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CAT | Double Close Legal

Oct/09

13

Lenders Hate Double Escrows or Double Closes

0 Comments | Posted by Daniel Reynolds in Arizona Real Estate News, Double Close Legal, Double Close vs Assignment

Here’s what they’ve done to see to it, you’ll never have a chance at doing this.

1) Restricted the Title Companies with full disclosure to all parties.
2) Title Companies now require Full Disclosure to the Buyer and the price the first buyer bought the property for.
3) Fannie Mae properties have verbiage which require the first buyer to hold onto the home for 90 days or face lawsuit.
4) FHA and Conventional Lenders require two appraisals for properties owned less than 60 days.

If you’re planning on placing a cash offer on a home, with the hopes of a double close, please take into consideration all possible scenarios that could take place. First and foremost, before placing a cash offer on a home, you should research who the seller is and if they ( lender/bank ) allow for a double close. Then, you’ll need to contact the title company they are going through and find out if they know how to handle a double escrow. Not all Title companies do.

If you manage to get that far, you’ll need to be prepared for the possibility of the second buyer finding out what price you bought the home for and what price you’re trying to sell it for.

Even if, you manage to get this far, you’ll still need to confirm the new lender will allow for such a transaction. Disclose, Disclose and disclose is the only way you can get through a double close without having major issues. Or worse, lose the earnest money you placed down. And with cash offers, most lenders want to see 10% down on Earnest Money.

I can assure you one thing in a lender owned property and that is most lender addendum’s have double close clauses in their contracts.

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Apr/09

28

Double Close or double escrow. Is it legal?

0 Comments | Posted by Daniel Reynolds in Arizona Real Estate News, Buyer Information, Double Close Legal, Double Close vs Assignment, Flipping Homes, From a Banks point of view, Legal Double Close, What is a Double Close

Double CloseA double close is when a buyer/investor finds a property for someone else with the intention of reselling it to them without ever actually owning the property. This is done by contracting the property with this stated in the Buyer line, ” Buyer and or Asssignee.” The assignee is the  buyer who is buying the property from the investor. The investor raises the price of the property while it is under contract and makes money on the difference. This is called a double close or a double escrow. This is legal as long as it’s clearly stated in the buyer line. Our experience with working Assignee contracts, has mostly been primary resident owners and usually do not mind a double escrow.

However, REO or bank owned properties have a clause within their addendum that states, “assignee or transfer within 30 days is considered a breach of contract.” If you are thinking of arranging a contract like this, make sure the broker understands your full intentions.

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