Colorado Short Sale Flips - Holding Period Required

The rules have changed for real estate investors wishing to flip short sales in Colorado. There is now a material difference for those flipping short sale properties regarding disclosure requirements to all parties; or as an option, a required holding period for the investor.  The Colorado Legislature’s House Bill 10-1133, known as the Foreclosure Act, became effective January 1, 2011. You can click  to access the full 10-1133 Bill.    Below is a summary of disclosure requirements for investors looking to flip Short Sales within 14 days (and also a solution) where A= Seller, B= Investor, and C= Ultimate Buyer:

- A to B Disclosure: Investors must disclose any knowledge of a near term sale of the Property to the Lender accepting the short sale and the homeowner (“Seller”) within one business day of such knowledge. The Investor must also disclose the subsequent sale price and profit margin of the property to the Seller.

- B to C Disclosure: Investors must disclose the purchase price for the property and the profit margin to the C Buyer (“Ultimate Buyer”) and Ultimate Buyer’s lender.

To summarize, if an investor in a Colorado short sale property is going to buy and flip it within 14 days the investor is legally obligated to disclose his or her profit to the Seller, the Ultimate Buyer, and the Ultimate Buyer’s lender.

- The Solution:

  has an product to assist you with this new Legislation in Colorado as well as other “seasoning” or “holding” requirements nationwide, such as: Bank of America short sale approvals requiring a 30 day hold before transferring title, FHA mortgages for the Ultimate Buyer, lenders for the Ultimate Buyer requiring B to be in title before closing, and so on. This funding product is for transactions where an investor is contracted to acquire short sale or REO real property and is also under contract to sell the property to another buyer with closing to occur within 35 days. This new Extended Term Transactional Funding is less expensive than traditional hard money and funds up to 100% of the initial purchase price.