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Re: Newbie & Finder's Fee

Posted by Ward-CA- on July 05, 2001 at 10:33 PM

In Reply to: Newbie & Finder's Fee posted by Troy on July 05, 2001 at 5:23 PM

: Ward, what is your opinion in regard to a newbie just finding deals and flipping them out to investors for a finder's fee ... rather than trying to rehab and retail the deal themselves? Thumbs up, or thumbs down?

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Troy, in many states, you must have a real estate license as a perequisite to legally charging someone a finder’s fee. However, CA allows a non-licensee to collect a finder’s fee if the non-licensee does nothing more than introduce party A to party B. The non-licensee cannot participate in negotiating any terms whatsoever concerning the transaction.

However, in the instance of a foreclosure, it’s a requirement of Civil Code Section 1695 (see link below) that whoever represents the buyer in any capacity, must have a real estate license.

So why not create your own title holding trust with yourself as the trustor, trustee and beneficiary. Then go out and negotiate the deal for your own account, taking title as the trustee of your trust. Then sell your investor 100% of the beneficial interest in your trust. You remain the trustee until after escrow closes and then transfer in the new successor trustee designated by the investor/beneficiary.


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