double close vs simultaneous close - Posted by James Buster

Posted by JohnBoy on July 11, 2002 at 23:39:46:

They are both the same and you would have two separate settlement statements.

You have the seller you are buying from. Then you have the buyer you are selling to. Your buyer comes to closing with the funds to buy from you whether it be his cash or cash coming from his lender. Then his money is used to pay off your seller that you are buying from and anything left would pass to you. You would have a settlement statement on the sale where you are buying from your seller and a separate settlement statement where you are selling to your buyer.

Closing can take place on the same day at the same time or minutes apart or hours apart or even days apart and you can even have the closing take place at different title companies. One title company with your seller and one with your buyer. The title company will just hold everything until the end buyer or seller is ready to close if need be. In either case its called a double closing or a simultaneous closing. They both mean the same thing.

As far as buying a note at closing you would not be involved with any lending. If you are the note buyer you are only buying the note. The seller is seller financing their buyer. You don’t need a license to seller finance your own property. Then you as the note buyer steps in and buys the seller’s note that he is holding the financing on. You don’t need a license to buy a note.

The double closing is between the seller, investor and buyer. You just step in to buy the note from the investor selling to his buyer.

Investor gets a $100k property under contract to buy for say, $80k. Then the investor finds a buyer offering seller financing where the investor will create a first note at 85% LTV and carry back a second for say, 15% and get 5% down from his buyer. Then you as the note buyer steps in to buy the 85% first note from the investor at closing for say, $80k. Then the investor uses that $80k to pay off his seller, collects $5k cash from his buyer and walks out with a second at 15%. The buyer buying from the investor will then make payments on the 85% first to you as the new lien holder of the first and he will make payments on the 15% second to the investor.

You as the note buyer basically have nothing to do with the double closing between the seller, investor and note buyer. You are just buying the investor’s note from the investor at closing. Just like any bank buys a note right after closing. One lender may fund the deal creating the note, but then immediately turn around and sell that note to another lender.

In your case as a note buyer you are not acting as a lender. You are not making a loan to anyone. You are merely BUYING the note that was already created as the loan by the investor. But in this case the investor is just taking the money you pay him to buy the note with and using that to pay off his seller with. So the actual loan is created and loaned by the investor to his buyer. You are then buying that loan from the investor.

double close vs simultaneous close - Posted by James Buster

Posted by James Buster on July 11, 2002 at 19:07:30:

Are these the same thing? I didn’t think they were, but some posters appears to use them interchangeably. My issue here would be where you fund (buy) a note in the same closing transaction as a property sale. This I call a “simultaneous close”. It may, as I understand it, make you vulnerable to two charges:

  1. Lending (to said buyer) without a license.
  2. Usury. Purchase-money loans in CA don’t have usury limits, fortunately. Other states vary.

What I thought was a double close was where the buy transaction is completed, with its own settlement statement, and then in a separate close, with a different settlement statement, you complete the note purchase. Both may happen on the same day only 5 minutes apart, but theoretically you are protected from (1) and (2).

Is this theory correct, and is the distinction I am making between “simultaneous” and “double” legally meaningful?