Why is a "Double-Closing Illegal? And what is the difference

[torojd]

Why are they Illegal and what is the difference between a "Double" closing and a "Simultaneous" closing???

[torojd]

wow 31 views and no one knows? Any input would help guys!

[kdhastedt]

To my knowledge, they are not illegal.

A double close is when you close one transaction and, once it's completed, you close the second.  I've also seen it called a back-to-back closing.

A simultaneous closing is where the two closings are kind of lumped together and funds from one are used directly against the next.  The closings happen simultaneously, thus the name.

It's possible that no one answered because this has been answered dozens of times before and people might have thought that you would have done a simple search for your answer.


Keith

[Deal Hunter]

Technically, there is noting illegal about a double closing (using new buyers funds from second to purchase property in first closing).  I think that due to the credit environment, you may have trouble with the lenders of your end buyers wanting seasoning, which would make it impossible to do the traditional "double-closing" as normally defined by RE investors.

You have to find a title company that understands the process, but be aware that banks are having to do more documentation in order to fund your buyers.  You probably have to have done some kind of improvement comensurate to the new asking price for a lender to feel that all is on the up and up.

I have never done a "double" closing, but only a "back-to-back" closing.  In my case, my client fully funded purchase with their own money and closed escrow with recorded title, then 24 hours later, closed on the end-buyer's escrow.  So technically different from the example above.

[MI-Newbie]

I talked to ten title companies about simultaneous closings and assignment of contracts and only two got it. I was told it was illegal by one too. Just keep calling title co. and or attorneys until you find the right person.

One title co. said they don't do assignments and right in their purchase agreement in their FSBO package online, there was a paragraph that said "This contract is not assignable without sellers written permission."
To me, that means it IS assignable with permission which would be an assignment!
Call someone else and ask around at your local REIA to find people who are doing these type of closings in your area.

[real estate 001]

 

 HEY  and hi  every one 
 Have been off  for a while  with family stuff and realestate stuff

 Okay any time a title company a realtor  or a lawyer  do not understand something // or have never done it

    WOW  WOW  it it must be against the law

 Hey wake up just because you have not done a thing is not to say it is  or has broken any law !!

  I will give you a story i just  was part of
  I have a realtor who is a bird dog for me and my company
  He is in a far part of Oregon 
 i told him look for   some  preforeclusers // folks with high  DTI S
  And we will do  may be some  SUB - 2   
  He right away said no i will not as  this is against the law  and would be screwing over the seller  and i will not be part of it

 and then he went down his long list of BS  due - on -sale    ect  ect
 
 Well he ending up giving me a name of a person wantting to sell  but not wantting to pay a realtor  to sell it
 In talking with this person he was a perfect person as i saw it for   a SUB - 2  he had just lost his job was now  2 payments behind  and wanted something done  fast !
 
 I now have a deal done and signed with him  he has moved on
 Startting a new job in a biger town  and i bought  his home SUB - 2
 And i have a renter in the home  making the payments to a lawyers office /trust  and i am making 150 cash per month  at this point

 AND oh  my bird dog realtor i paid him  100 bucks for the  information as  well the selling gave him a 50 dollar  thank you
  AND  i gave him the name of the lawyers office / trust 
  He looked over the papers

  AND  HE IS NOW A CONVERTED MAN  TO THE SUB - 2 WORLD

  So just hang in there all of you whom are getting the  crap on the deals with title compines and the like  once you get one done  and show them  it is a differant world

   FRAUD IS  BREAKING THE LAW     MAKING A HONEST BUCK IS NOT !!!!

    AND JUST BECAUSE YOU DO NOT KNOW OF IT   AND OR HAVE NOT DONE IT  IS NOT BREAKING THE LAW

  BUT BEING STUPID  SHOULD BE

[MILCseller]

I am a REALTOR in MI, I know. Isnt that against the law?

As far as I know the double close is NOT illegal. No one has shown me the law that states you cannot do this.

[kdhastedt]

I am a REALTOR in MI, I know. Isnt that against the law?

If it's not, perhaps it should be! 

LOL!

Keith

[real estate 001]

     Keith   what is it you think should be against the law  a double close ?

[kdhastedt]

No, it should be against the law to be a Realtor in Michigan!

But it was a joke...OK?

[real estate 001]

                         OKAY   LOL

[Roger J]

Doing a guru simo closing (use funds of 2nd closing to pay for 1st closing) may indeed by illegal in certain states.  With many cracking down on "creative" financing techniques, I'd never say that it wasn't illegal.  Check your state laws!

