2. Overview
• TITLE PROCESS
– General Title Clearance Process
– Closing Costs Breakdown
– Underwriter Involvement
– Title Related Questions to Ask when Wholesaling
– Special Title Considerations
• PURCHASE & SALE CONTRACTS
– GAR vs. Self-Created Contracts
– Earnest Money
– Wholesaling Lease Options and Subject-To Properties
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5. General Title Clearance Process
• Field and Process Title Order
– Review Purchase and Sale Contract(s) and Assignment of
Contract, if applicable – fully executed with law
firm indicated as Settlement Agent
• Order Title Abstract and Judgment Searches
– 48- to 72-hour typical turn-time, USPS verification, Patriot
Act search
– 30-day effective window for Title Abstracts
– A new Judgment Search must be performed if any
purchasing party changes at a later time
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6. General Title Clearances Process
• Examine Title & Collect Pre-Closing Information
– Order Mortgage Payoffs or obtain Cancellations
– Order Lien and/or Judgment Payoffs or obtain
Cancellations
– Review County, City and Sanitation Taxes; order Sexton
Report
– Review Water Bills
– Order HOA Closing Letter / Invoice
– Identify, prepare and deliver all necessary title documents
– Business entity and/or trust review for signatory authority
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7. General Title Clearance Process
• Examine Title & Collect Pre-Closing Information,
Continued
– Prepare Owner’s Title Commitment(s), if requested by
Purchaser(s)
– Prepare Closing Protection Letter
– Prepare Lender’s Title Commitment
– Obtain HOI Dec Page, if required by Lender
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9. Closing Costs Breakdown
DESCRIPTION AMOUNT
• Title Search and Examination Fee payable to Title Abstractor………..………....…200.00
• Title Binder/CPL Fee Payable to Title Underwriter/HLLLC………………………...35.00
• Document Preparation Fee payable to Halperin Lyman, LLC……………………….75.00
• Settlement Fee payable to Halperin Lyman, LLC……………………………………75.00
• Attorney Fee payable to Halperin Lyman, LLC…………………………………….350.00
• Wire/Admin/Courier Fee payable to Clerk of Court/HLLLC………….……………..65.00
• Re-draw fee………………………………………..……………….(if applicable, $150.00)
• Intangible Tax payable to Clerk of Court……………….....….($1.50/$500 of loan amount)
• Deed Transfer Tax payable to Clerk of Court………….…($1.00/$1,000 of purchase price)
• Title Update Fee…………………….…..…………..(if applicable, $75.00 for each update)
• Deed Recording Fee…..............…(if applicable, $10.00/first page + $2.00/additional page)
• Miscellaneous/Additional Fees……………..…....(May be incurred to cover endorsements,
additional doc prep or other unknown variables)
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13. Underwriter Involvement
• Agency Agreements and Title Standards
– Claims arising from latent defects
– Claims arising from agent errors (missed manifest
defects or failure to comply with published Title
Standards and/or UW Memoranda)
• Utilizing Multiple Underwriters
– Gray Areas ??
– Individual UWs within a single company
– Agency Agreements with multiple Title Insurance
Companies
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15. Pertinent Title Related Questions
• Has the legal name of any title holder changed from the
way it is shown on the vesting deed to the real property?
• Is any title holder recently divorced or in the process of
obtaining a divorce?
• Is any title holder now deceased?
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16. Pertinent Title Related Questions
• Is the real property currently held in a trust or business
entity? Alternatively, is any purchaser a trust or business
entity?
• Will all title holders execute closing documents personally
at Settlement Agent’s offices? Consider the absence of a
party at closing or the
physical inability of a party to sign all documents.
