The Mechanics
The mechanics of a double closing vary, depending on who the buyer and seller are, who is providing the financing, and who is conducting the closing. In the simplest form of double closing, the purchaser would pay the purchase monies to the middleman and they would complete a settlement statement (HUD-1) for their transaction. The purchaser would have to wait while the middleman uses most of the purchase monies to purchase the property from the seller. The seller and middleman would also complete a separate settlement statement for their transaction. The middleman would then instruct the seller to deed the property directly to the purchaser.
To keep the purchaser and seller separate,the closing may be conducted in two different rooms or at two different times or locations. Success is more likely if the closing agent is friendly and accommodating.
To simplify the transaction, the middleman may make one settlement statement directly between the purchaser and seller and take his profit as a line item on the settlement statement. This line item is usually on the purchaser's side of the statement as an assignment fee. This may create a problem for the middleman, as assignment fees may be taxed at a different rate than short-term capital gains.
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