There are few things more daunting to a potential Seller/Buyer than attempting to close on a sale and purchase on the same day—also known as “back to back closings.” While most transactions will be completed without a hitch, here are 10 Tips that every Seller/Buyer should consider when attempting a back to back closing:
- Use one Real Estate Professional Team: whether an attorney or a broker, make sure to use a single professional to be your point of contact, either should be familiar with your mortgage professional. All of this helps to limit errors due to miscommunication.
- Make Sure the Dates Align: this one seems simple, but you’d be surprised—be sure the Offer (and eventually P&S) sets the closing dates of the sale and purchase as the same day. Make sure the financing contingency dates align properly–the contingency date for the Buyer of your sale should occur before the contingency date for your own purchase.
- Use the Right Contingency: when drafting an offer, make sure to insert a very particular contingency which makes your performance as a Buyer “contingent upon receipt of the proceeds from the sale of the Buyer’s home located at 123 Main Street, Anywhere, Massachusetts.” This is different from a sale contingency, as conceivably you, as Buyer, could have sold but not yet received good funds to bring to the next closing, or worse yet, the Purchase and Sale Agreement has been signed but your sale subsequently falls through.
- Utilize a Power of Attorney: it is very common for a Real Estate attorney to attend and sign on behalf of a Seller at closing. The Seller does not need to attend. This frees up the Seller to focus on other things such as coordinating with movers, going to the bank or making last minute adjustments with the closing attorney for their purchase.
- Understand that you have to be “On Record” before Moving In: some are surprised to learn that signing the paperwork and tendering the cash to the Seller are not enough to get the keys to your new home; rather, the Buyer will be the true owner and given access only after the deed is recorded with the applicable County Registry of Deeds.
- Understand the Realities of Funding: the lender will wire the loan proceeds to the closing attorney. This wire can take time to arrive; therefore, early morning closings are unlikely to record and fund until midday. Keep in mind that the first transaction must fund and record before funds can be wired to the closing attorney for the second transaction–it would make sense to leave ample time between the two closings.
- Notify other Parties in the Chain of Transactions: in most cases, when closing attorneys are part of a chain of closings they work together to coordinate the closing schedule, and thus the transactions go very smoothly. If you wait until the week prior to closing to mention this to your closing attorneys, you may have unnecessary and otherwise avoidable scheduling problems.
- Try not to Schedule for the End of the Month: many Buyers prefer to close at the end of the month, most famously to avoid paying prepaid interest—a false economy worth debunking in a future article perhaps. Scheduling a closing in the first two weeks of the month: 1) usually results in greater attention by lenders and attorneys, 2) means shorter lines at the recording desk, and therefore, faster transactions, and 3) more flexible schedules for all involved Real Estate Professionals.
- Consider Inserting a Use and Occupancy Agreement in the Offer: a Use and Occupancy Agreement (called a “U/O” or “U and O” by people in the know), permits a Buyer access to a property for a period prior to closing or alternatively allows a Seller to remain on the property for a period after closing. This can relieve some of the scheduling conflicts that are inherent with a back to back closing.
- Roll with the Punches: remaining flexible helps to facilitate the transactions with the least amount of stress possible. Sometimes creative solutions are necessary. There is no doubt that back to back closings can can be hectic and stressful, but it’s easy to forget that for all your troubles you’re getting a brand new home!
Stiles Law, with offices located in Boston and Marshfield, Massachusetts, is a firm concentrating in real estate conveyancing and mortgage lending services, representing buyers, sellers, borrowers, banks, mortgage companies, investors, builders and developers in all of their real estate and mortgage transactions. Stiles Law serves all areas of eastern Massachusetts–the North Shore, Boston, and Cape Cod, in addition to the entire South Shore, including: Plymouth, Kingston, Duxbury, Hanover, Pembroke, Marshfield, Scituate, Norwell, Cohasset, Hull, Hingham, Weymouth, Braintree, and Quincy.
Copyright © 2014 Stiles Law, All rights reserved. Stiles Law is a Massachusetts licensed law firm and all content is based on Massachusetts law. The information presented above is meant to be used for general informational purposes and it should not be construed as legal advice or legal opinion on any specific facts. No child labor laws were breached during the creation of this Blog, further Bob Bonkley and Molly Moraine were compensated for their likenesses and appearances in the same.