Should I Double Close?
A double close is two separate sales of the same property, run back to back. The original owner deeds to you (A-to-B), and you deed to your end buyer (B-to-C). You take legal title, even if only for a few minutes.
So, should you? Consider double closing when you do not want your buyer/seller to see your markup, the contract is non-assignable, or when the buyer's lender won't fund assignment fees that show on a settlement statement. Those are the reasons that make double closing the right choice.
Oh but it's not that simple… There are secondary factors that can make it a no-go.
I wish it was all about cost. I wish it was all about what kind of loan your buyer is using. But it's both, and either one could be the deciding factor.
The cost: Do your profits survive two sets of closing costs?
The loan type: While many loans won't fund if you've got an assignment fee showing on the settlement statement, some also won’t fund if you haven’t owned the property for a while (like the FHA 90 Day Rule - they won't fund if the house has transferred in the last 90 days).
Sometimes it just costs too much, and sometimes the buyer's lender just won't allow it.
What a double close is, and is not
Two transactions, two settlement statements, two deeds.
A-to-B: the original seller sells to you.
B-to-C: you sell to your end buyer.
The legs usually close the same day. They are still two legally separate transactions, and the first has to close before the second can. See the section below: The sequence that does work.
You may also hear this called a back-to-back closing or a simultaneous close. Same thing.
It is not an assignment. In an assignment you sell your contract rights and never take title. One closing, no deed to you, and your fee shows up on the settlement statement where your buyer can see it.
When a double close is the right call
Your contract is not assignable. REO sellers, corporate sellers, and plenty of institutional paper prohibit assignment outright. If you cannot assign, closing first is how the deal gets done.
You do not want the spread visible. If you bought at $100,000 and you are selling at $150,000, an assignment puts that number in front of your buyer, and at some title companies it also puts it in front of your seller. A double close keeps each side looking at its own transaction.
Your buyer's lender wants a direct contract with you. Some financing will not accept an assigned contract at all.
The spread carries it. On a $6,000 profit, two sets of closing costs eats most of your assignment fee. On a $50,000 profit, the same costs might easily be worth the privacy.
When not to Double Close
Your margin is thin. Two closings means two settlement fees, two sets of recording charges, and a funding cost on the first leg. If your markup doesn’t clearly survive all of it, assign the deal or pass.
You are in a high transfer tax state. Transfer taxes are charged on the transfer, not on the deal. Two transfers = two tax bills. Tennessee is a good example: transfer tax is due on both legs of a double close. In states like that, a double close is cost-prohibitive.
Your buyer is using FHA and you have owned the property less than 90 days. FHA's anti-flip rule makes a property ineligible for FHA financing when title has changed hands in the prior 90 days. Plan for your buyer’s financing as you go under contract.
You can't independently get the first leg funded. You cannot legally use your buyer's money to fund your closing… You have to fund and close, then they can fund and close.
Funding the A-to-B leg, and why your buyer's money can't do it for you
“Can I just use my end buyer's funds to close the first leg?”
No.
“But my old title company does it.”
Then ask them how their method complies with Good Funds laws.
The Good Funds rule
A settlement agent may only disburse money that is available as a matter of right. Most states put this in a statute, usually called a good funds law. Essentially, Party B is not entitled to Party C’s money until Party B sells the property. If Party B doesn’t yet own the property, they can’t sell it. The A-to-B leg of the transaction must fund and close first, then the B-to-C leg can close.
Colorado's is C.R.S. § 38-35-125, Closing and Settlement Services, Disbursement of Funds. The operative language:
No person or entity that provides closing and settlement services for a real estate transaction shall disburse funds as a part of such services until those funds have been received and are either available for immediate withdrawal as a matter of right from the financial institution in which the funds have been deposited...
Failure to comply is a deceptive trade practice, enforceable by the attorney general or a district attorney.
Tennessee's equivalent sits in the Residential Closing Funds Distribution Act of 2005, T.C.A. § 47-32-105, which requires that the loan funds received be the funds "designated for said mortgage loan" before the agent disburses.
Statute names, scope, and dollar thresholds vary by state. The principle does not: the money a title company pays out has to be money that file actually has. A-to-B and B-to-C are separate files.
How that restricts pass-through funding
Your end buyer's money is contractually tied to the B-to-C file. It is their money for their purchase.
If the title company reaches into those funds to close A-to-B, two things happen at once. It disburses on the A-to-B file using funds that file never received. And it pays out proceeds to you that you have not yet legally earned, because you have not sold anything yet.
Good funds enforcement is compliance-based, not damage-based.
The sequence that does work
A-to-B papers fully.
B-to-C papers fully and funds fully.
Only then does A-to-B fund, just long enough to close. (often a transactional lender is used)
B-to-C closes.
B’s proceeds are either retained or repaid to B’s transactional lender.
Your buyer's money being on deposit is not the same as it being your money yet. It's not your money until you've sold, and you can't sell until you've bought. Your buyer's funds stay in the B-to-C file and never enter the A-to-B escrow. It’s two escrows, two sources of money, but one sequence of events.
Transactional lenders will fund A-to-B only when they can see B-to-C fully papered and fully funded, because they do not want their capital stranded in a deal if the resale dies.
If someone offers to do passthrough funding
Some title companies still will. But why? Either they did not get the memo, or they are willfully violating the good funds laws. We stay above the line.
