has grown in popularity in the recent past. Its current rise in popularity is mainly due to the nature of the current real estate market – a seller’s market characterized by rapid appreciation and high demand.

Wholesaling real estate offers a great starting point for new investors who have little capital with which to work. Vermont real estate wholesalers search for available homes with a purchase price below market value – usually because the seller is facing financial hardship or is in a hurry to move.

Real estate investors locate wholesale opportunities using investment properties, owner-occupied properties, rental properties, etc. With sites like Zillow, Redfin, & online foreclosure auctions, the modern digital landscape offers an easily accessible conduit to real estate opportunities in ways never thought possible. The 21st-century real estate market allows new wholesalers to begin to develop a lender network and curated list of cash buyers, two keys to succeeding in wholesaling real estate.

Real estate wholesalers acquire the rights or beneficial interest (through the Principle of Equitable Interest) to buy the subject wholesale property by signing a legally enforceable real estate contract. The rearranging of property ownership and rights is established under what is known in the legal realm as the Doctrine of Equitable Conversion.

Investors who possess equitable title (or equitable interest) have the option of selling/assigning their contractual rights to another potential buyer – who is referred to as the end buyer or a cash buyer – using the legal instrument known as an assignment of contract.

Wholesaling properties resemble another real estate investment known as flipping houses, except a flipper must traditionally take the title for the short term, intending to renovate/update/rehab the property and then sell it.

What Do You Need To Know About Wholesaling Houses In Vermont?

Aspiring real estate investors in Vermont keen on diving into wholesaling need to first familiarize themselves with the local laws governing real estate transactions. It's crucial to understand these regulations to ensure your ventures are compliant and strategically sound. Equally important is knowing which properties and situations are suitable for specific exit strategies like contract assignments, double closings, or wholetailing, depending on the deal's specifics and the property condition.

Understanding the local market dynamics is another vital aspect. According to RedFin, in the Massachusetts real estate market, which can offer insights relevant to Vermont's nearby market, median sales prices have surged by 15.7% over the last year. Despite this increase in value, the number of homes sold has slightly decreased by 2.3% year over year. Homes are currently remaining on the market for about 53 days, with approximately three months of inventory available and a 14.4% increase in the number of homes for sale year over year. These indicators suggest a growing market that could potentially offer lucrative opportunities for wholesalers, especially given the increased inventory and longer market durations, which may allow for better deal negotiations.

For more detailed information and additional resources, it's wise for investors to connect with Vermont's Realtor organizations. These organizations can provide valuable insights and updated market data and confidently answer the question, " Is wholesaling real estate legal in Vermont?"

wholesale real estate contract pdf

The following list represents Vermont's largest trade and professional organizations for real estate professionals. Each of these real estate-related associations is a member organization of the National Association of Realtors (NAR):

  • The Vermont Association of REALTORS (VAR): The VAR was established in the mid-1940s and now serves more than 1,600 real estate professional members. The VAR administers the state’s nine local real estate boards and is a member of the NAR. Its mission is to offer support and resources to members and advocate for Vermont property owner rights.
  • The Northwestern Vermont Board of REALTORS (NVBR): Established in 1968, the NVBR serves realtors and affiliated businesses across these counties - Chittenden, Franklin, and Grand Isle. NVBR provides its professional members with industry news, professional development, networking events, and other relevant resources.
  • The Lamoille Area Board of REALTORS (LABR): Founded in 2007 and located in Stowe, Vermont, the LABR serves the real estate community by offering the resources and tools for professionals to serve the public with the highest service.
  • The Addison County Board of REALTORS (ACBOR): Established in the early 1980s in Montpelier, the ACBR is a real estate professional organization representing more than 50 real estate-related professionals across ten real estate brokerages in and around the capital region.
  • The Southern Central Vermont Board of REALTORS (SCVBR): Established in 2008, the SCVBR serves the real estate professional and community in the south and central portions of the Green Mountain State in matters of advocacy, ethics, and professional real estate practices

Vermont’s Secretary of State’s Office of Professional Regulation (OPR) administers and enforces the real estate laws and regulations in Vermont. Vermont real estate laws are noted to be among the most restrictive in the nation concerning sustainability and the protection of its natural environment. The Secretary of State, the Vermont Real Estate Commission, and the OPR combine efforts to administer the licensing laws for real estate professionals. Vermont offers online services to facilitate real estate licensing in the state. Vermont’s Real Estate Commission’s authority is found in 26 V.S.A. § 2251.

The Real Estate Commission in Vermont is a seven-member board, with members appointed by Vermont’s governor.

Vermont grants two types of real estate licenses, which expire every two years. Renewals require 16 hours of continuing education for real estate agents or 24 hours of continuing education for real estate brokers (26 VSA § 2293).

Vermont's first real estate license is the salesperson license, in which a real estate salesperson is defined as any person who, for a fee, compensation, salary of other consideration, or in expectation or upon the promise thereof, is employed by or associated with a licensed real estate broker to do any actor deal in any transaction as provided in subdivision (4) of this subsection for or on behalf of a licensed real estate broker.

The second real estate license issued by Vermont is a real estate broker license – Note that Provision 4 (Listed below as A – G) defines the actions that require either a Vermont real estate salesperson or real estate broker’s license which means any person who for another, for a fee, commission, salary, or other consideration, or with the intention or expectation of receiving or collecting such compensation from another, engages in or attempts to engage in, either directly or indirectly, by continuing course of conducts.

