Triple Conveyance
would like to have some comments by those of you that have filpped with double closings......
I have been buying condos at the preconstruction stage and flipping the unassignable contracts with a standard real estate contract with addendums about construction timing etc. No problem...
LLC's are used for the original contracts and I have sold the LLC's. Also no problem.....except where the original contract says that the eventual buyer, if a company, must still control 51% of the new buyers shares.
I have some concerns, however, about the lack of seasoning on some of the deals where the new buyer will have to finance, and I do not want to have to pay for all the expenses of a double closing.... I have a number of deals that will "close" the end of first quarter.
We are exploring methods for conveyance where there is one deed prepared by the title company. This deed conveys title from two owners at once ( The original seller and me - the owner of the contract to buy) to the buyer. This will eliminate doc stamps required by double closing, avoid the no assignment clause, and avoid the double closing that would trigger a problem with the lenders.
I am presenting these documents to the underwriter (Title Company) for review next week.. I have selected a few lenders that are OK with the lack of seasoning. I have also selected a title insurance company that will give me a 40% discount on the promulgated rate.
Have any of you explpored this "triple conveyance" method? ( Three parties on a deed - two owners and a buyer) ?
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I just got a call from my title company about above. He has reviewed double closing with the title underwriter (Commonwealth). He is telling me that flips are going to be harder and harder to do and we have to make arrangements ahead of time. Accordingly I am meeting with a local bank that will set up the criteria they need to meet in order to avoid needing seasoning on a property. In some cases I will have to have a loan in place ON THE FIRST CLOSE. Banks will not let us SKIM (their word) to the second closing.
In some situations I have three or four flips I will do in a short period of time ( say two weeks). Unless I arrange ahead of time I will not be able to actually close WITH FUNDS or LOAN in place on all the proprrties - this is especially the case if I do not get MY bank to do the end loan for my buyer.
Have any of you run into this situation? How do you handel flips that need to be financed?
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