Calling, texting and keeping records

Bottom line first. Before you call or text a homeowner to buy their house, you need either their permission or a clear reason the law does not treat it as a sales call, and you need to check your list against the do-not-call lists. Then keep records that prove it. This lesson is general education, not legal advice. These rules are about how you reach people, and nothing here is a way around them. A Colorado lawyer should look at your actual campaign before it runs.

Two layers: federal and Colorado

Two sets of law apply. The federal law is the Telephone Consumer Protection Act, found at 47 U.S.C. 227. Colorado adds its own rules in the Colorado No-Call List Act, C.R.S. 6-1-901 to 6-1-906. You must follow both.

Federal rules: robot dialers and recorded voices

The federal statute defines an automatic telephone dialing system as equipment with the capacity to store or produce numbers using a random or sequential number generator, and to dial them (47 U.S.C. 227(a)(1)). It is unlawful, except for emergency calls or calls made with the called party's prior express consent, to call using such a system or an artificial or prerecorded voice to a cellular telephone number, a paging service, or certain other lines (47 U.S.C. 227(b)(1)(A)). It is also unlawful to place a call to a residential line using an artificial or prerecorded voice without prior express consent (47 U.S.C. 227(b)(1)(B)). Prior express consent means the person clearly said you may contact them that way. Keep proof of it.

The statute also lets the FCC set up a single national database of numbers of residential subscribers who object to telephone solicitations, and it says the rules may prohibit anyone from making a solicitation to a number in that database (47 U.S.C. 227(c)(3)). This is the legal basis of the national do-not-call list. The detailed rules, such as how consent for text messages must be written, live in FCC regulations that are not in this course's sources. Read them or ask a lawyer before you text.

The federal statute lets a person sue. Under the automated-call section, a person may recover actual monetary loss or $500 in damages for each violation, whichever is greater, and a court that finds a willful or knowing violation may increase the award to up to three times that amount (47 U.S.C. 227(b)(3)). Under the do-not-call section, a person who received more than one call in a 12-month period from or for the same entity may sue for up to $500 per violation, and there is a defense if the caller had established, with due care, reasonable practices and procedures to prevent violations (47 U.S.C. 227(c)(5)). The FCC can also impose civil forfeitures (47 U.S.C. 227(b)(4)).

Colorado rules

Colorado's law covers a telephone solicitation: any voice, fax, graphic or data communication, including text messages, sent to encourage the purchase or rental of, or investment in, property, goods or services. This covers voice calls made by a live person too (C.R.S. 6-1-903(10)). A message to a homeowner asking to buy their house is a solicitation to buy property, so assume the law covers it, and ask a lawyer about your exact wording.

The law does not treat these as telephone solicitations (C.R.S. 6-1-903(10)(b)):

• Communications to someone who gave prior express invitation or permission.
• Communications by or for someone with whom the person has an established business relationship: a voluntary two-way relationship formed before the contact, not ended, and current or existing within the past 18 months (C.R.S. 6-1-903(7)).
• Communications within thirty days after the person contacted a business to ask about buying goods or services, or until they ask for no more calls, whichever comes first.

The Colorado no-call list is a database of Colorado residential and wireless subscribers who have objected to telephone solicitations (C.R.S. 6-1-903(2)). Signing up costs the subscriber nothing (C.R.S. 6-1-905(3)(b)(I)). No person or entity may make or cause a telephone solicitation to a number on that list (C.R.S. 6-1-904(1)(a)). Anyone who makes telephone solicitations to Colorado subscribers must register with the list's administrator (C.R.S. 6-1-904(1)(b)). The statute directs a sliding-scale registration fee of up to $500 a year, with no fee for businesses with fewer than five employees (C.R.S. 6-1-905(3)(b)(II)); check the current registration rules for the actual amount.

Callers must update their copy of the list, or use a conforming consolidated list or a list from a conforming list broker, within thirty days after the start of every calendar quarter (C.R.S. 6-1-904(4)). You also may not knowingly block caller ID if your equipment can show the number (C.R.S. 6-1-904(3)).

Penalties and the defense you can build

A violation is a deceptive trade practice that can be enforced by the state, though a state action may not be brought for fewer than three violations per month (C.R.S. 6-1-906(1)). That is not permission to make two bad calls: the law also says remedies are not exclusive and are in addition to other remedies and penalties (C.R.S. 6-1-906(3)), and the federal private suits above carry no such three-a-month rule.

It is not a violation if you have otherwise fully complied and, before the violation, you established and implemented written practices and procedures to effectively prevent unlawful solicitations (C.R.S. 6-1-906(2)(a)). A transcription or technical error in the list you received, not your fault, is also a defense (C.R.S. 6-1-906(2)(b)). Both defenses reward the same habit: write your process down before you start.

Example with real numbers

Priya has a list of 1,000 Colorado homeowners. All numbers are made up. She plans to text each one an offer to buy their house.

1. She first checks her list against the Colorado no-call list and the national registry. Suppose 140 numbers match. She removes them. 1,000 − 140 = 860 left.
2. She only texts people who gave written permission to be texted, or who fit one of the exceptions above, and she keeps the proof. Suppose 90 of the 860 qualify. She texts those 90.
3. She writes a one-page process: list check date, who checked it, how a “stop” reply is honored, where proof is stored.

Compare a mistake: Marcus texts all 1,000 with an automatic system and no permission, and 140 are on the list. If 20 recipients sue under the federal automated-call section and each can recover $500 for one violation, that is 20 × $500 = $10,000. If a court finds the violation willful, the court may increase the award to up to three times, which is up to $30,000. That is before lawyers and before any state action. Priya's 90 texts cost her far less risk than Marcus's 1,000.

Records, an LLC and taxes, in general terms

Keep a file for every deal and every campaign: the contract, how you found the lead, who you contacted, the date and how, the permission you have, the list checks, and the closing statement. Good records are your defense in a dispute and what your tax preparer needs.

An LLC (limited liability company) is a business entity you form with the state. Many people use one to keep business debts and claims separate from personal assets, but it does not excuse breaking calling or licensing laws, and it has formation costs and paperwork. Whether you need one, and how to name the buyer on a contract, is a question for a lawyer.

Income from wholesaling is generally taxable, and how it is taxed depends on how you operate and your entity. This course gives no tax numbers. Hire a CPA before your first deal, and ask about estimated payments and which expenses you can deduct.

The honest rule

• Get consent before automated calls or texts, and keep the proof.
• Scrub your lists against the Colorado and national lists before every campaign, and again on schedule.
• Keep records of the process and of every contact, written down before you start.