California tightened the rules on wholesaling, and a lot of the commentary online is still describing how things worked before. Here is the current picture and how experienced operators are structuring around it.
The short answer
Assigning a purchase contract is still legal in California. What changed is the disclosure required, the limits on unrecorded assignments, and how aggressively the line between marketing a contract and brokering real estate is being enforced. Structure the deal correctly and you are fine. Improvise and you are exposed.
The line that has always existed
Under the Business and Professions Code, you need a license to sell or offer to sell real property for someone else. You do not need one to buy and sell your own property, and an equitable interest created by a purchase contract counts as your own interest.
That distinction is the entire legal foundation of wholesaling. When you market "a house for sale" that you have no contractual interest in, you have crossed into brokerage without a license. When you market your contractual right to purchase, and you are transparent that this is what you are selling, you are dealing in your own asset.
In practice the difference shows up in three places: whether you actually have a signed contract before you market anything, what your marketing says you are selling, and whether your buyer understands they are taking an assignment rather than buying from a titleholder.
What changed with AB 1720
The legislation tightened requirements around assignment of residential purchase agreements. The practical effects worth planning around:
- Disclosure to the seller. The seller needs to know at contract signing that you may assign your interest rather than close yourself. Bury it and you are handing a future opponent an argument.
- Assignment fee visibility. Keeping the fee off the settlement statement invites problems. Run it through escrow.
- Cancellation exposure. Sellers have clearer footing to walk when disclosure was not made properly, which turns a paperwork shortcut into a lost deal.
How experienced operators structure deals now
Disclosure in the contract itself
Not in a separate addendum the seller signs without reading. A clause in the purchase agreement stating you may assign, that you may profit from the assignment, and that the seller's proceeds do not change either way. Sellers rarely object once it is explained as what it is: you may bring a partner to the closing table.
Double close when the spread is large
When the assignment fee is big enough to trigger a reaction, two separate transactions solve it. You buy, you sell, the end buyer sees their own settlement statement and not your margin. Transactional funding costs a point or two for a same-day close, which is cheap against a blown deal.
Everything through escrow
Assignment agreement to escrow, fee disbursed on the settlement statement, no side payments. This is also what protects you when a buyer decides after closing that your fee was excessive.
Real earnest money
A hundred dollars in escrow signals you have no intention of closing yourself. Deposits that reflect a genuine purchase intent make the equitable interest argument much stronger if anyone questions it.
What still gets people in trouble
| Practice | Problem |
|---|---|
| Marketing before the contract is signed | Selling property you have no interest in. This is the classic unlicensed brokerage fact pattern. |
| Photos of a house with "for sale" language | Reads as marketing the property, not the contract. Language matters in an enforcement review. |
| Verbal-only assignment disclosure | Unprovable when the seller later says nobody told them. |
| Fee paid outside escrow | Looks like concealment even when it is not. |
| Contracts with no meaningful deposit | Undermines the position that you were a genuine buyer. |
Where lead sourcing fits
None of the above restricts how you find sellers. Buying leads, running PPC, sending mail and cold calling are marketing activities, and marketing to homeowners has never required a license. The regulated moment is what you do after the seller says yes: what the contract says, what you disclose, and how the fee moves.
One operational note. The TCPA governs calls and texts to consumers, and a purchased lead should carry the consent record from the form the seller submitted. Ask your lead source how consent is captured and whether numbers are verified. That documentation is worth more than the discount on a cheaper lead if a complaint ever surfaces.
Questions I get asked
Do I need a real estate license to wholesale in California?
Not to assign contracts on properties you have under agreement. You do if you market property you have no contractual interest in, or if you represent sellers for compensation.
Is double closing safer than assigning?
It removes the fee-disclosure friction and it costs more. Most operators assign on ordinary spreads and double close when the margin is large or the buyer is difficult.
Does this apply to commercial or land deals?
The residential assignment rules are narrower than the general licensing statute. The licensing line applies regardless of asset type.