Why Do Some Closing Attorneys Hate Transactional Funding?
While seasoned professional closing agents embrace transactional funding to get deals closed, there are closing agents and closing attorneys who hate transactional funding. These agents seem to come from a couple of backgrounds that account for their adversity to the legal and successful funding of real estate closings using transactional funding.
The first type of closing agent or closing attorney that tends not to like or even hate transactional funding is one who is usually very experienced in traditional closings where the end-buyer had to get conventional (bank) financing to buy the property.
With these types of closings the closing agent is under extreme scrutiny from state and Federal regulators because of the mortgages being given the end-buyers. A goodly amount of the closing documents are disclosures for the buyer and seller and hold harmless agreements to protect the closing agent.
Mistakes by the closing agent can be catastrophic even many years later because of the non-intentional violation of mortgage statutes – so these closings follow strict guidelines that the agents do not want to amend – even for cash buyers who do not fall under Federal or State regulations.
In addition, the national lenders (banks, credit unions, savings and loans, etc.) have intimidated the closing agents into believing that investors are not entitled to make quick profits (illegal flipping). So these closing agents stick to their tried and true methods of closing transactions that do not include transactional funding.
Another type of closing agent that does not like investors doing transactional funding is one who does real estate closings as a sideline to his other practice. I have called some of these firms and their “on hold advertising message” is related to their resolving traffic tickets, criminal offenses or other non-investor related activities.
The final non-authority on transactional funding who seems to mess up deals is the attorney who represents an end-buyer and who is suspect that every investor is a criminal and he is out to prove it. He requires document after document that almost has no relevance to a real estate closing. In one case we had, the attorney for the end-buyer wanted to see the closing agent’s escrow account with the our funds in the account before he would allow his client to send in his money.
The above are broad generalizations from our personal experience and not meant to reflect on any specific closing agent, title company or closing attorney. I suggest you get referrals for investor-friendly closing agents and deal with the end-buyer’s attorney as the issue presents itself.