My question concerns methods of closing. Is it legal to have a simultaneous closing?
In other words on an A to B and B to C purchase where the bank is A, I am B, and an end buyer is C.
At closing is it legal for B and C to sign papers, with the funds from C put into escrow, and then A and B close using funds from escrow on first signing to fund that transaction?
I hear some Title companies will and many will not. I would like to know the legalities on the issue.
Thank you, R
I am not an attorney and am unable to answer your question about legalities. As a title insurance agent, I can help you understand why I may or may not handle a transaction like this.
I insure title in PA and so there may be issues in FL of which I am unaware. In PA the Dept of Revenue considers, as do I, that these are clearly two transfers. Even if there are not two deeds in PA, both transfers are subject to transfer taxes.
When a transaction like this is presented, a title agent will consider whether or not there is a potential for fraud. We insure against fraud and we also do not want to collude to defraud another party. A test, then, is whether all parties - A, B and C - are aware of the simultaneous close.
This is the case in relocation transactions. In those cases a relocation company has advanced funds to a homeowner and holds a signed deed in hand pending the sale of the property to a buyer. The buyer deals with the relocation company but at closing there may be two deeds - one from the owner to relo, then another from relo to the buyer - or there may be just one deed from the owner to the buyer. In both cases transfer taxes are paid twice. Everyone is aware of the nature of the transaction. There is no fraud and there is no harm.
As to the specific transaction you mention:
"In other words on an A to B and B to C purchase where the bank is A, I am B, and an end buyer is C.
At closing is it legal for B and C to sign papers, with the funds from C put into escrow, and then A and B close using funds from escrow on first signing to fund that transaction?"
A title insurance agent is in the business of insuring title. If the closing vests title in B, then B is the consumer and the one being insured. The fact that C gave B the money, has nothing to do with the title agent. If you then expect the title agent to convey from B to C, that's a second transaction and though it may happen at the same table, it is really happening after the first closing.
Since this type of closing has so often been used as a vehicle for fraud, honest title agents are hyper-sensitive and for that reason would be likely to pass on taking the business unless they are absolutely comfortable that everything is above board and there are no shortcuts.
I hope that explanation helps and thanks for reading! ;)