Is it illegal to Flip properties in state of Maryland?
Please help?
Answer:
Unfortunately the links provided give a 'definition' of a flipper and the definition means you inflate the sales price and push buyers into a home they couldnt afford at an exagerated price. Yes, that would be illegal.
What you want to know is if it is legal to purchase a fixer, make the improvemnts, and sell for a profit. And THAT is perectly legal. If you are listing on the open market and not having anything to do with the lending process you've got very little to worry about. Its only those 'flippers' who are trying to 'hook up' buyers with little hope of buying otherwise that seem to be fraudulent.
It is illegal anywhere to break building codes by doing stupid things to the structure of a building (such as demolishing structural load-bearing walls), but I can't see why proper renovations would be outlawed anywhere? I'm curious about your sources.
You need to get a building permit!!
The Federal Government has locked up and prosecuted many people for flipping property in MD.
http://www.peoples-law.org/housing/home-.
http://www.oag.state.md.us/consumer/flip.
http://www.mortgagefraud.org/display/sho.
http://rismedia.com/index.php/article/ar.
The illegal activity begins with fradulent appraisers - a house sells for $100,000 in a neighborhood where houses average $25,000. Everyone walks away from the settlement table with money BUT the homeowner is stuck with a rotten house which is not worth $25,000. That behavior is illegal.
Now, if you buy a house for $25,000 in a neighborhood where houses average $100,000 and spend $25,000 to fix the house - you can sell for $100,000 and walk away with $50,000 profit. Of course, If I were the buyer - I wouldn't offer you $100,000 - maybe $75,000 and you can always refuse me. Regardless - this transaction would be legit because a legit appraiser would value the remodeled house at $100,000 like the other houses in the area.
Go right a head and do so and I'll buy the property at auction for less than value while you warm a jail cell.
You can flip anywhere. You can not however do it fraudulently all information in our research department shows that there has been a lot of fraud forcing your state's attorney general to issue a brochure warning consumers of fraudulent activity by certain house flippers such as loan scams.
If you are told of the original purchase price and the new price and terms without any fraud and a deal is provided to you say through owner financing that meets your approval and budget and all proprieties are followed in the purchase agreement including any required disclosures there is nothing illegal about flipping a property. If all facts are known and there is no fraud and it does not violate city, county or state laws as to zoning and use, a real estate transaction can not be impeded by the government. If it was it would be a taking without compensation and as such the seller has certain constitutionally provided legal recourse against the government.
Here are some links from our research department so you can verify my opinions and those of others:
Maryland’s Attorney General on warnings of Fraudulent House Flipping: http://www.oag.state.md.us/consumer/flip.
Wet Settlement funding at closing: http://www.dllr.state.md.us/finance/advi.
STATE’S WEB SITE: http://www.maryland.gov/portal/server.pt.
REAL ESTATE COMMISSION: http://www.dllr.state.md.us/license/occp.
LAWS: http://mlis.state.md.us/#stat
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