Vermont real estate law defines real estate as any interest or estate in land, excepting leaseholds, whether such interest or estate is corporeal, incorporeal, freehold, or nonfreehold, and whether situated in this state or elsewhere.

Vermont law offers exceptions to its license law such as any person, partnership, association, or corporation who as a bona fide owner performs any of the acts set forth in subdivision (a)(4) of this section with reference to property owned by them, nor shall it apply to regular employees thereof, when such acts are performed in the regular course of or as an incident to the management of such property and the investment therein.

Vermont’s License Reciprocity

Vermont offers real estate licensees reciprocity, as stated in Title 26, Chapter 041.

Vermont offers this provision for nonresident brokers, as stated in Chapter 041, Subchapter 003, wherein a nonresident of the state, who has held a real estate broker's or salesperson's license in the previous state of residence for a period of two years prior to applying for a license, may be licensed to act in a similar capacity in this state by conforming to the provisions of this chapter regarding application for and securing of license, except that the application shall be accompanied by a statement from the regulatory body of the other state concerning whether the applicant has been the subject of any criminal or disciplinary investigation or action.

It is noted that New Hampshire explicitly denotes a reciprocal relationship with Vermont real estate licenses.

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

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Yes, wholesaling real estate is legal in Vermont. This practice involves an unlicensed wholesaler who, instead of buying a property themselves, legally agrees to purchase a home and then sells or "assigns" that purchase agreement to another buyer for a fee. It's crucial for wholesalers to follow state laws closely and avoid performing any actions that would typically require a real estate license, such as marketing, selling, or buying a property on behalf of others. These activities are reserved for licensed real estate agents.

Wholesalers in Vermont can operate legally by focusing on acquiring the rights to purchase a property and then transferring those rights to an end buyer. This method, known as contract assignment, does not involve taking title to the property, thus not stepping into the realm of activities that require a real estate license. This approach allows them to engage in real estate transactions without the need for a license, as long as they adhere to the legal boundaries set by state regulations.

Vermont Is An Attorney-Close State

Additionally, it is noted that Vermont is recognized as an "Attorney Closing State.” In Vermont, all real estate transactions must be done by a real estate attorney licensed by Vermont’s State Bar.

And while this may seem like an extra cost, this mandate offers excellent protection to wholesalers in Vermont. As a result, a Vermont real estate attorney can become an excellent resource for a real estate wholesaler, helping guide the investor through the transaction to a legal conclusion.

What Are The Wholesaling Laws In Vermont?

In Vermont, laws relating to the practice of real estate are found in Title 26, Chapter 41 – Real Estate Brokers and Salespersons.

The key to wholesaling in Vermont is to avoid the actions requiring a state-issued real estate license. These actions include the following:

(A) lists, offers, attempts, or agrees to list real estate or any interest therein for sale or exchange;

(B) sells, exchanges, or purchases real estate or any interest therein;

(C) offers to sell, exchange, or purchase real estate or any interest therein;

(D) negotiates, or offers, attempts, or agrees to negotiate the sale, exchange, or purchase of real estate, or any interest therein;

(E) buys, sells, offers to buy or sell, or otherwise deals in options on real estate or any interest therein;

(F) advertises or holds himself or herself out as being engaged in the business of buying, selling, or exchanging real estate or any interest therein;

(G) assists or directs in the procuring of prospects, calculated to result in the sale or exchange of real estate or any interest therein; however, a nonlicensed employee of a licensee shall be allowed to respond to inquiries from members of the public, so long as the employee makes it clear that he or she is not licensed and that any information provided should be confirmed by a licensed person.

This sentiment is further noted in 26 V.S.A. § 2212 – Except as may be otherwise provided in this chapter, a person, firm, partnership, association, or corporation shall not engage in the business or act in the capacity of real estate broker or salesperson within this state without first obtaining a license therefor.

The consequences & penalties of violating Vermont’s license law, regarding unauthorized practice, are found in VSA § 127 .

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

Do You Need A License To Wholesale Real Estate In Vermont?

No, real estate wholesalers in Vermont do not need to earn a real estate license if their actions and choices do not violate Vermont’s state laws.

Real estate wholesalers would benefit from following these suggestions, which will help them avoid potential legal issues in Vermont -

  • Being transparent throughout the wholesale transaction should include one’s intentions. A well-written contract of sale is the easiest way to remain transparent.
  • Appropriately managing the expectations of relevant parties.
  • Acting with integrity. Offer a disclaimer when appropriate.
  • Consulting with a legal professional for clarification & protection.

Wholesaling real estate in Vermont

Final Thoughts

Wrapping up our discussion on "Is wholesaling real estate legal in Vermont" —yes, it absolutely is! The key for unlicensed wholesalers is to keep everything above board by sticking to the legal guidelines and avoiding any real estate agent-type activities which do require a license. Essentially, as long as you focus on acquiring rights to a property and then passing those rights along to an end buyer, you're on solid ground.

Now that you're clued in on the legality, why not dive deeper? If you're eager to make the most of the real estate opportunities in Vermont, consider checking out Real Estate Skill's free training program. It's a fantastic resource that could really kick-start your journey into the world of real estate. Ready to explore what you can achieve? Let’s get started!

*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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