Do Title companies do double closings???

10 Replies

Can someone direct me to a title company that will do a double closing?  North Title says its illegal and Title Smart that they can do two closings if they are roughly ten days apart.  My associates are doing these types of deals all across the country, wondering if someone can help.

@Greg Olson

It's a state issue.  Check to make sure it actually is legal in your state.  There have been restrictions placed on the practice, including forcing the transactions to be further apart, so that there is no way to use the end buyer's funds for the 1st close.  This forces wholesalers to actually have the ability to close on their deals.  And, if you think about it, without funds changing hands, there can be no actual closing, so...I can actually understand why that process would have been deemed illegal.  Just saying...

Yes, you are completely right, if no funds change hands there wouldn't be a closing.  Thank you.  I appreciate the sound advice.  

The thing is, I am talking about a double closing where the buyer's money goes from their hands to my hands to the seller's hands, all at the same time.  That's why its called a double closing.  It takes skill to set up and it takes skill to close on it.

I don't know if anyone has ever told you this before but if you end dialogue in a passive aggressive tone, the initial reaction of the recipient is to be on the defensive.  

Not sure if that was an accident or if you are trying to create a hostile environment.

Craig, if title must go to you before you grant title, your ability to purchase is accomplished to close the transaction first, even if it's micro-seconds, besides state laws, there are issues of escrowed funds being misapplied, if any closer is still doing these they are wrong.

You need transactional funding, basically a loan for an hour or a few days. 

If you can get your seller to provide 100% seller financing to you, say for 10 days, you can pay them off with the end buyer's funds. 

Under new settlement requirements, consumer buyers need disclosures 3 days prior to closing and other requirements 10 days prior if they are getting a loan. Off hand, I don't believe there is any title requirement unless the lender invokes the requirement of the seller being in title prior to settlement, which they can, such requirements also come from HUD depending on the loan.

While your closing can be exempt as a commercial transaction, your buyer won't be if they are to be owner occupants. If your buyer is a commercial transaction you can speed things up. But, you still have the escrow issue and you not actually buying to close before you sell. :)

@Greg Olson ,

This may be more of a state issue, and more states are starting to weigh in on the issue of wholesaling.  Are you referring to a Minnesota property?  Over the past couple of years most title companies have stopped doing double closings, either due to requirements of their underwriters or in some cases state regulatory agencies.  In both cases they are wanting two distinct and separately funded transactions (a "back-to-back" closing) to clearly avoid the use of the end-buyers funds being used to pay the original seller.  For instance, in Texas the State Department of Insurance requires separation of the two transactions (one day is adequate).  I have not heard of a ten day requirement in any state I have funded in.  That may be the comfort level of that particular title company when they consider what is adequate separation between the deals.  If it is not a state issue you can likely find one that will allow a shorter time period between closings (such as one day, or two, or three). The concern of title companies (especially in the case of distressed homeowners and for short sales) is whether an argument can later be made that a legal closing took place if you did not bring your own funds, or transactional funding, or other borrowed funds.

If your purchase is a short sale it will be near impossible to find a title company that will allow use of the end-buyers funds to close on the initial purchase. If your end buyer is not a cash buyer and is using a mortgage that is an entirely different deal. It will require separation of the transactions, as mortgage companies will almost never accomplish a same day funding of a flip. Some separation is possible (such as 10 days, or maybe a bit longer) if it is an FHA mortgage being used by the buyer. If it is a conventional mortgage being used most lenders will require at least 90 days after you go in title.

In Minnesota both closing a must be wet funded. This means that in a transaction where you want to double close, you need to fund your purchase closing and your buyer needs to fund their purchase. When the end buyers funds flow through to be used as your purchase funds, that is called a dry double close and you can't do it in MN. 

Double closing add costs and take your profits. You can wholesale much easier by using a single purpose llc and selling the entity that holds the contract. Of you can explore flash cash to fill the void where you need the funding until your buyer closes. 

Originally posted by @Ted Akers :

@Greg Olson ,

This may be more of a state issue, and more states are starting to weigh in on the issue of wholesaling.  Are you referring to a Minnesota property?  Over the past couple of years most title companies have stopped doing double closings, either due to requirements of their underwriters or in some cases state regulatory agencies.  In both cases they are wanting two distinct and separately funded transactions (a "back-to-back" closing) to clearly avoid the use of the end-buyers funds being used to pay the original seller.  For instance, in Texas the State Department of Insurance requires separation of the two transactions (one day is adequate).  I have not heard of a ten day requirement in any state I have funded in.  That may be the comfort level of that particular title company when they consider what is adequate separation between the deals.  If it is not a state issue you can likely find one that will allow a shorter time period between closings (such as one day, or two, or three). The concern of title companies (especially in the case of distressed homeowners and for short sales) is whether an argument can later be made that a legal closing took place if you did not bring your own funds, or transactional funding, or other borrowed funds.

If your purchase is a short sale it will be near impossible to find a title company that will allow use of the end-buyers funds to close on the initial purchase. If your end buyer is not a cash buyer and is using a mortgage that is an entirely different deal. It will require separation of the transactions, as mortgage companies will almost never accomplish a same day funding of a flip. Some separation is possible (such as 10 days, or maybe a bit longer) if it is an FHA mortgage being used by the buyer. If it is a conventional mortgage being used most lenders will require at least 90 days after you go in title.

There is no requirement for even a one day separation to do a double close in Texas.  Technically, 2 closings cannot happen at once but they can be separated by a second.  Obviously, the "purchase" deed will be recorded by the "sale" deed but again that can be a matter of seconds

With the FHA "Anti-flip" rule back in effect, you are looking at a minimum of 90 days from the date the deed is recorded to close to a buyer using FHA financing to a maximum of 90 days before you can execute a contract plus the time to close depending on the interpretation of the rule by the lender

@Greg H.

Thank you for the clarification regarding Texas.  I am funding one this week in Houston that is requiring one day of separation; and have spoke to or worked with maybe a half dozen over time that all wanted 1-5 days separation, most all citing Department of Insurance oversight.  So, that goes to what their comfort level is in their definition of separation.  I do not mean to hijack this thread, but can you recommend a Texas title company that will allow same-day transactions for future use?  

Thanks,

@Ted Akers

Excel Title-Carla Fetty 214-440-0359 They use to be Luna and Luna and at one time the exclusive closer for HUD. A double close is not her specialty and she might need some guidance but they can close a deal in just about any county

Texas Title- Wally Tingley 512-293-3885   Investor friendly and can wraps, double close etc

Disclosure- I am not affiliated in anyway with either and  I do not have to use the buyer's funds to do a double close

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