"Bird-dogging" In TX Legal???

I recently came upon a post somewhere that bird-dogging in TX is illegal? Can anyone confirm this?

Comments(26)

  • Kitjai2623rd July, 2004

    Can no one shed some light on the subject?

  • JohnLocke23rd July, 2004

    Kitjai26,

    Glad to meet you.

    Yes, Bird Dogging is legal in Texas.

    You need to make sure your paperwork is correct between you and your investor and that it is very easy to do.

    John $Cash$ Locke
    [addsig]

  • Kitjai2623rd July, 2004

    Thanks John!!! Anyone in the DFW area looking for a birddog?

  • dcgoolsby4924th July, 2004

    I,too heard that "birddogging " was illegal in Texas, so I checked with the Texas Real Estate Commission. This is a direct quote from their rules:

    Section 535.19 - Locating Property

    The compilation and distribution of information relating to rental vacancies or property for sale, purchase, rent or lease is activity for which a real estate license is required if payment of any fee or other consideration received by the person who compiles and distributes the information is contingent upon the sale, purchase, rental or lease of the property.

    How in the world can you get around this legally?
    :-?

  • InActive_Account24th July, 2004

    It may be illegal but who in the world is going to catch you and take legal action? Seriously. Do what John says, if you set up an agreement with a investor you will have no problems.

    [ Edited by senatorcbp2 on Date 07/24/2004 ][ Edited by senatorcbp2 on Date 07/24/2004 ]

  • compwhiz26th July, 2004

    I believe birddogging as we know it is illegal in all 50 states. Many birddogs simply break the local real estate law. Having an agreement with investor won't protect you much - if the investor decides to renege on their promise to pay(even if it's in writing), all they have to do is to threaten a call to the state agency that oversees real estate trade and report the birdddog's demands to be compensated for performing a licensed activity.

    It's really very similar situation as in between workers and employers who pay in cash(and therefore skip paying taxes). Is it illegal? You bet. Are people doing it in hopes of not getting caught? Sure. You have to decide what level of risk you want to bear and act accordingly.

  • JohnLocke26th July, 2004

    compwhiz,

    Once the Bird Dog becomes a principal in the deal your argument is naught or any other number of ways to legally Bird Dog. Your "fear factor" analogy is very weak, for those of us who understand how it really works.

    Of course you are a realtor, so coming from you I can understand becuse you are not allowed to use bird dogs.

    We are creative investors not governed by some code of ethics, which are constantly being broken by realtors and agents and are showing up in license revocations accross the US.

    Something about people who live in glass houses.

    You realtors should get your own house in order before you start picking on Bird Dogs.

    John $Cash$ Locke

  • Birddog126th July, 2004

    Its only "illegal" if a broker pays a "finders fee" to a unlicenced persons. So if you bring a broker a property, and he pays you money, thats illegal. If you bring something to an investor, consider yourself a consultant and you'll be fine

  • compwhiz26th July, 2004

    John, John, what an cheap shot. Just because I put "Realtor" in my profile does not justify the bashing. I do NOT make a living as a Realtor. I got my broker's license to facilitate access to MLS and to benefit financially when I buy and sell my own real estate. However, by virtue of getting licensed in a wonderful state of Illinois, I had to learn the real estate law and its implications.

    You are absolutely right that becoming a principal in transaction is a way to "legalize" birddogging activity. However, many people DO NOT do that. They just want to provide leads and get paid for that. That itself is a LICENSED activity that real estate law requires to be performed by licensed people. People to conduct business that way break real estate law in their state. I give people HONEST answers about the legal aspect of the birddogging activity so that they don't think that simply having an agreement with an investor that provides for payment of a birddogging fee is going to be enough for them to protect themselves from people that would want to screw them. I'm not trying to scare people away from the birddogging, I'm just giving them info they're asking for.

  • compwhiz26th July, 2004

    This is 100% incorrect. Payment of ANY kind by ANYBODY is illegal under real estate law. An investor cannot legally pay a birddog for that information unless the birddog is also a principal in that transaction(i.e contract assignment, etc.).

    Once again, I'm only covering the LEGAL aspect of the question so people don't have any false impressions. In reality the enforcement is only viable if someone points out the activity to the state' real estate governing body.

    I will give you another example that happened to me in real life, since John$CASH$ didn't like my taxes analogy. My parents used to own 3-flat building years ago in Chicago. We lived in one flat and rented out two others. The building was purchased in pretty bad conditions, and we slowly fixed it up, although, as it turns out, it wasn't up to many code standards of the City of Chicago. One day we had a burglary of all three flats. Our top floor tenant wasn't happy with it and withheld rent from us to compensate for the stuff that was stolen from her. As we were trying to resolve the situation with her, one day we mysteriosuly got a citation from the City of Chicago that listed numerous violations, imposed heavy fines, and required us to make all the necessary changes within 30 days. Coincidence? I think not.

