GMAC Approval letter clause

OK, here we go again!! Just received an approval letter from GMAC with a clause that reads: "THIS TRANSACTION MAY NOT INVOLVE A THIRD PARTY WHO RECEIVES A DEED PRIOR TO THIS CLOSING OR AFTER THIS CLOSING AND BEFORE RECORDING OF THE DEED TO THE PURCHASER".
I am using the Option Contract and the only thing recorded is the "Notice of Option".
Would you translate this to "I can never resell or transfer the deed to a third party?" And yes, this is a double C.
Any ideas, thoughts or suggestions?
Thank you.

Edited: 06/26/2010 at 11:35AM

Larry Moore

Real Estate Investor · Belvidere, Illinois

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Icon_minipost Feb 09 '10, 10:05 PM

As I read it, it states that you cannot assign your option or transfer the deed to a third party until you have closed on the property and the deed has been recorded. So, no, not never, just not immediately with a double close. Whether or not it can be enforced has been addressed in other posts.

Edited: 06/26/2010 at 11:35AM by Larry Moore

Scott Hubbard

Rehabber · Tucson, Arizona

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Icon_minipost Feb 10 '10, 11:20 AM

Originally posted by Larry Moore

As I read it, it states that you cannot assign your option or transfer the deed to a third party until you have closed on the property and the deed has been recorded. So, no, not never, just not immediately with a double close. Whether or not it can be enforced has been addressed in other posts.

I agree with Larry. However, the key interpretation will come from the title company since they need to issue a title policy. Check with your title company.

Edited: 06/26/2010 at 11:36AM

James Ward

Real Estate Investor · Ocala, Florida

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Icon_minipost Feb 10 '10, 06:35 PM

Originally posted by Scott Hubbard

However, the key interpretation will come from the title company since they need to issue a title policy. Check with your title company.

This is the key! You really need to have a conversation with your Title Company about these types of items and how they (the Title Company) will respond.

Edited: 06/26/2010 at 11:36AM by James Ward

Bill Gulley

Real Estate Investor · Springfield, Missouri

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Icon_minipost Feb 10 '10, 07:11 PM

Hi, agree that you need to talk to the settlement agent. Your option is not a deed. A lender does not have the right to restrict a deed for a future sale. What they are saying is that you need to be in title and it be perfected prior to you transferring the deed. If you execute a deed, you have transferred your interest (at the time it is executed, not when it is filed) and if you execute a deed of trust before it is filed and perfected, it is not valid. You can't give me title and then give a lender an unencumbered security interest in the same property. If you are using transactional funding, close the A-B in an AM closing, file it over the lunch hour, do your B-C in an afternoon closing. I don't know who is getting this loan, you as B or C? Title companies in my area make two trips a day to the courthouse. Double closings can often be taken care of using seller financing with individuals to close, then payoff the note. No problem! Bill

Edited: 06/26/2010 at 11:36AM

Ted Akers

Private Money Lender · Denver, Colorado

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Icon_minipost Feb 10 '10, 07:34 PM

Good suggestions here - have to check with title - and good answer by Bill. Your Option is not a Deed. Unless someone other than the purchaser (you) executed a Warranty or Quit Claim Deed to tie up the property you should be able to do a back-to-back closing.

Edited: 06/26/2010 at 11:36AM