double close and tax delinquent

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I have a question for the BiggerPockets family. When I have a property under contract and I am going to wholesale the property. When doing a double close can I use the same contract that i used with the seller or do I need to have a complete different contract style to fill out with my new buyer? And also when wholesaling property's with back taxes on them do I need to have a specific clause in the contract that allows me wot buy the home with back taxes on them so the taxes will get paid off at closing by the buyer. and back taxes will be included in purchase price.

@Account Closed Short answers. If the lingo works for both contracts then you should be able to use them. Two separate contracts obviously but they are both a sales transaction. Anytime you have an issue that the TF provider will be coming across you need to let them know ahead of time. Have you found a reliable TF lender, yet?

I don't have a transactional funder at the moment. I didn't think I would need one if when doing a double close I would be using the buyers funds for the double close. Do you recommend having one? @George Taylor

Well it depends on your profit from the transaction and the buyers funding. If he's using a hard money loan then his lender would be responsible for paying your assignment fee. Our company will only pay assignment fees up to $8k. Anything above that we require the wholesaler to do a transactional loan. That protects you as being the facilitator of the deal by you getting a loan to purchase the property and then double close to the end buyer. That way the end buyer doesn't wait out your contract, with all of the sellers information and go directly to them. I've come across that before several times. Also, if you are looking to make a hefty product, your end buyer might do this deal but might not work with you in the future. One example is for two TF loans I'm doing the end of this month. The wholesaler is making $60k profit on each of two deals profiting him $120k total. If his end buyer knew he was making that much of a profit their feelings might get hurt and it might cause some major headaches for them both. A TF loan ,asks your profit and makes sure you get paid in the case the buyers doesn't want to honor your contract.

Also, another thing to think about when exploring TF loans. Some contracts aren't assignable and you would have to get the TF to legally do the deal such as all HUD properties. My old partner and I flipped several HUD properties to end buyers and investors and since they are non-assignable contracts we had to go the TF route to be able to make it work without us buying the property and having to season it to be able to sell it.

I recommend anyone who wholesales properties to at least run a deal by a HML to get their opinion on it. If you would like more information on this then shoot me a PM and we can talk more.

You can use the same contract but you probably want to take out any inspection contingency you have on the B-C contract. 

I don't think you need any specific clauses for the taxes. It's a given that the back taxes will be paid off with the buyer's funds at closing. Otherwise the sale wouldn't be allowed.

Generally, at least here in CA, anything the seller owes in terms of taxes, county fines, etc, will get paid off at closing. 

I understand the double close with a cash buyer. But with tf you use their money to close the AB transaction and then the buyer comes in to close the BC transaction and pays back the transactional lender correct? @George Taylor

@Account Closed ","user_avatar":{"medium":{"url":"https://biggerpockets.s3.amazonaws.com/assets/avatar/no_avatar.svg"}}}" href="/users/ColeR6">@Account Closed

My last two deals were double-closes. Both my buyers new that I was using their funds to close A-B and they didn't have a problem. I made sure my title company could do it before going into contract as well.

So my advice is, make sure your escrow officer can pull it off and also be clear about the double close with your buyers. If they want the deal, it shouldn't matter to them if it's an assignment or double-close. If it really is an issue, use transactional funding. 

@Account Closed ,

Double close is illegal in most states/jurisdictions and most title companies will refuse to attempt it.

What was once called "double close" was so badly abused, especially by short sale flippers, that it has been outlawed almost everywhere.

The "A to B" and "B to C" transactions must be fully stand-alone. Hence, the suggestion of transactional funding. The most common legal way is known as "back-to-back" closings.

If your locality makes contract assignment difficult (Ohio, Florida, others), that's the way to go.

Otherwise, you would just assign your position in the contract to the end buyer, they close with the seller and you get paid out of the buyer's funds at closing.