Posted by Dave H on March 18, 2002 at 16:36:10:
When doing a double close, a lot depends on the lender that your tenant/buyer is using. Some will allow the double close with no problem. However, some will not allow the closing to happen, or rather will not fund your tenant/buyer if you have not been on title for at least 12 months. This is something that you will need to find out first.
When I do a double closing, I always use my own attorney who knows how these transaction are supposed to transpire. Normally, my attorney has already set up all the paperwork, got the payoff information from the seller’s lender, and had the tenant/buyer’s lender wire funds to fund the deal. I go into the closing with my lease option agreement that I have with the seller. (I always use a lease option agreement and not a purchase agreement when BUYING on a lease option, and a lease and seperate purchase agreement when SELLING on a lease option, but that’s another discussion.) You would use your purchase agreement between you and the seller to close with the seller. You then turn around and close with the buyer. The attorney sets up the paperwork so that title goes to you, then to the tenant/buyer. The attorney would use the funds wired to closing to pay off the seller’s mortgage, give the seller any profit that they will be making from the sale, then cut you a check for your profit.
There are other ways of closing the deal if a double closing will not work for one reason or another. It is possible to record a lien against the property as something like a “secured loan” that would be paid off with the proceeds of the buyer’s new mortgage. You would need to get the cooperation of the sellers for that though. If they are agreeable to the idea, you could record the lien, then assign your purchase agreement between you and the seller to the tenant/buyer, letting them close directly with the seller. You would then be paid off at closing just like any other lienholder.
As far as the seller “stiffing” you, after the closing goes through and the sellers have signed all the documents, they do not own the house any more, and cannot sell it to someone else.
Any way, I hope this helps a bit. You really need to get a closing attorney that is working for you AND find out what the tenant/buyer’s lender’s requirements are as far as allowing a double closing. If need more clarification or help on this one, feel free to post further details.