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

UPDATED: Sep 30, 2022

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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


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 5 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.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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