Question about deeds relating to short sales; double closing

Hey all,

I have a potential double close coming up where the house will be short-sale’d down to $235k and resold for $300k.

In order to complete this, we would buy all-cash at $235k and resell the same day to the end buyer for $300k;

  1. Seller to Investor $235k
  2. Investor to End buyer $300k

However, the End Buyer’s lender has problems with the sales contract being between the Investor and End Buyer, because the Investor won’t be on title.

My possible solution is to have the investor record the deed with consideration of $10 in his name. Then he’ll be on title and the end buyer’s lender won’t give us problems.

However, I’m not sure how this works:

  1. Will the Seller’s bank (doing the short-sale), exercise the due-on-sale clause if the deed is transferred?

  2. Can we record the deed with consideration of $10, knowing that a few days later the investor will actually buy at $235k?

  3. If this deed gets recorded under the investor and the deal falls apart, can we re-record the deed under the original seller’s name to over-write any liability to the investor?

Thanks in advance for any input

Per your post, you will be doing a double close:

Closing 1) Seller to Investor: Investor will now be on the deed. Seller no longer owns the property. Investor owns the property
Closing 2) Investor to End Buyer: End Buyer will now be on the deed. Investor no longer owns the property. End Buyer owns the property.

Assuming you are using a NJ title company for closing, I don’t know how you will record the deed in closing #1 for $10. NJ wants their transfer tax and now taxes Sub2 transfers at the value of the Sub2 mortgage. Since End buyer is getting a mortgage and (I asume) will be paying off the original Seller’s mortgage (I am assuming the Investor is buying Sub2) I wouldn’t be worried about the DOS clause. The original Seller’s mortgage willl be paid off at the second closing before the lender even realizes there has been a transfer of ownership.


Let me clarify:
The first closing will be done all cash, not by using the end buyer’s funds. However, the investor does not want to purchase the home until the day of closing. He doesn’t want to tie up his money. He’ll purchase it on the day of closing, only to do the double close.

So, can we go and record the deed in the investor’s name ahead of time, say 1-2 weeks before closing. Now the investor owns the property. So when the end buyer’s lender does a title search, it shows the investor’s name and so they accept the contract with the investor selling to end buyer, because the investor is on title rather than the original seller.

Then the end buyer’s lender approves financing, and on the day of closing, the investor brings the cash to the table to pay off the seller’s bank. And right after, flips it to the end buyer.

So the issue here is, can we record the deed ahead of time for a $10 consideration. In NJ, I just read the law that says there are no transfer taxes if the consideration amount is under $100. But, I don’t have practical knowledge of anything relating to this.

What do you think?

The big issue to consider is the end buyers financing, to make sure their lender does not require title seasoning.


Regarding my questions, to make a long story short… it’s not a possible solution. I spoke to an attorney earlier, and I’ll have to have two separate closings within days of each other.

bosshaug, title seasoning gets brought up a lot… but have you personally had an issue with it? I spoke to the lender and they specifically said the 90-day seasoning isn’t required. The only thing required is that the investor doing the flip has to be on title. I also had a deal fall apart recently where the lender did not mention seasoning during the entire mortgage commitment process, they also did not have an issue with the seller not being on title.

Apparently, some lenders don’t even have this requirement, so you can actually do a double close. But the lender that I’m currently working with is requiring that the investor be on title when selling to the end buyer.

I recommend using the option to purchase contract. By recording the “notice of option” you will be on title with no break in the chain and end buyers will fund the deal in a double closing. I have all the docs I will share and explain how to use them.

PM me for more info!


I agree with Alinos08 about using options with recorded memorandum of option.

This has solved a lot of problems for me. The previous way we did short sales was by using land trusts to preserve the chain of title but the option method works far better.

Agreed, Option works better without affecting title.