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18. Special Title Considerations
• Powers of Attorney
– Ideally, specific to the transaction
– If general/durable, must obtain UW approval
– Alive-and-Well Call or Physician Verification Letter
– Overseas execution requirements (O.C.G.A. 44-2-21)
• Signatory Authority Determination
– Business Entities
– Trusts
– Estates
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19. Special Title Considerations
• Probate Matters
– Deceased title holder has a Will
• Probate Estate – File Petition to Probate Will in Solemn
Form, obtain Letters Testamentary
• Factors that affect timeline: Obtaining original Will, Self
Proving Affidavit, number of Heirs
– Deceased title holder does not have a Will (intestate)
• Probate Estate – File Petition for Letters of Administration,
obtain Letters of Administration
• Factors that affect timeline: Identifying and publishing notice to Heirs
number of Heirs, physical location of Heirs
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21. GAR vs. Self-Created Contracts
• The Georgia Statute of Frauds and Real Estate
Purchase and Sale Contract Requirements
– Written evidence is required, which can be the contract
itself or a memorandum (i.e. a written document that
evidences and outlines the nature of the agreement and
would be sufficient to give a judge reason to believe the
two parties intended to enter into a legally binding
contract)
– Contracts that do not comply with the necessity of writing
(e.g. oral contracts) are not necessarily illegal, fraudulent or
invalid. However, failure to satisfy the writing requirement
means that the contract is not enforceable in a Georgia
Court of Law.
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22. GAR vs. Self-Created Contracts
• The Georgia Statute of Frauds and Real Estate
Purchase and Sale Contract Requirements, Cont’d
– To clearly satisfy the Statue of Frauds a contract must
at least have the following:
• Names of the buyer(s) and seller(s);
• Sufficient description of the real property being conveyed;
• Sales price;
• Terms of the purchase, if other than lump-sum cash; and
• Signatures of the parties thereto.
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24. GAR vs. Self-Created Contracts
• Propria Persona (or pro se) Purchaser / FSBO
vs. Principal-Agent Relationship
• Legal Requirement vs. Broker Requirement vs.
Settlement Agent Requirement
• Special consideration for Wholesale
Transactions vs. Retail Transactions
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26. Earnest Money
• Definition of Earnest Money
– A deposit of funds made by a buyer of real estate as evidence of
good faith and held in escrow with joint interest of both buyer
and seller
• Earnest Money Distribution Determination
– Does the Purchase and Sale Contract direct Settlement Agent
what to do with the EM beyond all doubt?
– If not, is there a Termination and Release signed by both buyer
and seller unequivocally directing Settlement Agent what to do
with the EM?
– When in doubt (i.e. if even the smallest determination by SA is
necessary), interplead EM into a Court of competent jurisdiction
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28. Lease Option & Subject-To
• Wholesaling Lease Options
– Written disclosure to C Party is imperative when
contracting the BC transaction
– Owner’s Title Police of insurance is not available until
C Party exercises Option
• Wholesaling Subject-To Properties
– Written disclosure to C Party is imperative when
contracting the BC transaction
– Uninsurable from a Title Insurance perspective, even
with Specific Exception to existing Mortgage
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30. Simultaneous Closings
• Copy of the executed AB Settlement Statement
– To BC Settlement Agent if closing with two different
Settlement Agents
– Include Wiring Instructions for AB Settlement Agent
• Copy of the executed AB Deed of Conveyance
– To BC Settlement Agent if closing with two different
Settlement Agents
– Include Owner’s Title Policy of Insurance if purchased from
AB Settlement Agent (B Party may decline OTP from AB
Settlement Agent and purchase at BC transaction
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31. Simultaneous Closings
• Practical Considerations
– Best to close and fund wholesale simultaneous closing
transactions from back to front (i.e. schedule BC
transaction to close prior to AB transaction)
– If this is not an option, try to set A Party’s funding
expectations
– Identify in Purchase and Sale Contracts which Party is
represented by Settlement Agent
– Inform Settlement Agent(s) if the A Party and/or the C Party
is unaware of simultaneous closing
– Transfer Tax shown on AB transaction Deed of conveyance
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32. Simultaneous Closings
• B Party Decisions as a Wholesaler
– Absorb or pass through acquisition closing costs?
– Purchase Owner’s Title Policy coverage?
