are REO simultaneous Closings for real.?

Question

I'm a Real Estate investor from Texas, and I have just recently decided to start wholesaling (double-closing) REO properties (since they're all over the map) but I soon ran into a problem. I purchased a property at a great discount, marketed it and quickly lined up a (cash) buyer and tried to double close on it, and that's when I found out that is a lot harder than anticipated.

I used my own money to close the A-B transaction (on a Monday) then turned around and closed with my (cash) buyer on Wednesday. (everything was going according to plan until) My Title company notified us that they could not disperse the founds until the Bank's Title company could  provide them with a proof or receipt that indicated that the deed had been properly recorded in the county's office (from the A-B transaction).

And here we are a week later and still no funds, the bank's title company has completely and absolutely refused to provide us with such documents. And I am wondering how are other investors around the country going about this.? has anybody else encounter such a thing? is there a way around this.?

Your comments and suggestions will be greatly appreciated.

Thanks.!

Edgar G

J Scott · Answer

Yes, I've done this and (so far) have never had an issue.  If they have the deed in-hand, they'll give it to you; if not, they'll send it to you (instead of filing it) as soon as they get it...

It's your property, and you have every right to the deed, though don't be surprised if the first closing company asks you for proof that it's eventually filed.

By the way, there is a $12 county filing fee where I live to file the deed...I make sure to tell the closer early on that I'll be leaving with deed in hand so that they can remove this fee from the HUD...   :D

Edgar Martinez · Answer

J have you tried this technique before..? and if you have, how effective is it.? in another words, is that something that the (first) closing title company would agree without an issue.

J Scott · Answer

I just realized I never mentioned this, but here's another option...

Tell the closing attorney at the first closing that you want to walk out with the deed in hand.  Then drive it over to the other closing attorney and drop it off.  Let them file it the second closing...

J Scott · Answer

It's part of the standard FNMA addendum.  Page 3, I believe.

That said, the asset manager needs to check the box that makes it part of the agreement, which only happens about two-thirds of the time, in my experience.

Jesse Ramirez · Answer

I've heard about this stipulation before, but as of yet haven't seen it. We've double closed on several fannie's in the past few months and not once was there an addendum requiring anything that might cause title transfer problems.

Jesse Ramirez · Answer

Anytime the bank requires that we use their title company(and they do most of the time), we just have our company get with the banks title company to set up the courtesy closing. Our title company handles all the deed recordings and money transfer issues and it isn't a problem.

Steve Babiak · Answer

One question I have for the OP: Did you buy this property from FNMA (Fannie Mae)?  If so, did they have an addendum stipulating a deed restriction?

J Scott · Answer

Legally, the bank can't require you to use their title company or closing attorney to complete the transaction, and in my experience, they really don't care if you do or not, as long as you can get the closing done by the contractual closing date.

So, in the future, when you purchase an REO, specify that you will use your own title/closing companies and that should make the whole process MUCH easier.

Steve L. · Answer

Every state seems to be a bit different.

Here is what I know for California:

1. It's best to use the same title company, the escrow company doesn't really matter.  Before closing tell the escrow officer you need the "Instrument Number" as soon as it is available.  This # allows any title company to go to the county and provide the # and get proof.

2. The transactions cannot happen on the same day.  It has to be 1 business day lapse.

3. You cannot use C's money to close the A-B transaction.  From what I've been told you used to be able to, but it is illegal for 10+ years.

4.  You can buy something called a Title Insurance Binder for the transaction.  If you do this, you should only have to pay for Title Insurance on your margin.

If party C trusts you, you can also have them fund your escrow and deed them the property outside of escrow.

Jimmy C. · Answer

I need the answer to this as well.  we will likely have our title co do a "courtesy closing;" but will we get the deed?