    The point is that when a dispute arises, the opposing party will do anything possible to prevail and if you have weak spots, they will be hit. Exposing and/or creating these weak spots is up to each individual - everyone makes their own risk/benefit ratio assesement. It's a smart thing to eliminate obvious weak spots if you can.


    Quote:
    On 2004-07-26 10:14, Birddog1 wrote:
    Its only "illegal" if a broker pays a "finders fee" to a unlicenced persons. So if you bring a broker a property, and he pays you money, thats illegal. If you bring something to an investor, consider yourself a consultant and you'll be fine

  • regal26th July, 2004

    A Broker may not be able to pay birddogs, but an investor can.

    Also, is it illegal for a birddog to accept a referral fee from a Broker? No. It is just illegal for the broker paying the fee.

    What if your an investor that happens to be a broker? Pay thru your corp and the fee isn't coming from a broker. Unless your corp is a r.e. brokerage, in which case you should have another corp around anyway for such things. Make him an independant contractor

  • compwhiz26th July, 2004

    regal,

    I see that you are in CA. Please show me an excerpt from CA real estate law that confirms what you are saying. It's pretty silly to say that only broker can't pay a birddog but anybody else can. The whole point of real estate law, licensure, and regulation is to make sure that nobody without a license can perform real estate-related activities in exchange for compensation for other people.

    So, the whole point that is trying to be made here is that it is illegal for a birddog to RECEIVE a fee for their services is they are not a principal in the transaction. Are there ways of getting around this limitation? Sure. But everybody who is engaged in the birddog activity should know the specifics of the situation to better PROTECT themselves from the unexpectant surprises in the future.





    Quote:
    On 2004-07-26 15:38, regal wrote:
    A Broker may not be able to pay birddogs, but an investor can.

    Also, is it illegal for a birddog to accept a referral fee from a Broker? No. It is just illegal for the broker paying the fee.

    What if your an investor that happens to be a broker? Pay thru your corp and the fee isn't coming from a broker. Unless your corp is a r.e. brokerage, in which case you should have another corp around anyway for such things. Make him an independant contractor

  • mojomike26th July, 2004

    In Florida, I can pay out a refferal fee ( very small $25.00 ) and that's legal. So you can use them within the florida guild lines as a realtor.

    With regular person I would think that it would be illegal if the details of the bird dogging is highly detailed, like a full report, might be considered stalking type behavior.

    I get pulled over all the time when I am researching an area, and wisely, I carry my paperwork and research reports, the officers tipically know alot and I can pick thier brains about an area. Also sometimes you can turn them into accounts.

    As for being in a glass home, We ( realtors) are in a highly regulated industry, with a lot of people, that think bending the rules is ok. I have seen some of the worst contracts done by people that do 1 or 2 deals per year. Most of our industry suffers from lack of quality training. What i would like to see is a more exams and more qualified training to be placed into the industry.

    Heck, try to explain to another broker that they did there paper work wrong starts a heap of trouble. Then what makes it worst is that everyone and thier mother is a mortage broker, that just makes it worst. I have walked out of closings because the counter parties were not advised properly of what was needed to close

    also a small but important helpful hint.
    always do your closings at 10am, why, real simple, at 10am you can get to the bank, you can call in other lawyers or do whatever is needed. Now if the lawyer says something ( since they like to do closings at night ) tell him that you will advise the client to move the business to another lawyer.

  • c-brainard26th July, 2004

    Compwhiz is correct. Rob Barney from our local REI group inquired about the legality of birddogging some time ago. The response from TREC is below. I personally do not agree with this Texas Law, but it is a reality of our state. I personally own John's course and think the material is a sound way to invest in RE. I even tolerate his dislike of realtors, although it makes me laugh since I'm licensed. That being said, there are a multitude of ways to avoid this issue (company employee, principal in deal, assignment of contract) and I think that new investors need to be aware of the situation and act appropriately.

    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
    From TREC:

    "Birddogging," as you describe it, is illegal if the person is not licensed
    as a real estate broker or salesperson. The question and answer from our
    website is the Texas Real Estate Commission's position on the subject and our interpretation of the Real Estate License Act ("the Act"wink.

    Under the Act, the Commission may assess administrative penalties against an unlicensed person of up to $1,000 per violation for unlicensed activity.
    Each day that a violation continues is considered a separate violation if
    the person was not licensed as a broker or salesperson within the preceding four years. In addition, unlicensed brokerage activity is a crime, a class A misdemeanor, and may subject the person to criminal penalties.

