Illegal To Flip/wholesale?!? Help
The title company I use has done one simultaneous closing with me, now I have another property and they are telling me that they are being told they cannot do that anymore. They haven't told me no yet, they are going to get back to me tomorrow afternoon.
They were telling me that they can't fund the deal with the buyers funds, that I would have to bring the money myself to closing. They said that "The Law"...not sure which one they are talking about...but they said the law here in florida "..if you read it one way it is legal, and if you read it another way, it's illegal to do a closing this way".
Is anyone well versed in Florida Law, that can explain to me what exactly I CANNOT do. When is wholesaling (or is it ever), illegal. Because according to Ron Legrand it's all legal, I believe him, because I do it and I've never had any resistance until now.
How can I explain how it is not illegal?
Any feed back would be greatly appreciated.
Thanks
JB
[addsig]
The problem JB is the Title Companies get nervous with double closings. This is why I always "Assign" after I collect my wholesale fee..
I would recommend finding another company to process your double closings are start wholesaling by way of "Assignment". Or you can close in your name, grant deed, collect your fee and let them assume the financing in place by the hard-money lender or private investor.
Best Riches,
Jeff Adam
_________________
"The only place success comes before work
is in the dictionary."
[ Edited by JeffreyAdam on Date 08/21/2004 ][ Edited by JeffreyAdam on Date 08/21/2004 ]
why would you do a double closing, just use an assignment, or worse case just be a line item on the hud 1 for the difference in contract amounts.
A truth in the RE world is that the big title/escrow cos. generally don't want anything to do with the odd, 3 way, or "take Bob's money from transaction B and buy Joe's property in name of Sam" deals.
Makes them nervous as this is not their everyday bread and butter and doesn't fit their mold.
You'd be far better off finding the small independent escrow outfit in your area, such as here is normally owned and run by a lawyer...and these guys will do the odd, multiparty closing, generally without any problems.
So make some calls or visits and they'll net you some better escrow contacts for your 3+ party deals.
[addsig]
Title companies can be skittish, as stated, around anything out of the ordinary. Mine has done my last two closings "unofficially," at arms length, because I chose not to get a title opinion (I researched them myself and was satisfied), which made them anxious. And they are the smaller of the two I have to choose from in my area.
On our litigous playing field, everyone's nervous these days. It doesn't help that some RE investors are a little careless and can overlook details; probably the title company trade magazine is full of stories about them. Have you tried explaining exactly why your deals are legit? Paraphrase your guru if necessary--but make sure his methods are legit first, seriously--and show them that everyone is protected--if you can--and maybe they'll relax.
In the end, I agree that assignment is cleaner too, but that doesn't mean you have to switch to that way immediately.
Ok, so is the transaction illegal?
Meaning, is it legal to come to the closing with NO money, use my buyers funds to fund my purchase, and then collect a check for the difference of what my buyer is paying me? Is there anything illegal about this?
I spoke with yet another title agent yesterday, and she told me she used to do wholesaling and she did them the same way I did. She also said she stopped because of friend of hers is still in jail to this day. She mentioned I could get away with it for about 12 months, but then a flag will be raised as an "illegal flipper" as she called it.
She told me, the legal way to do this is to come to the closing with my purchase amount (any way I can get it...borrow the money for 5 minutes until I sell, a private loan) and then purchase the property, then get reimbursed as soon as my buyer buys from me.
Now, is she just trying to collect double closing costs, or...is she right about the other way is illegal and this is the way I have to do this?
JB
[addsig]
JB:
I dont know if a double closing is illegal, however it is quite possible the escrow agent is trying to collect the double fees.
Personally, I prefer to 'assign' as it is much cleaner, less stress...
Best Riches,
Jeff Adam
[addsig]
My suggestion is to contact a lawyer. That's your only sure bet.
But I seem to doubt that it is illegal. Especially since Legrand is in Florida and supposedly does it all the time.
In your case, I think LeGrand would suggest to just find another title company! (lol)
can someone please explain to me what the differnce between an "Assigning" and "Double Closing". To you profit less when you Assign? :-?
We have wholesaled properties in Florida for years. When my brother and I don't wan the property for our selves, we usually go to our title agent and demand that they do a simultaneous closing so that we can control the deal without the buyer meeting the seller and making them nervous or giving us a bad name for not closing our own properties. The reason we do this is the fact that sometimes we buy the house really cheap and we don't want the people we are flipping it to, to get pissed about how much money we are making. That is the only reason we do the double closing. If it is a buyer we have worked with on many deals and we can trust them not to try to steal the deal, then we just assign and pick up our check from closing.
In short, we have done this for the past five years with one of the biggest title agencies here in tampa and we have never had a problem. If your agent won't do it.... guess what - time to find a new agent.:-o A simultaneous closing is not illegal, it is just an arrangement between multiple parties that do not have to know each other.
PS the problem might be in the paperwork that you are using.
:-o "..if you read it one way it is legal, and if you read it another way, it's illegal to do a closing this way". :-o
Again, try to find a title agency that has knowledge of investor deals and how they work. I just had a realtor that brought us to a closing where it was not our people cause the buyer's frend was the agent and we allowed this cause it was no real big deal to us as the costs were the same. When we got about two weeks into the deal, the title agent refused to close the deal because the did not "understand" the way the trust was set up (non modified trust agreement). Oh well, they lost the deal and we closed it two days later at our title agency.
Find an agent that is comfotable with investor deals.
Mike Mosher
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Thanks, Mike. Appreciate the info.
The problem is not doing it , it was the way it was done. under RESPA as well as Florida statute if you sell a property that you never had ownership in you are infact acting as a Realtor. The above mentioned a double closing as well as , under assignment you have position to sell. Under a same day Quit claim you have ownership and under a double closing you take ownership.
If you look into RESPA at www.HUD.gov by never taking ownership and never being a legal entity to the property ,that is what the GOV deemed fliping.