It is also worth asking what that favor actually is. A title company doing pass-through funding for you is in one of two positions. It is disbursing against funds not designated to that file (which is the violation); or it is absorbing the cost of a funding service it is not charging you for (which is an unlawful inducement / unfair trade practice).
People usually like that we sweat the small stuff at Creative Title. We hold the line, and that’s why people trust us with their transactions.
What a double close costs
Colorado, first leg, on a $400,000 purchase. Expect roughly $1,500 in settlement charges, plus title insurance, plus transactional funding (if applicable). That range covers the settlement fee, notary, tax certificates, wire and courier charges, recording, and state documentary fees.
Title insurance on the first leg. Get a hold-open policy if available (125% of normal rate), because it allows you to pass the policy to your end buyer practically at-cost. On a $400,000 Colorado transaction, normal rate is ~$1,800, which puts the hold-open policy at roughly $2,250.
Second leg. Add another set of settlement-side charges in the same range as the first. If you took the hold-open on leg one, the second leg is only charged for the price increase, rather than a full title insurance premium.
Transfer taxes, where they apply. Charged on every transfer. In some states, transfer tax is pricey, and that alone can make double closing not worth it.
So: two sets of settlement charges, one hold-open premium instead of two full ones, and whatever your state charges to transfer title twice. That is your all-in price, and your profit margins plus the benefits you’re seeking have to be worth more than that number.
Is double closing legal?
Yes. Two sequential sales of the same property is a legitimate structure, used every day.
What makes a transaction illegal is misrepresentation, not the mere fact that a property sold twice. A compliant double close has accurate settlement statements, independently sourced and verified funds, and truthful representations to every lender involved.
This article is general information, not legal advice. Real estate, disclosure, lending, and transfer tax rules vary by state and change over time. Consult a qualified attorney and confirm your buyer's lender requirements for your specific transaction.
Double close vs. assignment
Double close | Assignment | |
|---|---|---|
Number of closings | Two | One |
Do you take title? | Yes, briefly | No |
Is your spread visible to your buyer? | No | Yes, as an assignment fee |
Capital required | Yes, your own or transactional funding | None |
Works with a non-assignable contract? | Yes | No |
Transfer taxes | Charged on both transfers | Charged once |
Cost | Two sets of closing costs | One |
Best when | Spread is large, contract is locked, privacy matters | Spread is modest, contract allows it, costs matter more than privacy |
Double closings at Creative Title
Double closings are a core transaction type for us, in Colorado and Tennessee.
We will tell you when a double close is the wrong structure for your deal. If the numbers do not survive two closings, or your buyer's financing will not allow it, you should hear that from us before you sign, not at the table.
We hold both legs under one closing team, so the sequence above actually happens in the right order. We check every file against the filed rate schedules and apply the title discounts it qualifies for. And we will not run your money in a way that creates a compliance problem for you, because how you do one thing is how you do everything. We are not willing to violate the good funds laws for a client. That is the same reason we are not going to let anyone walk off with your assignment fee, which is a thing that happens at title companies that treat wholesalers as an afterthought.
Key takeaways
Double close when your contract will not let you assign or your spread needs to stay private, and when the numbers survive two closings. Do not double close when your margin is thin, when your buyer is FHA and you have held the property less than 90 days, or when you are in a state where transfer taxes are charged twice.
Fund the first leg with your own capital or transactional funding. Never with your buyer's money. The good funds laws do not permit it, and a closer who offers to do it anyway is showing you how they handle everyone's file.
Ask for the hold-open at order intake, before the first policy issues. It is the single easiest money you will save on the transaction.
Ready to talk it through? Book a call and we will walk your deal before you commit to a structure. Or send your contract any time to [email protected].
Frequently Asked Questions
Is a double closing legal? Yes. Two sequential sales of the same property is a legal structure. What makes a transaction illegal is misrepresentation, particularly an artificially inflated value used to obtain financing.
What is the difference between a double close and an assignment? A double close is two transactions and you briefly take title. An assignment is one transaction, you never take title, and you sell your contract rights for a fee that appears on the settlement statement.
Can I use my end buyer's funds to close the first leg? No. Good funds laws require a settlement agent to disburse only funds actually received for that file. Your buyer's wire belongs to the second transaction. Fund the first leg with your own capital or transactional funding.
Then how does the money actually work? A-to-B papers. B-to-C papers and funds. A-to-B funds and closes. B-to-C closes. The transactional funds go back to the funder. Two escrows, two sources, never commingled.
Do you pay title insurance twice on a double close? Two policies issue, but with a hold-open on the first leg the resale policy issues without a second full premium. It has to be requested before the first policy is issued.
Do you pay transfer taxes twice on a double close? Yes. Transfer taxes are charged on the transfer, so both legs are taxed. In some states that is minor. In others it is enough to make the structure not worth using.
Can I double close if my buyer is using FHA financing? No. FHA's anti-flip rule makes the property ineligible for FHA financing when title changed hands inside that window.
What is transactional funding? Short-term capital used to fund the A-to-B purchase, repaid from the B-to-C proceeds the same day. Lenders typically want to see both contracts, a verified end buyer, and both legs closing at the same settlement agent.
Does Creative Title handle double closings? Yes, in Colorado and Tennessee.
This article is general information, not legal advice. Title insurance availability, underwriting standards and state law vary, and outcomes depend on the specific facts of a transaction. Consult a qualified attorney in the relevant state before acting. Creative Title is a licensed title and settlement services provider in Colorado and Tennessee.
Questions?
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