• Initial Purchase Price vs. Final Purchase Price
– B Party’s agreed upon Purchase Price: $100,000.00
• AB Purchase and Sale Contract
– C Party’s agreed upon Purchase Price: $105,000.00
• BC Purchase and Sale Contract
– B Party’s Margin: gross of $5,000.00; net of $5,000.00
minus acquisition closing costs
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34. Funding Options
• Three Compliant Options for B Party Funding of
Simultaneous Closings:
1) Two separate sources of funds (one from B Party for the
AB transaction and one from the C Party for the BC
transaction)
2) Transactional Funding (for the B Party for the AB
transaction)
3) Pass-Through Funding (from the C Party to the A Party)
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35. Funding Options
• Transactional Funding
– May be required by Transactional Lender to sign a
Note and Security Instrument
– Typical market rate is 1.5% with a $1,500 minimum with
24- to 48-hour return requirement
– No disclosure is needed to the A Party or C Party when
utilizing Transactional Funding
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36. Funding Options
• Pass-Through Funding
– A Party must sign disclosure acquiescing to contingent
financing and financed nature of the transaction
– C Party must sign disclosure acquiescing to B Party’s
use of C Party’s funds in the AB transaction
– C Party’s Lender, if applicable, must sign disclosure
acquiescing to B Party’s use of Lender’s funds in the
AB transactions
– Specific UW approved language should be used and,
ideally, included in the Purchase and Sale Contracts
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37. Funding Options
• Pass-Through Funding Disclosure Language for A Party:
Seller acknowledges that the Subject Property is being acquired from him/her/it and
simultaneously sold to a third party purchaser by Purchaser for a possible profit.
The Acquisition Escrow funds tendered for this transaction to purchase the Subject
Property are being derived from the Resale Escrow in order for Purchaser to acquire
the Subject Property. Furthermore, Seller acknowledges that, even in the event this
transaction
is labeled as a cash purchase on the corresponding Settlement Statement, this
transaction is contingent upon the successful simultaneous closing of the Resale
Escrow and without this occurrence Purchaser will not have the necessary funds to
purchase the above referenced property, as the funds used to purchase the Subject
Property are derived from the
aforementioned third party purchaser.
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38. Funding Options
• Pass-Through Funding Disclosure Language for C Party:
Purchaser acknowledges that the Subject Property is being acquired and
simultaneously sold to him/her/it by Seller for a possible profit. The
Resale Escrow funds tendered for this transaction by Purchaser to
purchase the Subject Property are first being used to fund the Acquisition
Escrow in order for Seller to acquire the Subject Property. Furthermore,
Purchaser acknowledges that this transaction is contingent upon the
successful simultaneous closing of the Acquisition Escrow and without
this occurrence Seller will not have valid title to the above referenced
property in order to convey the Subject Property to Purchaser.
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40. Assignments of Contract
• End Buyer Steps into the Wholesaler’s Position
– One Purchase and Sale Contract and one Assignment
of Contract is required
– Second Purchase and Sale Contract is optional
– Reserve approval of Settlement Agent in Assignment
• Earnest Money Considerations
– Ideally, Assignment of Contract will require higher
amount of “Earnest Money” than AB Purchase and
Sale Contract
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41. Assignments of Contract
• Final Purchase Price vs. Assignment Fee
– B Party’s agreed upon Purchase Price: $100,000.00
• AB Purchase and Sale Contract
– C Party’s agreed upon Purchase Price: $105,000.00
• BC Purchase and Sale Contract (optional)
• Assignment of Contract (with Assignment Fee)
– Assignment Fee: net of $5,000.00
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42. QUESTION AND ANSWER
Questions?
This presentation has been provided as a courtesy by Halperin Lyman, LLC and its individual presenters for informational purposes only. Nothing contained within or expressed during this
presentation is intended to create an attorney-client relationship or constitute legal advice. Should a prospective client wish to employ the services of Halperin Lyman, LLC, he or she
should speak to one of the Firm’s attorneys via telephone or in-office consultation and formally engage the Firm accordingly.
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