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When a property in a real estate is purchased and sold at the same time a double closing occurs. This usually happens when the buying and selling occurs among three parties namely the original seller, the final buyer and the investor, who acts as a middleman. There are many different reasons for such a closing to take place. The most common one is that it allows the middleman to purchase a property from an original seller by using the buyer’s money. One more reason is that it helps to keep the identity of both the seller and buyer concealed. Below are answers to few of the more common legal questions on the subject: How can a double contract differ from double closing?
In a real estate scenario, the term “double contract” has various applications. In this process usually two contracts are made when a real estate transaction takes place. Out of these two, one is a real contract, while the other is considered a false one. The real contract is a type of contract that itemizes the true elements of the transaction, whereas the false contract is created so that the buyer can go for a bigger loan by projecting a higher price for the sales. This document is mainly created for the buyer to show it to the lender so that he or she can mislead the lender. Therefore this kind of a contract is considered to be an illegal one. On the other hand, double closing refers to a process where a particular piece of real estate is purchased by an individual, who has the right to sell it to a new buyer immediately. Even in this case, you have to create two separate contracts. One is created for the new buyer while the other is formed in order to maintain a record of the transaction that would take place between the buyer and the seller. Both these contracts are put in escrow and the closing takes place simultaneously. There are many real estate investors who follow this process so that they are able to earn profit instantly on a piece of property. This process is completely legal. However, at times, people may confuse it with double contracting. In New Jersey, is it possible for anyone to do a dual closing as a real estate investor, if he or she wants to make profit on a deal by putting a real estate property like a house under contract, then getting a buyer and finally transferring the title of that property from the seller to the buyer?
In a case like this, if you are acting as a dual agent, you should possibly be able to do a closing as a real estate investor, provided both the buyer and seller should agree to carry out and implement the terms and conditions laid down in a dual agency agreement, which in turn should also specify that you are representing both parties. As long as, everyone is aware of the rules and regulations of the agreement and they have a mutual consent in you playing this role, there should not be any problem. In a double closing process, there is a seller with whom a real estate investor enters a contract with in order to purchase a real property. Once that property is purchased, the investor gets into another contract with the buyer to whom the person wants to sell the property to, which the investor has already bought from the original seller. The investor does this before he or she closes the deal. It is at this point the investor uses this method of closing to complete both deals at the same time. Usually, this closing happens at two different locations or times or in two separate rooms. This is done mainly to hide the identity of the buyer from the seller. If you need any clarification about your particular situation on the subject, you may wish to ask a real estate lawyer for legal insight based on an expert evaluation of your circumstances.
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