A “double closing” is where an investor has signed a purchase and sales agreement with a property owner (the A-B contract) and will close the transaction, while at the same time having a purchase and sale agreement with a buyer (the B-C contract) to sell the same property. Both closings to occur on the same day.
The double closing requires the real estate investor to actually close on the A-B transaction and pay associated closing costs. Additionally, the timing of closing must be handled with care as the investor will need either his/her own cash or transitional financing to complete the A-B transaction then quickly close on the B-C transaction. Commonwealth Lending can handle the required transactional financing.
With the A-B and B-C closings recording nearly simultaneously, investors sometimes ask if they can use the funds to pay the current owner when the B-C transaction records and disburses. It is our opinion that funds from the B-C closing are to be used strictly for the B-C purchase and cannot be used by the AB closing attorney to fund the AB transaction. This is why transaction funding is available and a critical part of the closing process for real estate wholesalers.
Another question investors ask with whether the same attorney can close both the A-B transaction and the B-C transaction? Massachusetts is an “attorney state” meaning real estate closings are considered the practice of law and non-lawyer title companies cannot conduct closings. Furthermore, the Massachusetts Real Estate Bar Association has advised against the ethical dilemma of the same lawyer conducting both the A-B and B-C transactions with both closing the same day or soon thereafter. This is because an attorney representing the buyer on the A-B closing would need to quickly switch hats and represent the buyer on the B-C closing jumping to the other side of the table from the A-B buyer on what are nearly simultaneous transactions.
Commonwealth Lending has an experienced legal team to close the A-B transaction and work with the B-C attorney to ensure all title issues are taken care of and that each transaction closes on the same day or quickly thereafter. The legal team at Commonwealth Lending is experienced with real estate closings having conducted over 10,000 closings since 1997.
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