Also, regardless of their legality in your state, performing them as such would have severe consequences should an "oops" occur in the process.  What happens when you close on the 2nd and the 1st doesn't close?  What happens if there is a problem with the 2nd, and you can't close on the 1st?  Not just what happens with you and the seller/buyer of the deals, but the closing agent as well?

Title companies, and especially, attorneys, have to account for those funds.  If they aren't there when they should be, guess who is responsible?  The closing agent.  Most won't do them simply because of that fact.  However, it's much worse.  One problem simo closing and there whole business could be shut down.  Hardly worth the money, I'd guess.

And your Realtor friend, if he is representing these people at all, then he is violating his code of ethics which basically says that he will not recommend anyone to violate any agreements that they have made (ie, a due on sale clause in a contract) in order to sale a property.  Since he is getting paid, I'd wager that a review board would say that he is violation.  Just an FYI.

Raj

[skersey]

This is one of the myths of this industry, spread by even some title agents unfortunately.  Now, in your particular state they mat have in fact made it illegal, but not the way you think.  This is similar to the many knucklehead real estate agents telling you that flipping properties is illegal.  It has to do with some states not liking the funding of one.  But the concept of a double close is not illegal or unethical, it usually has to do with the lender wanting complete disclosure of whats happening.  Same with the "Flipping" of properties.  Thats the american way, by something at a discount and then sell it for more.

The first real estate transaction I did, I had an option to the property, but was not on title.  I got it under contract from the seller to me.  Then listed and got it under contract to a different seller.  A typical double close.  The lender had issues with me not being on title (obviously) and selling the house.  I completely disclosed what was going on and the lender still didn't like it.  I told their lender to make it a prior to funding condition, which means we would all go close (sign papers) on the transaction, then before the lender funded it, they would review the title and see it was right, and then fund it.  The lender did not want to do that.  So I had the person selling it go in and close, which put me on title, and the very next day closed part two of the transaction, and everything was fine.  The funding of it was fine because I was on title, but before i can be paid for selling my house, the liens have to be satisfied. So we satisfy the lien (payoff the mortgage company) and I get the rest.  Very simple!!  Was it a double close still?  Basically, but because I understood that simple thing about title, it technically wasn't.  This issue is not as big of a deal as everyone makes it out to be, because most people do not understand how title works.  Go find a good title agent who understands this stuff, or lender, or if you are very lucky, a RE agent who gets it (good luck), and figure it out.  This land trust stuff may work, but all it is is just smoke and mirrors, and is a scary substitute for full disclosure.  The only reason it is not being cracked down on is because our states do not have the man power to go after it yet.  They have bigger fish to fry.  Lenders do not have title or seasoning issues (generally) on purchase money as long as it makes sense (no fraud).  Alot of this seasoning crap everyone is talking about is on refinances, because of equity stripping (fraud).  If the value is there and the collateral makes sense, then you are usually ok.  A cash out refi is a different story, because of obvious reasons.  But even a rate/term refi is usually ok.

[real estate 001]

 

 HELLO  ROGER  J  you  need to reread my post on this matter  all my realtor friend did  was  tell me of the person  /// he was in no way the realtor for any party in the deal

 Second my giving him   some cash  was just for his telling me  about  the person need the help

 As well the seller  giving him some cash was just him saying thank you
 It was just a friend helpping a friend form both ends
 
 No breaking of any laws

 I do understand the laws in some states  do not want any one but a realtor to make  any money in  a realestate  deal     but hey  this is just not going to be the case  every where  and even in the states  that want this

 Why dont they just start   telling people  you can not do any more of the FSBO  owners as you are not a realtor   WRONG    THIS  IS  THE GOOD OLE U.S.A.   

 If i want to sell my house  with out any realtor in it  i can do it >>>> and how i do it is of nobodys business  but me   the seller /buyer  and my lawyer

 Iam sure there are many whom thing just as i do  on this ?

[Roger J]

RE 001,

Depending on your state's RE commission rules/laws, your agent friend may or may not be representing the person.  Don't know the state or exactly what was going on.  Alot would depend on that as well.  That said, if he accepted payment of any kind, then in most cases, a review board would consider that payment for services, in which case, his duties as an agent would come into play.  And I never said anyone was breaking laws.  I said that it would possibly be an ethics code violation for him.  Again, just sharing for an FYI.  Thought he may want to review his policies just to make sure.

Raj