Home Buying in Diamond Bar>Question Details

Jacqueline, Both Buyer and Seller in Diamond Bar, CA

Is back to back closing/simultaneous closing/ double closing legal in California?

Asked by Jacqueline, Diamond Bar, CA Sat Aug 16, 2008

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0 votes Thank Flag Link Mon Sep 7, 2009
Hello Jacqueline. I am not sure what kind of double closing you have in mind. Are you talking about a seller of property A closing on the same day on the property he/she buys (i.e., replacement home) or are you talking about a buyer of property A who turns around and sells property A on the same day to another buyer? While neither is illegal, the second scenario poses different issues than the first scenario. The first scenario is primarily a matter of logistics. The second scenario may involve a duty to disclose to the lender that there is a double closing. For instance, if the buyer were to get a conventional loan and were to indicate in the loan application that he/she intends to occupy the house as a primary residence and then turns around and sells the house to a third party, there's a problem because the loan was obtained under false pretenses. I can also see a problem is a third party buys a short sale property and then sells it back to the person who short sold the property. As you can see from the examples that I gave you, whether or not a double closing is legally permitted, will depend on your particular cirumstances. As always, if you wonder whether something is legal, consult with an attorney who is licensed to practice law in your state as only properly licensed attorneys can give legal advice.
0 votes Thank Flag Link Sun Aug 17, 2008
Ute Ferdig -…, Real Estate Pro in Newcastle, CA
MVP'08
Contact
Hello Jacqueline,

It isn't illegal to do a concurrent close on an escrow. Given how unpredictable loans are these days it's not easy. I recommend one of the properties closing before the other and leasing back a few days to achieve a smooth transition between closings. I think it makes it a lot less hectic.

Best,

Monique Carrabba
Realtor and Eco Broker
Keller Williams Wilshire
The Reavis Group
mcarrabba@kw.com
0 votes Thank Flag Link Sun Aug 17, 2008
Hi Jacqueline:

As the John indicated it is not illegal.
We many times put in our offers that the closing be concurrent, but in practice it is sequential (the first must close before the second), sometimes it is on the same day but many times it is one day later. For them to close on the same day it is more likely to happen if both transactions are held at the same escrow and the same title company and if they second property is in a county that has a second, afternoon or late recording. This makes it easier for the set up, the balancing and the recording.

I have closed transactions that are not with the same companies but there has to be great communication between everyone.

Information is the key to great decisions.
Diana Margala 909-945-5763
0 votes Thank Flag Link Sun Aug 17, 2008
Hi Jacqueline,

Great question. It is not illegal, per se but in practice it really isn't possible. This could depend on your local county's policy on deed recordings.

State law requires that escrow and title have "good funds" before they can release money. What that means is that an escrow or title company must actually confirm receipt of funds before they can move it to the next party. When an escrow closes the money must be transferred from the title company of one escrow to the title company of the next escrow. This is normally done with a wire transfer and it often takes two or three hours to confirm that the funds have been received. So, here's how it looks:

Escrow #1:
Deed records at 10:00am
Wire is sent to escrow #2 at 10:45am
Escrow #2:
Wire is received at 2:00pm
Deed is recorded asap. This is where the hangup occurs.

Some counties have deadlines for recording. The deadline is often as early as 10:00am. With a 10:00am deadline there is no way the second escrow can record on the same day.

Check with your agent or escrow company.

Good luck,

John Hickey
Dilbeck Realtors, GMAC
818-541-7311
John@JohnHickey.com
0 votes Thank Flag Link Sat Aug 16, 2008
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