Legal Question in Real Estate Law in New York
Equitable Conversion
I am trying to use a method to buy real estate called the Inverse Purchase in New York State.
I go to contract using a Purchase Sales Agreement with a seller disclosing I am a private investor looking out for my own best interests.
I find an end buyer, and assign them to my previous purchase position. In return for the assignment the seller pays me the difference between what I contracted to pay him and what I sold at.
Would you agree on the following and if not please let me know your thoughts?
I have an adversarial relationship with the buyer and the seller there for I am not acting as an Agent and do not need a real-estate license.
I am not considered a broker because I have nothing to do with any actual lending.
I have been told there is no problem with this technique in NY. It is a contract assignment.
NY does not recognize Equitable Conversion from Black Law Dictionary and this is what this technique is based on.
I was told although not recognized; there is nothing illegal about it by other people using system
2 Answers from Attorneys
Re: Equitable Conversion
Where, It appears that you want to "flip" property w/o disclosing" your connection to the transaction; collect a "broker" commission, without subjecting yourself to disclosure requirements or rules, re "brokers," the tax laws of the NY or federal government. Want to ignore buyer and seller preferences, regarding to whom they may or may not want to sell their property, etc., YOU should re-think your plan.
Because, it does sound like your design to "skirt" the "NY" disclosure and other rules and practice, is an attempt to "get over," that will result in someone getting into trouble.
Good luck,
Re: Equitable Conversion
There is nothing wrong with going to contract and assigning your position. However, the payment you receive from the seller not only appears to be a brokerage commission, but an illegal fee for a "net listing". In a bona fide assignment in the nature of a flip, you would be collecting an amount from the buyer that reflected the discounted contract price. If you're getting money from a seller in connection with a property which you do not purchase and for which you produce another purchaser, it would be hard to explain that as anything other than a commission.
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