Title says they can't send me the reno budget at closing. Help!

11 Replies

I'm closing on my first BRRRR property on Monday. My private lender was going to wire the purchase cost and renovation budget to the title company, and I was told that title would send me my renovation budget at closing. Today they called me and said it's not possible for them to send me the money. Is this true? I thought I had read that this is normal???? What do I do? I need some help!

What is your written agreement with the private lender? They typically control release of funds as work is completed, not the title company

Hi Caroline, I thought that it is possible for my lender to simply send the purchase cost and rehab budget directly to the Title Company in one wire transfer and then Title would send the remaining funds over to me. Is that not the case? Can you tell me what best practice is for this, and do I need to create two promissory notes for purchase and rehab? And will the total loan amount be on the lien's deed of trust? Or just the purchase price?

No lender will gift you more than the value of subject property to do as you feel. Title company insures the closing, they don't handle construction draws or pay the buyer. Send me your note to read. In a typical rehab loan you request funds as work was already completed. Permits, plans, items before close are first draw. Next you get the rough lumber and sticks and drywall done... and so forth. Without knowing what the project is - very hard to help advise you. You closed already and you read the docs? Lender may handle the draws or they may have a trustee or they might issue checks to you and contractor... many variables and options. How much work are you talking about and what is the cost to cure?

@Caroline Gerardo the lender is a very close friend of mine. He is happy to send me the full rehab budget in one wire. I am purchasing the house for $100k and have a $58k rehab budget. We thought that my pvt lender (my friend) could put the full $158k into title’s account and that title would distribute $100k to the seller and $58k to me.

We will have a promissory note and deed of trust drawn up by an attorney for closing too.

@Wayne Brooks because it is a cleaner process. My lender just makes one wire transfer. And title handles is. I have an investor friend in California that does this with every deal and he’s buying a house a month. Are you able to share some insights one this?

@Tony Barwick It’s totally possible. I just finished a flip where I borrowed 100% funds for purchase and rehab. My private lender, like yours, is a friend, so he wired the whole amount to my title attorney, who then disbursed the purchase amount to the seller and the rehab amount to me.

Just went under contract for the rehabbed property and will be able to fully cash out my lender his loan for purchase and rehab, with a nice $50K profit for myself.

@Jean H. Is dealing with your personal title attorney the same as dealing with the title company themselves, or different? I’ve been dealing with an attorney from the title company, so perhaps I should get him on the line tomorrow? It sounded like he was the one saying it wasn’t possible, and I was really taken by surprise.