INVESTOR REVIEW
ALTERNATIVE STRATEGIES
SPONSORED CONTENT Are You Lending Across State Lines? CHECK LICENSING REGULATION. WHAT’S ROUTINE AT HOME COULD POSE SERIOUS RISK SOMEWHERE ELSE.
CORNERSTONE LICENSING SERVICES
E xpanding into a new state may offer fresh deals, but also be prepared for a maze of new regulations. Activities that seem routine at home (e.g., loaning money to a buyer, buying a mortgage note, or managing a rental) can suddenly trigger licensing requirements once you cross into another jurisdiction. Before you extend seller financing or private lending across state lines, do your homework on each state’s laws.
DIFFERENT STATES, DIFFERENT RULES Every state defines its own licensing thresholds. California is known for strict requirements—it generally requires a lending license for anyone making loans. Florida bases its rules on the parties and the property: Lending to an individual on a residential property will likely require a license, but loans to a business entity or for an investment property might be exempt. Texas requires a licensed residential mortgage loan originator to be involved in most seller-financed transactions. And New York, which historically only licensed residential mortgage lenders, is considering expanding licensing to commercial mortgage lending activity. RISKS AND EMERGING TRENDS If you operate without the proper license, you risk serious consequences. Regulators can issue cease-and- desist orders, impose steep fines, and in some states, courts may declare unlicensed loans void. You may also lose the right to enforce certain contracts, collect debts, or foreclose on property. Even beyond official penalties, operating unlicensed can damage
your business reputation and disrupt investor or lender relationships. What’s more, states are increasing oversight. Many now use shared data platforms that make it easier to detect unlicensed activity across jurisdictions. Lawmakers are updating statutes too—some to tighten rules; others to clarify exemptions or streamline licensing. As this landscape evolves, understanding when and where licenses are required is more than a legal checkbox; it’s a strategic necessity. Before your next out-of-state deal, pause and ask: Does this activity require a license here? The answer could save you from costly surprises—and keep your portfolio growing on solid ground.
COMMON ACTIVITIES REQUIRING A LICENSE
Making loans or financing deals in another state often means you need to be licensed there. Providing seller financing or private loans frequently demands a mortgage lender or broker license, even if the loan is for a business-purpose investment. Purchasing mortgage notes or servicing loans can likewise put you in the role of a creditor or collector, and some states will require a debt buyer or loan servicer license. Even simply advertising that you offer financing can mark you as engaging in the lending business, meaning you must hold the same credentials as a local lender. And don’t overlook property management: If you manage rentals for others across state lines, most states insist you have a real estate broker’s license.
Cornerstone frees you from the burden of licensing so that you can focus on growing your business. You’re too busy to spend time and energy on complex, ever-changing licensing requirements that don’t add to your bottom line. You need a solution that eases that strain—one where you know your licensing is done right, on time, every time.
66 | think realty magazine :: july - august 2025
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