Funding the A leg in a double close when the C buyer's wire lands a day late

Question

Reading transactional funder agreements closely shows where the real protection sits. The same-session structure is straightforward: money goes out, the A leg records or is held, the C buyer's funds are already in escrow, and the funder is repaid from disbursement in the same sitting. Exposure is measured in hours, a flat fee is earned, and the transaction is done. The other category is different. The C buyer is using a lender that funds the next business day, or a wet-funding requirement in that state forces the A leg to fund before the C money arrives. Whether a closing can be structured dry or must be wet varies by state and by the title underwriter, so this isn't a preference call everywhere. Some funders price this as a one-day extension at a higher flat fee. Some refuse it outright. The case for taking it: the fee is bigger, a C lender's funding letter and the closer's escrow hold give something concrete to point at, and a wholesaler who can close on a financed end buyer tends to be a repeat source of deals. The case for refusing: the entire reason this structure is low risk is that the repayment source is already sitting in escrow. Once money goes out overnight against a commitment rather than cash already in hand, the funder is acting as a bridge lender without a bridge lender's underwriting, and risks owning a property nobody wanted through an entity that can't carry it. Where the line gets drawn as a funder usually comes down to how well documented that commitment is, not just how attractive the fee looks.

dmitri_248 · Answer

The document question is what secures the funder during the gap, and funder agreements tend to handle it two different ways. One is a recorded deed of trust or mortgage on the A leg, released on repayment. The other is contractual, an escrow instruction that says the closer holds and disburses principal and fee before anything reaches the wholesaler, with no security instrument at all. The second is fine for a two-hour window in the same room. Overnight, the position depends entirely on the closer following instructions and on nothing recording out of order in between, and recording gaps and disbursement rules differ by state. Taking financed-C-buyer deals only with a recorded instrument, a funding letter from the C lender addressed to the closer, and a per-diem that runs if the wire slips is the safer structure. Then the extension isn't a favor, it's priced. @chriswalton8 the clause worth hunting for in funder agreements is what happens on day three, because that's where the flat fee model stops describing reality.

raj_mehta14 · Answer

On a same-day double close that only lives a few hours, the mortgage often still gets recorded, with the funder relying on the closer to handle the timing rather than skipping recording altogether. @dmitri_248's answer points at both patterns existing, which lines up with how confusing this mechanic reads on paper. Recording something that lives six hours does sound like more fees stacked onto a very short loan, but the recording is usually what protects the funder's position during that window.

Funding the A leg in a double close when the C buyer's wire lands a day late

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