When is "house flipping" illegal in Nevada?

Property flipping is perfectly legal in Nevada unless the homebuyer ("flipper") engages in fraud to distort the property's true value. The penalties for illegal property flipping may include prison and high fines. But Las Vegas criminal defense attorneys experienced in real estate law may be able to negotiate a favorable plea bargain or even a full dismissal of the charges.

Keep reading to learn about what property flipping is and how it can be unlawful in Nevada. This article also explains how to defend against criminal charges of illegal property flipping and what punishments a judge may impose for illegal property flipping.


Ordinarily, property flipping is a lawful real estate practice in Nevada, and many people make a living by it. Bunkerville criminal defense attorney Michael Becker explains a classic property flipping scenario:

Max buys a house below market value. The reason for its low price is because it's a "fixer-upper" and was sold in a foreclosure sale. Max then spends a couple of months repairing it and installing fancy upgrades. Finally Max sells it at market value, netting him a $50,000 profit.

Here, Bob did nothing criminal because he had no "intent to defraud." The large difference between the purchase and sale prices of the house is based on legitimate factors such as the house's state of repair and fixtures. And he didn't deceive anyone into over-or under-valuing the home. Now, Laughlin criminal defense attorney Neil Shouse gives an example of illegal property flipping in Nevada.

John gets a loan to buy a house in Henderson for $200,000, which is fair market value. Before closing on the house, John conspires with his friend Jim for Jim to buy the same house for $300,000. They bribe a real estate appraiser to overestimate the house's property. Based on this appraisal, the second lender then releases a $300,000 loan. John uses it to pay $200,000 to the first lender, and John and Jim divide the remaining $100,000 amongst themselves. Jim never pays the second loan, the house goes into foreclosure, and the second lender can't recoup the $300,000 because the house is worth only $200,000.

If caught, John and Jim could be booked at the Henderson Detention Center for mortgage fraud. Since they intentionally conspired for Jim to buy the house at a price they knew was inflated, this type of flipping is illegal. Note that if Jim didn't know that the appraiser was bribed and paid the $300,000 without realizing the price was inflated, then Jim shouldn't be held liable because he didn't intentionally defraud anyone.

There are many other scenarios in which illegal property flipping is accomplished in Nevada. They commonly involve some or all of the following "players":

  • Property purchasers, who buy the house intending to flip it illegally.
  • "Straw purchasers," who buy the house without intending to pay the mortgage.
  • Real estate agents, who agree to be bribed for perpetuating the scam
  • Mortgage brokers, who agree to be bribed for fabricating fraudulent loan paperwork
  • Property appraisers, who agree to be bribed to give false appraisals.
  • Notaries, who agree to be bribed to forge documents.

Note that many illegal property flipping cases are also considered "straw buying schemes," which both state and federal authorities have been cracking down on. For more information see our article on the Nevada crime of
straw buyer schemes


Prosecutors often have a difficult time trying to prove allegations of real estate fraud precisely because there's such a fine line between legal and illegal house flipping. Below are the three most typical defenses attorneys use to fight charges of unlawful property flipping:

  1. The defendant didn't have fraudulent intent. Courts should not convict defendants of fraud unless the prosecution can prove he/she had fraudulent intent. Making savvy and profitable house sales is no crime as long as it didn't involve material misrepresentations of the truth. So if the defense attorney can show that that the defendant honestly believed the property's appraisal value was legitimate, then he/she shouldn't be held criminally liable.
  2. There is inadequate evidence to prove fraud. In order for someone to be convicted of unlawful house flipping in Nevada, the prosecution has to prove his/her guilt beyond a reasonable doubt. Technically, the defendant doesn't have to prove anything except that the prosecution lacks sufficient evidence to sustain a conviction. If the court agrees that there isn't enough evidence to prove the defendant's culpability, the case should be dropped.
  3. The police behaved illegally when investigating the case. Sometimes fraud charges may be dropped because of mistakes the police made in the case. For instance, if the cops may have overstepped their bounds when searching for evidence against the defendant, the defense attorney can file with the court a motion to suppress evidence in Nevada. This motion requests that the judge disregard all the evidence that the police unearthed as a result of the illegal search. If the judge grants the motion, the prosecution may dismiss the case for lack of evidence.

Unlike many crimes, the practice of illegal property flipping isn't prohibited by one specific law. Rather, prosecutors typically bring an array of fraud charges against someone suspected of illegal property flipping. Which charges prosecutors bring depends on the circumstances of each individual case.

The following are some of the more common crimes and punishments that people suspected of illegal house flipping may face in Nevada:

  • The federal crime of mail fraud: A defendant who uses the mail to send or receive documents related to an unlawful house flipping incident faces mail fraud charges. The maximum sentence is twenty years in Federal Prison and/or a fine.
  • The federal crime of wire fraud: A defendant suspected of using wire communications to send or receive information related to illegal property flipping may be charged with wire fraud. Like mail fraud, the judge may order up to twenty years in federal prison and a fine.
  • The federal crime of bank fraud: Just like it sounds, bank fraud is when someone intentionally defrauds a financial institution. Suspected illegal property flippers are frequently charged with bank fraud for allegedly deceiving banks as to the property's value. The maximum penalty is thirty years in federal prison and/or one million dollars in fines.
  • The Nevada crime of mortgage fraud: Illegal property flipping usually involves the suspect lying to a mortgage company about a property's value. Therefore, the D.A. may bring mortgage fraud charges against the defendant. Penalties range from one to twenty years in Nevada State Prison and tens of thousands of dollars in fines.

In addition, people being prosecuted for unlawful house flipping may face professional discipline such as having their real estate licenses revoked. They could also be sued civilly and be ordered to pay hefty compensatory and punitive damages.

Arrested? Call an attorney . . . .

If you've been accused of 'illegal property flipping' in Nevada, phone our Las Vegas criminal defense lawyers at 702-DEFENSE (702-333-3673) for a consultation free of charge. We're determined to try to achieve the best resolution possible for your case so your criminal record stays clean and you keep your real estate license.

To learn about California property flipping laws, go to our article on California property flipping laws.

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