Double Closing Transaction Information
A double closing involves: the A-B closing (the original seller (A) sells to the intermediary (B) at a lower price), and the B-C closing (the intermediary (B) sells to the end buyer (C) at a higher price). The intermediary profits from the spread between the two prices. Benefits for the intermediary: they control the transaction without disclosing their profit to either party (each closing is separate), they may use transactional funding (short-term loans that provide the B-C purchase funds for the few hours needed between closings). Legal requirements: each closing must be a complete, arm's-length transaction (with its own title search, closing disclosure, and deed), the intermediary must have the legal ability to purchase and convey the property, and both closings must comply with all applicable disclosure requirements.
Florida Legal Definition
Double closings in Florida are governed by: general contract law, real estate license law (Chapter 475), and disclosure requirements. Under Florida law: double closings are legal (there is no prohibition against purchasing and immediately reselling property), each closing is subject to: documentary stamp tax (§201.02; on each deed), intangible tax (§199.133; on any new mortgages), and title insurance requirements. Under §475.42, a person who engages in real estate transactions for compensation may need a real estate license (wholesalers who market properties for a fee may be engaging in unlicensed brokerage). Under Florida practice: the title company must be aware of and agree to handle the double closing (some title companies refuse due to the complexity and risk).
How It's Used in Practice
In practice, attorneys structure double closings for wholesalers and investors. The attorney: reviews the contracts (ensuring both the A-B and B-C contracts are valid and complete), coordinates with the title company (finding a title company willing to handle the double closing), arranges transactional funding if needed (short-term financing for the A-B closing), ensures proper disclosure (each closing has its own closing disclosure; the intermediary's profit does not need to be disclosed to the A or C parties), calculates the doc stamps and taxes (each closing is a separate taxable transaction), and monitors licensing requirements (ensuring the intermediary does not cross the line into unlicensed brokerage). Common issues include: the title company's willingness to handle the transaction, the timing (both closings must occur on the same day or within a very short period), and the licensing risk (Florida DBPR may investigate wholesalers who market properties without a real estate license).
Key Takeaways
- Double closing: two back-to-back closings; intermediary profits from spread.
- Each closing is separate with its own deed, doc stamps, and disclosures.
- Legal in Florida; no prohibition against immediate resale.
- Licensing risk: wholesaling may constitute unlicensed brokerage.
- Coordinate with title company willing to handle double closings.
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Reviewed by the attorneys at Barnes Walker, Goethe, Shea & Robinson, PLLC