Double-Closing Technicalities (i.e. my atty says my way is illegal!)

[Karin Crompton]

Hey all,

I'm having a bit of trouble sorting out how to complete a double closing here in CT. To attempt to summarize, my attorney tells me we can't fund the A-B with the B-C money. We are using a hard-money lender (HML) in this situation. I should add that the contract cannot be assigned, so the A-B does need to take place and can't be A-C.

I believe my attorney's primary issue is that we can't do B to C funding as a first step b/c we don't actually own anything at that point. Also, that that money can't be used for the A to B transaction b/c our lender has not agreed to loan to the wholesaler, only to loan to us.

We've done this a couple of times in the past in cash transactions where we brought the cash. It was clunky. Our attorney drafted a note saying we were making an unsecured loan to the wholesaler; we did A to B that way, and then the funds were immediately paid back when we did the B to C closing 10 minutes later.

This time we've got the hard-money lender. I haven't yet contacted them, but I imagine they've been in this situation before and am hopeful they will have an easy solution (probably at a price). After all, we have an agreement w/the wholesaler and the HML has agreed to fund us. All we need to do is smooth over the first part - the wholesaler buying from the seller - that has my attorney hung up.

I understand the laws vary by state, but is there something I'm missing? I swear I've heard other investors in CT talk about doing double closings all the time, though I've never gotten the nitty-gritty details. Maybe it's always this clunky.

Any suggestions?

[Wayne Brooks]

Your best bet for some transactional type of funding should be your HML. His money will already be there anyway. The wholesaler should have figured this out. Another point with transactional funding...make sure that "B" has no judgment outstanding. If he does, they attach to that property during the 10 minutes he owns it.