    The Commission investigates complaints of unlicensed activity. If the
    evidence warrants, the Commission may seek an administrative penalty or
    refer the complaint to the local prosecuting attorney for criminal
    prosecution.

    I hope this information will be helpful to you.

    Brad Bowman
    Staff Attorney
    Texas Real Estate Commission
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

  • regal26th July, 2004

    Compwiz,

    "The whole point of real estate law, licensure, and regulation is to make sure that nobody without a license can perform real estate-related activities in exchange for compensation for other people."

    I disagree. Real Estate law mainly issues regulations, code of ethics, etc to the LICENSED world.

    For other readers, if your a newbie in the biz, talk with a local investor and learn the ropes. The discussion of bird dog fees isn't part of any investors concerns.
    It ranks up there with removing a tag from your mattress.

    Can I say something that will ruffle some feathers?

    I'm new here, but I can read a post and for the most part I can tell you who's a Realtor and who's an investor about half the way thru. No offense. I'm licensed and have been for about 15 years. My dad's a broker for 40+ and my son just graduated college last year and just received his broker's license. None of us do 'real estate', per se, but we use the licenses for other activities.

    Realtors tend to site passages from laws to make their points. Investors don't really care about the passages. That's why we have attorneys. They tell us what to be concerned with. Have i ever screwed anyone? Nope, not once. Never have, never will. I know Realtors who have. I also know other investors who have.
    It has nothing to do with a license. It's the individual.

    I sold r.e. for about 7 years before the light bulb went off. I'm still a Realtor, but my only client is me. I'm friends with many Realtors and they call me now and then with deals. They make their 10k commission and I flip the house and make 40k. They are happy with it that way. I used to be, when I was A Realtor for a living, until I figured out I could have the whole 50k. That's now all I do.

    Am I right about the birddog fees? Maybe. Maybe not. I really don't care. It's just another thing to analyze instead of DOING deals. It's 'noise'.

    Hope I didn't offend anyone or shock the easily shocked. I really enjoy reading ALL of your folks posts and hopefully we can learn from one another.

    Cheers,
    Diane

  • c-brainard26th July, 2004

    Diane,

    I don't think anyone's feathers got ruffled. The fact of the matter is Texas Law applies to everyone who buys, sells, invests, leases, or brokers in Texas.

    Given that you are new here, I think it is important to point out that most members of this board are not seasoned investors, but new investors starting out. While your point about lawyers is right on target, most of them don't keep one retained nor could afford a costly legal battle with the state. Therefore, it is important for them to play by the state's rules, realtor or not.

    -Chris
    [addsig]

  • regal26th July, 2004

    Chris,

    Good point. I just wasted a LOT of time worrying about the technicalities and didn't spend enough time DOING.

    Yeah, you have to learn the ropes and rules first.

    Di

  • 64Ford26th July, 2004

    This topic was covered in length in another thread:

    http://www.thecreativeinvestor.com/modules.php?op=modload&name=Forum&file=viewtopic&mode=viewtopic&topic=29834&forum=33&start=15

    The bottom line is YES< IT IS ILLEGAL! It is not well enforced, but it is illegal regardless.

  • JohnLocke26th July, 2004

    Chris,

    If you notice in any of my material I say consult with a professional before you start your career.

    It is so easy for a Bird Dog to walk on the side of the law without a problem, that when I hear blanket statements Bird Dogging is illegal then their should be a disclaimer "Check with competent legal consul regarding the state statutes in your state because done properly it is legal."

    There is no state that I am aware of that stops a principal from selling and buying properties albiet if they have 1% or 100% in the deal.

    Now, I will cover realtors and real estate agents, I personally only sell to the them which I have done many times with a Contract for Deed and we all know why they need my help when they purchase this way.

    My beef with realtors and agents started with the ones, when I put "Principals Only" or "No Agents" in my selling ads and they still call, as if they can't read, which may be the case.

    Plus I could go on and on about what I was doing is illegal, I will spend time with the Bird Man of Alkatraz, your taking food out of my babys mouth, I am turning you into the board of realtors, well you understand what I am saying.

    I have seen to many "back pocket listings" or deals being stolen from buyers, inflated CMA's to get the listing, plus other things going on that I believe if someone signs the paperwork about ethics in their industry, then they should live by those rules. Another poster even mentioned more training should be required and they are in the realtor, real estate agent industry.

    We are aware that the majority of realtors would just as soon the creative side of investing go away, I have many students who are Realtors or Real Estate Agents and like you I always get the jesting about how I feel.

    Have you ever noticed that anytime Bird Dogging is mentioned how many realtors or agents jump on this like the crime of the century has just occured, sure you have and so has everyone else, so I have to do my "become a principal in the deal", which they all agree makes it legal, however they try to make it look like the legal system has nothing to do but chase down Bird Dogs for a living.

