Is Double Escrow Closing Really Against The Law?Escrow closing requires many efforts from the seller as well as the buyer of a property. Sometimes, the concept of double escrow closing also comes into existence. Many people have a misconception that double escrow closing is illegal. But double escrow closing is not illegal under any law. It is only the Housing and Urban Development (HUD) that has initiated a policy to stop the frauds that arise because of double escrow closing. Yes, double escrow closing is as legal as any other escrow closing! But, lets first find out what exactly is double escrow closing. It is the process by which a buyer buys a property, becomes its owner, and then sells his newly acquired property to another party. In the process of double escrow, the buyer, after buying a property in the first transaction, becomes the seller in the second transaction. Double escrow closing leads to profit for many. . More and more property holders and buyers like to indulge in this activity to earn good money. But this sometimes also leads to frauds among the various parties involved in property transfers. Maybe, this is why the HUD is against double escrow closings. For example, if a person buys a property for $150000 from a seller, and simultaneously sells it to another buyer after getting the ownership of property for $160000, he clearly makes a profit of $10000. At this place the person who sold the property for $150000 lost $10000 when the property was sold for $160000. This could create some displeasure among parties, but due to the authorized nature of transfer it normally does not happen. The objective of double closing may be earning high profits or something else, but it does not make it illegal in the eyes of law. There are some guidelines made by HUD to restrict sellers and buyers of a property to sell a property time and again. And with the effect to these guidelines, no mortgage is given on the property which is not owned for at least a year. It makes the process of double escrow closing little difficult. However, one can get the better of these restrictive policies by simply using cash for the various transactions. Not all banks follow the guidelines of HUD, so it is wise to deal through such banks. If a buyer is not using financial options offered by HUD, FHA and VA, he is further in a position to ignore this policy. The reasons behind double escrow closing can be personal as well as professional. But what is really important is the legal status of the process, which the process actually enjoys, and that is why it is followed by many sellers and buyers. |