Can real estate wholesalers ask for a non-refundable upfront fee prior to closing on a property?

A real estate wholesaler has asked our company to give them a 5k non-refundable assignment fee and wanted that fee upfront prior to closing. Is that legal? Don’t they have to wait until the property closes at the closing table?

Asked on June 13, 2017 under Real Estate Law, Texas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

No, this is legal: the parties to a real estate transaction (especially commerical parties--i.e. not consumers themselves buying property to live in) have enormous freedom to determine the terms of the deal, and can include non-refundable upfront fees. They are free to insist on such a fee; your company is likewise free to not buy real estate from them or otherwise do business with them if you don't like or trust this arrangement. However, if you and they do enter into an agreement including such a fee, it is legal.


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