    Well we caught another Bird Dog, "Bookem Dano" and it is donut time.

    Anyway Chris remember I said their are a few good ones around so I consider you one of the good ones, don't dissapoint me by picking on Bird Dogs.

    John $Cash$ Locke

    PS: 64Ford just reported this post as argumentative I still haven't figured out his axe to grind with Bird Dogs.
    [addsig]

  • Ichabod26th July, 2004

    I'm gonna step back a little bit and use the literal term for a "bird-dog."

    It's like when this guy I know that uses one for his hunting adventures.

    When his dog spots a deer....a duck....a rabbitt....a quail....etc, etc....
    he aims his rifle toward the respective "game" and shoots.

    When the hunter and his trusty bird-dog are back at the homestead, he sometimes cleans and prepares whatever animal for eating.

    I've never known him not once to refuse to toss a piece of the deer meat on the floor for the dog to eat.
    Nor have I heard him say, "Now, Spot...you can't have any meat. Eventhough you found it, I'm the one who shot it......"

    Why?
    If not for the bird-dog, he'd still be stubbling in the darken woods. rolleyes

    Now, just replace "deer" & "ducks" with "houses", and "meat" with "$." wink

  • c-brainard26th July, 2004

    Ichabod - I always find your posts most amusing. Perhaps we can talk Joel into adding a new real estate profession option: comedian.


    John - My intent is not to pick on bird dogs, but rather to educate them.

    The business in the Dallas area is quite fierce right now and there are multitudes of investors/realtors looking for any way to make ten cents more. Its important to be aware of the law, so birddogs can ensure they are legally paid for their hard work, instead of pushed to the side. It seems that we have been seeing an increasing number of birddogs that are quite eager to get started but don't fully understand the rules of the game. We try to bring them up to speed on alternative ways to accomplish their goals via assignment, contract employment, and partial ownership.

    I actually share your opinion of realtors, which is why I became one. I lost a house last December that was an excellent deal due to incompetence on behalf of my realtor. I figured that I needed to find someone who has my own interest at heart……me!!

    As far as the training goes, you are absolutely correct. The funny part is, they have an entire section on the (non) legality of "bird dogging" in real estate school. This time could be better spent on a dozen different subjects, since the training is quite....pathetic. I've dealt with several realtors that still can't grasp how to properly fill out a TREC contract.

    -Chris
    [addsig]

  • Maude27th July, 2004

    I live in Dallas, TX and was a bird-dog in various parts of the metro area.

    Before I would bird-dog for an investor, I would interview them to get a feel for how they operated. If I felt they did not operate with integrity, I simply did not work with them.

    For those I chose to work with, I would ask if they used contracts, and if not, would they be willing to sign one that I had. Inevitably the response was 'yes'.

    The contract put me as part of the team and I would receive a percentage.

    With assigning, I was not a bird-dog, I was making an offer to buy a property which I would then assign if I chose.

    Maude

  • miraclehomes27th July, 2004

    Why all of the B.S.? Ok, the question has been answered, so lets accept it, and move on. If you birddog, and are not a principal in the deal, then it is illegal. If you are , it isn't. Does that need any kind of clarification? If you still have problems with this, call the Bird Dog police, and start having some people arrested, otherwise, accept it and move on.

  • maacs29th July, 2004

    Birddogging as a finder fee is considered illegal in Texas. If you have some one researching properties for you, that is a lead source, advertising, or
    promotional services. Like asset management, you can't mention investments, but you can grow your assets or have your money work for you.
    Get your real estate attorney to give a creative approach to accomplish objective. Stay legal. maacs

    grin Code:

  • buddy3rd August, 2004

    As a libertarian I bemoan the intrusion of government(petty bureaucrats) trying to justify their existance with enforcement of the multitude of crapola laws we have on the books. Today, government has sought to require a license for every activity(working in a liquor store/restaurant etc etc). The true purpose is not to to improve competence ,or protect the public but is another way of harvesting revenue from license fees. They actually create obstacles to free enterprise which brings in the taxes to pay their salaries. But this is not recognized in the pursuit of fee collection. It requires one to find creative ways to circumvent these obstacles to do business.

    But back to subject: Like j. locke has indicated this is aimed more at licensees than at investors. That is why as a broker as well as an investor, the former often confines my activity as an investor....to the point I am considering turning in my license.

  • realagent7th August, 2004

    ^ ^ bIchabod, your story mentioned a duck being shot with a rifle? That's a federal crime! I am calling the Board of Realtors and the Game Warden!
    All kidding aside, I believe Texas law allows certain activities to be practiced by an unlicensed employ. New home builders do it all the time. Their sales staff is normally forbidden from holding a license yet they do what licensed agents do.
    8-)

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