When a seller's attorney strikes the assignment clause and offers a double close instead

Question

Consider a disposition arrangement where a signed contract on a distressed estate sits at $1.85m and the seller's counsel strikes the assignment language, countering with a double close at the buyer's expense. Transactional funding for a same-day close on $1.85m, plus two sets of title and recording, plus transfer tax, often runs 1 to 3 percent of purchase price depending on the state and the funding source. Against a projected spread of $110k, that consumes 15 to 30 percent of the spread before anything else is counted. The walk point is wherever the cost stack pushes the net spread below what the deal's execution risk justifies, often somewhere in the 30 to 40 percent range of the original spread. A structure that keeps a seller comfortable without a double buy is a simultaneous close with a title company willing to hold both closings same-day under one escrow, which reduces the funding window and often the fee, though not every title company will do it and it needs to be arranged well before the closing date.

Rena Expert · Accepted Answer

Price the stack before anything else. Transactional funding on a same-day double close is usually quoted as points on the loan amount, and on $1.85m even a couple of points is tens of thousands before fees. Add a second owner's policy, a second set of recording charges, and transfer tax. Transfer tax is the item that varies most, and it varies by state and sometimes by county, so get the actual figure from the title company in writing rather than working from a percentage someone quoted you. In a high transfer tax jurisdiction a $1.85m round trip can take a $110k spread down to something that doesn't justify the risk you're carrying in the middle.

The alternative structures each have a catch. Assigning an entity interest, where you hold the contract in an LLC and sell the membership interest instead of the contract, avoids the assignment clause on its face, but whether that's respected depends on the contract language and on how your state treats it, and some states have looked at exactly that pattern. That's an attorney question in the state of the property, not a forum question.

A straight fee agreement with the seller, where you're paid at closing for finding the buyer, can run into licensing rules, because getting compensated for procuring a buyer for someone else's property looks like brokerage in many states.

What I'd watch that you haven't raised: in a double close your name goes on a deed at $1.85m and out at $1.96m, and in states where prices are public your buyer's agent can pull both. Some buyers accept that. Some renegotiate hard the moment they see it. Ask your operator whether the end buyer has already been told the spread.

mitchell_ray4 · Answer

The recorded-both-sides thing is what would scare me. A buyer paying almost $2m who finds out you made $110k in an afternoon isn't going to be reasonable about it.

When a seller's attorney strikes the assignment clause and offers a double close instead

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