Signing Before Closing Date
Purchasing property, waiting on appraisals. The seller recently said after we signed a sales contract in November that he wants to have the contract go into effect Jan 1, 2017. This is to avoid capital gains he'd have to pay in April. I get it, I'm fine with it. The issue I have is that I won't be in town January and want to get this thing going January 1st or before.
How might I amend or restructure the contract to be able to sign in December, but have the contract go into effect Jan 1. I'm sure there's a name for that...
You can just sign the contract dated Jan 1 and have it held in escrow by your or his attorney.
Originally posted by @Jessica Zolotorofe:
You can just sign the contract dated Jan 1 and have it held in escrow by your or his attorney.
As in, make the contract's date be January 1st. Sign the contracts and date our signatures as December 20th?
You shouldn't really need to date your signatures at all. Just an effective date for the contract.
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As buyer you can sign any time in advance without doing any "post dating", since you're just signing the closing statement, disclosures and such....you're not signing the deed transfer.
Are we talking about the CONTRACT or the closing documents? Seems like @Wayne Brooks is referring to closing docs. The contract itself wouldn't trigger cap gains tax, I don't think, only the transfer of title should. So, if you meant the actual closing, Wayne is right. Just sign in advance and your title company or lawyer can even date for you on the actual closing date. Is that what you meant?
Originally posted by @Jessica Zolotorofe:
Are we talking about the CONTRACT or the closing documents? Seems like @Wayne Brooks is referring to closing docs. The contract itself wouldn't trigger cap gains tax, I don't think, only the transfer of title should. So, if you meant the actual closing, Wayne is right. Just sign in advance and your title company or lawyer can even date for you on the actual closing date. Is that what you meant?
Sales contract. We signed one for December 30th that we currently have executed. He's asked to amend or resubmit a new contract, so he can get out of paying capital gains so soon, etc, etc.
I'd still like to sign the contract and have the sale go into effect January 1st...
I'm sorry, you still lost me. The contract says you have to close in December but he wants to close Jan 1? The contract date itself doesn't matter at this point. It doesn't have an impact on taxes (double check with your accountant, but I'm fairly certain), only the date he actually incurs the gain, which would be the date he gets the money and you get the deed. The only reason the contract itself would have to be amended is if it made time of the essence to close by the end of December or if you waive your right to purchase if some event doesn't occur prior to January 1. If neither of those are an issue, you can just have the seller date the deed Jan 1, have the lawyer or title company fund on that date and hold everything you sign in advance in escrow until Jan 1 and you authorize them to break escrow, pay the seller and record the deed on that date.
Originally posted by @Jessica Zolotorofe:
I'm sorry, you still lost me. The contract says you have to close in December but he wants to close Jan 1? The contract date itself doesn't matter at this point. It doesn't have an impact on taxes (double check with your accountant, but I'm fairly certain), only the date he actually incurs the gain, which would be the date he gets the money and you get the deed. The only reason the contract itself would have to be amended is if it made time of the essence to close by the end of December or if you waive your right to purchase if some event doesn't occur prior to January 1. If neither of those are an issue, you can just have the seller date the deed Jan 1, have the lawyer or title company fund on that date and hold everything you sign in advance in escrow until Jan 1 and you authorize them to break escrow, pay the seller and record the deed on that date.
Excellent. We'll have the deed and the fund date be January 1st.
Thank you Jessica!
Very welcome and congrats on the purchase!
Originally posted by @Jessica Zolotorofe:
Very welcome and congrats on the purchase!
So... my bank has to transfer the funds to the title company. The title company isn't allowed to hold the money for more than a day.
I had to redo the sales contract.
Oh well.
Why did the bank fund already? Didn't we say it would only work with a Jan 1 fund date? If you aren't closing until the 1st, I don't understand why the bank released the money already. And while I've never heard that and you probably need a new title agent, why couldn't an attorney hold the funds until closing? This doesn't make a whole lot of sense.
Bank hasn't released any monies.
I'm also not using an attorney. There's already enough middlemen/women... ;-)
Wait, so why would you need to change the contract? You fund the 1st, and the title company closes the sale. What is he issue?
Issue is that the contract says one date, 12/30 and the payment and closing will be after that date. Not kosher for the title company. The title company can't hold onto the funds. All sorted now though.