Have you ever tried to do a double closing, but the buyer’s lender won’t let the deal close until you (the wholesaler in the middle of the A-B and B-C transaction) have held title to the property for X amount of time? Or perhaps the buyer’s lender won’t close at all because they don’t like double closings?
In some cases, you might even try to do a double closing and use the end buyer’s funds to pay for both the A-B transaction and the B-C transaction (sometimes referred to as single source funding), but again, if the end buyer is using bank financing, often the lender won’t let it happen.
This scenario came up in a recent Mindshare Meetup, and one of our members, Tim, had a pretty smart solution to that issue. His title company in Illinois has been able to use single-source funding even when the end buyer has a lender involved. His title company has a disclosure statement that clearly states they (the title company) will use the end buyer’s funds to complete both transactions.
The beauty behind this document is that the title company provided it, so if the lender has any questions about it, the title company will answer those questions directly with the lender, and the wholesaler doesn’t have to justify their position to the lender.
Having the title company act as the authority on the matter offers a lot more legitimacy than the wholesaler having the fend for themselves.
This disclosure statement is made up of a few parts, which will vary, depending on whether the end buyer has a lender involved or not. Here’s how it works.
In all cases, the original seller and the end buyer will sign this document:
DOUBLE ESCROW DISCLOSURE
“ACQUISITION ESCROW”The closing of this escrow is subject to and contingent upon the concurrent closing of Escrow No. ____________ (“Resale Escrow”), wherein Buyer herein is selling the subject property at an increased purchase price.
Seller acknowledges that proceeds from the Resale Escrow transactions are the source of all or part of the purchase price herein. Escrow Holder is authorized and instructed to record all appropriate documents regarding this escrow, even though funds necessary to consummate this transaction will not be transferred to this escrow until after such documents are recorded.
With full knowledge of the foregoing, the parties hereto authorize and instruct Escrow Holder to proceed with the closing of this escrow pursuant to instructions relative thereto. The Parties further agree that Escrow Holder shall have no liability for and shall be held harmless from any matter resulting from Escrow Holder’s compliance with these instructions.
In cases where the end buyer is working with a lender, then the original seller, end buyer, and the lender will sign this document:
DOUBLE ESCROW DISCLOSURE
“RESALE ESCROW”The closing of this escrow is subject to and contingent upon the concurrent closing of Escrow No. ____________________________ (“Acquisition Escrow”), wherein Seller herein is acquiring the subject property at a lesser purchase price.
Buyer is aware that all or a portion of the proceeds from this transaction are the source of all or a portion of the purchase in the Acquisition Escrow. Escrow Holder is authorized and instructed to transfer funds from Seller’s proceeds in this escrow to the Acquisition Escrow sufficient for purchase of the subject property and closing of the Acquisition Escrow.
With full knowledge of the foregoing, the parties hereto, including any Lender providing new financing for the acquisition of the subject property, authorize and instruct Escrow Holder proceed with the closing of this escrow pursuant to instructions relative thereto. The parties further agree that Escrow Holder shall have no liability for and shall be held harmless from any matter resulting from Escrow Holder’s compliance with these instructions.
In cases where the end buyer is paying cash, with no financing involved, the original seller and end buyer will sign this document:
DOUBLE ESCROW DISCLOSURE
“RESALE ESCROW” (no lender):The Closing of this escrow is subject to and contingent upon the seller acquiring the property through Escrow ___________(“Acquisition Escrow”), wherein Seller herein is acquiring the subject property at a lesser purchase price.
With full knowledge of the foregoing, the parties hereto authorize and instruct Escrow Holder proceed with the closing of this escrow pursuant to instructions relative thereto. The parties further agree that Escrow Holder shall have no liability for and shall be held
Note: These docs and Tim’s transactions were all done in the state of Illinois.
If you want to download a PDF of these templates, Tim was kind enough to share them with the whole community! You can download them here.
If you’re looking for an investor-friendly title company in your part of the country, don’t forget to check out our nationwide directory of closing agents to see if you can find one there. And better yet, if you know of one that isn’t already listed, be sure to submit them here!