How to handle the transfer of funds when self-closing
I am new to the idea of land flipping, but I have a decent understanding of running title and doing due diligence in my state. Drawing up contacts shouldn’t be an issue either. What I am having some issues with is when the actual transfer of funds takes place. I maybe over thinking this, but it’s been kind of a hang up for me. I plan on using a mobile notary for my first closing. Should I send out payment to the seller after it has been recorded in the court house?the seller would be putting a lot of trust in me at that point to send funds and I don’t think I would ever do that if I was selling land. Anyway, does the transfer of funds kinda differ from case to case ? Any input would be appreciated, thanks.
It looks like Karl James answered this the best way possible:
Send the prepared deed for the seller to notarize, along your cashiers check for payment, to the mobile notary with explicit written notary instructions that require that seller sign and give the deed to the notary for notarization and sending to you before the notary hands over the check to the seller.
I was thinking the notary was there as a witness only. But giving the notary instructions with the funds in there hands makes sense, thanks. That was the answer I was looking for
Jim - yep, Karl's got it right.
Also, I wouldn't say you're overthinking it. This is one of the more delicate steps in the closing process, and even with a mobile notary, it takes a bit of explaining and intentionality to make sure everyone has the right instructions and does everything right. It's definitely achievable... but just to give you credit, it's an important step, and worth spending the time to make sure it's done right!
Below is the actual instructions template I used a couple weeks ago for a self-closing purchase facilitated by a mobile notary in the DFW area. When I reach out to a mobile notary to engage their services I will include a draft of this in my e-mail asking if they can provide the services, and at what cost, so they see exactly what I am asking them to do. i typically send the docs to the notary in a USPS Flat Rate Priority Mail Envelope (w/tracking # affixed) and include a postage paid USPS Flat Rate Priority Mail Envelope (w/tracking # affixed) addressed to me for the return of the documents so I can track them both ways - adds about $15 total to my costs.
Seller Primary Contact:
Documents requiring action are in “Action Needed” folder. Copies for the Seller, which require no
action, are in the “Copies” folder. Please contact the Seller and arrange a mutually agreeable place and to complete the services within the next [xx] days.
Send items #1, #2, and a receipt for your services back to me.
Documents for Action:
1. Deed - Have BOTH Sellers date and sign where indicated on the deed. Complete the Notary/Acknowledgement section and notarize. A copy for each Seller is in the ‘Copies” folder. Sellers do not need to sign their copy. If either or both of the Sellers is unable, or unwilling, to sign and have the Deed notarized - do not give the Sellers the Cashier’s Check from #3, below. Instead tell Sellers you cannot complete the transaction at this time. Retain all documents and call me when convenient. I will pay for the unsuccessful attempt. And I will pay you again if I am able to resolve and reschedule with Sellers.
2. Receipt and Tax Reporting Acknowledgment - Have BOTH Sellers date and sign where indicated. Do not notarized it. A copy for each Seller is in the ‘Copies” folder. Sellers do not need to sign their copy.
3. Cashier's check payable to Sellers - Give to Sellers only after BOTH Sellers complete steps #1 and #2 above.
4. Check for $XX for your services - For you to keep.
5. Postage-paid envelope to return items #1, #2, AND a receipt for your services to me.
(Your Name Hear)
(Your phone / text # here so notary doesn't have to look for it if they have any questions / issues)
(Your e-mail here)
Thanks, I’m gonna use that template as a guide.
Karl James Wow this is a great template, and I was wondered how the money/signature transactions occur without meeting in person. Thanks for sharing!
Karl James Have you emailed documents back and forth?
also, what is the receipt and Tax reporting acknowledgment? I'm closing on my first property tomorrow and I haven't seen anyone mention that. Ugh..I can't believe I actually paid someone to walk me through my first deal and I'm getting this basic info from the forum. I should have paid you!!! Lesson learned! This forum is a lifesaver. Thank you so much!
Give this REtipster article a read:
Particularly the section titled: Here’s the bad news
The tac reportage acknowledgement is a statement I have the seller sign acknowledging they agree to handle the IRS tax reporting of the transaction, so I don't have to do a 1099-S for a sale over $600.
Karl James DM me your e-mail address and I can send you a copy of the I one I use.
Karl James I can't DM you because you don't follow me. My email is on my profile! Thanks!!
Karl James Thank you again Karl!