Double Closings

Double Closings. Double closings are when a person or business buys and sells the same piece of property on the same day. For example, Streetvestor closes on the purchase of 123 Main Street at 10:00 in the morning and then closes on the sale at 2:00 that afternoon. Double closings are not illegal although you may have uninformed people tell you that they are. All of the attorneys on the Approved Vendor List are fine with double closings as long as they are performed in the appropriate fashion.

The easiest Double Closing is when the purchase and sale are closed by the same attorney. Since the attorney is handling both closings they are more familiar with the details and will make sure that the process goes smoothly. They typically will not require certified funds for the first closing as long as certified funds are brought to the second. This is helpful because it reduces the necessary funds needed for closing. If we were to purchase a property for 40k and sell it that same day for 50k, 90k in funds would be necessary if both closings required certified funds. Since the attorney will take a company check for the first closing, only 50k in certified funds is necessary. The company check does not have to be covered by the bank, which means that the check can be cut regardless of whether there is money in the account. By the time the attorney runs the company check, the 50k check from the sale will be deposited into Streetvestor’s account and will cover the initial check.

Let’s go through this example again. cuts a 40k company check even though there is $0 in the bank. They take it to closing and give it to the attorney. At the second closing the attorney gives Streetvestor a 50k check from the sale. That check is deposited, covering the initial 40k company check, and 10k is left in the account as profit.

When a double closing occurs where the two closings are at different attorneys there is a little more work involved. Certified funds will be required at the first closing because that attorney is not party to the second closing. Streetvestor will either need to borrow the funds or bring them from the bank. Borrowed funds cost money and there will not always be 40k lying around for closings, so there is one other way to make the closing work. You are going to convert the check from the second closing into certified funds and take it back to the first closing. In order to do this the second closing attorney will usually need a copy of the HUD-1 and the deed from the first closing. The first attorney must be willing to let you perform the first closing without any money. They will then give you the documents to take to the second closing. Using those documents you will then close the second sale and receive a check. That check must be taken to the second attorney’s bank and converted into certified funds.

The certified funds can then be taken back to the first attorney to complete the transaction. You should make sure that the second attorney’s bank will work with you. Some banks will not be willing to cut a check back to you unless you have an account with them. You should call and speak with someone at the branch you are going to visit before the transaction so that they are prepared and there are no surprises.

The timeline of this transaction will go as follows, go to first closing, sign all paperwork and leave with necessary paperwork to close second closing. Go to the second closing, deliver paperwork from the first closing and sign all paperwork for the second closing. Get check from second attorney and take to their bank. Convert the check into two certified checks, one in the amount needed to close the first transaction and the other in the amount going back to Streetvestor. Take the certified check back to the first attorney. Take the second check back to the office.