The seller accepted 1.85M on a 2.4M estate and the fee held, but the earnest money structure is what actually decided it

This thread is doing something useful, so I want to make sure the terminology is clear for anyone reading who has not done a luxury assignment before.

A few terms worth defining:

Earnest money is a deposit the buyer (here, the wholesaler) puts up to show the seller the deal is serious. If the wholesaler walks away without cause, the seller often keeps it.

Assignment fee is what the wholesaler charges the end buyer for handing over the contract. The 210k figure here is that fee, before costs ate into it.

Mechanics lien is a legal claim a contractor files against a property when they did work and did not get paid. It attaches to the property, not the seller personally, which means the new buyer inherits the problem if it is not resolved first.

Double close means the wholesaler actually buys the property and resells it in two back-to-back transactions, rather than simply flipping the contract. It costs more, but some sellers and attorneys insist on it.

The lien point in this post matters for anyone at any price point. A standard title commitment is not always a lien search. They are different documents, and on any property with visible renovation work, ordering the standalone search before your inspection window closes can catch exactly what caught this deal late.

The earnest money loan structure described here, where the assignee funds part of the deposit, raises legal and securities questions I am not qualified to answer. A real estate attorney who works in your state should review that structure before you use it.

What market are you in, and are you working luxury deals now or building toward them?

The mechanic's lien being on record and still getting missed two weeks in is what gets me. Title company's first pass failing on a 2.4M estate is not a minor slip, that's a workflow problem and somebody should have caught it before the inspection clock was already more than halfway gone.

My last deal with a split like that was a 1.6M off-market in Pasadena. I put up 30k, assignee put up 20k documented as a bridge note, and the assignee's attorney actually tried to recharacterize it at the table as an equity stake, which would have blown the assignment structure entirely. Cost me four days and a revised closing statement to unwind. So the documentation on how that loan is papered matters more than people think when they're setting it up.

What was the seller's attorney's response once the lien hit? Because that's usually where a deal like this either gets saved or turns into a litigation conversation.

Did the wholesaler disclose the loan arrangement to the seller, or did it stay between the buyer and the assignee only?

That part matters more than the fee structure to me, because in Texas at least, if the earnest money source is papered as a third-party loan and the seller's attorney finds out mid-deal, they can argue the assignee was already a de facto principal before the assignment was executed, which gives them grounds to void the assignment clause entirely. A motivated seller's counsel does not need much.

The lien miss is the part I keep coming back to. Standalone lien search on a property with recent permits runs maybe 150 to 300 bucks and two days, and it would have put that 45k reprice back in the wholesaler's pocket.

The assumption doing the most work in this deal is that the 210k fee was fixed before anyone knew the lien existed, which means the wholesaler had already mentally spent a number that depended entirely on a clean title picture. When the lien compressed the net to 165k, that was not just a bad day, it was the fee structure absorbing a due diligence failure that should have been priced as a separate line item before the inspection period opened. On an estate with any visible renovation history, a standalone lien search costs maybe 300 to 500 dollars and takes two to three days. Running it in parallel with the title commitment, rather than waiting for the commitment's first pass, would have put that 45k compression on the table at day three instead of day fourteen, and the wholesaler could have gone back to the seller for a price adjustment before the assignee had leverage to demand one.

The earnest money loan structure is the part I want to pull on further, because the mechanics of it matter more than the optics. If the assignee wrote a check to the wholesaler, and the wholesaler deposited it into escrow as their own funds, the seller and seller's attorney saw one clean 50k deposit and did not know 25k of it was a loan obligation sitting on the assignee's side of the ledger. That is a disclosure conversation worth having with a real estate attorney before you use this structure again, because if the seller's counsel had asked for the source of funds on the earnest money, a loan from the end buyer to the wholesaler, documented before countersigning, could read as evidence that the assignee was already a party to the contract before the assignment clause was formally triggered. That might not have killed the deal, but it would have given the seller's attorney a cleaner argument for demanding a full novation rather than just a double close. Was the loan

The earnest money loan structure is the part I'd push back on a little, not because it's wrong but because I've seen it get weird when the assignee later acts like the 25k they fronted gives them a seat at the renegotiation table it doesn't. My land deal in Adair County I had a similar thing where a guy who contributed to the earnest thought that bought him input on terms it didn't, and untangling that cost me time and a relationship. On the lien search point, I'd go further than the post does: I now pull a separate lien search before I even lock the inspection period on anything where I can see paint buckets or a dumpster in the listing photos, because the title company's first pass is not built to find everything fast, it's built to find everything eventually. That distinction cost this wholesaler roughly 45k and almost cost them the deal entirely. What I want to know is whether the assignee's 25k was documented as a true loan with a rate and a repayment date or just described as a loan in a side letter, because that distinction matters if the deal falls apart and you're both pointing at the same earnest money check trying to decide who gets it back.

The repricing from 2.07M to net 165k after fixed double-close costs stayed put is what I want to sit on, because that math only works if the double-close costs were already thin enough to absorb it without blowing the deal entirely.

What was the title hold fee the end buyer required, and was that negotiated before or after the lien surfaced?