Comments on: When flipping a house, should I assign the contract or buy and resell the house?

By: Bryan Casteel

Bryan Casteel — Sun, 29 Jan 2006 03:46:51 +0000

I am glad I checked back on this post Jon so I could answer your questions. All contracts are assignable in Ohio (and probably elsewhere) as long as there is nothing in them that specifically states that they are not assignable. All banks selling their REO’s have separate contract addendums that must be signed before they will complete a deal. Usually they include a clause in these addendums that specifically states that the contract is not assignable. Every once an awhile I run across a bank addendum that misses this clause. I am closing on one property next week where this is the case and a wholesaler (flipper) is assigning his contract to me. Finally, I assume that we are talking about the same thing when I use the term “simultaneous closing” and you use “double closings”. I agree when you state that they are an interesting subject. In order for it to work you have to have a good title company that understands what is going on. The title company I use is run by two lawyers who are well known in the community for their expertise. If I want to do a simultaneous close, I call them and ask them directly if it will work. In all cases that they have told me it would work, I have successfully closed this way.

By: Administrator

Administrator — Sat, 28 Jan 2006 21:51:45 +0000

Thanks for the comment, Bryan. All contracts are assignable by default in Ohio? That’s interesting. Do banks have a specific provision disallowing the assignable contract or do they allow investors to assign them?

Double closings are an interesting subject. While possible, I’ve seen more deals get ruined by investors trying to do them than people succeed using them. I don’t personally recommend them. Maybe I’ll post an article or two about it.

By: Bryan Casteel

Bryan Casteel — Wed, 25 Jan 2006 05:04:11 +0000

An excellent list showing both sides of the coin. I am not sure how laws/rules change throughout the country, but in Ohio a contract is assignable as long as it doesn’t explicitly say that it isn’t assignable. The standard Board contract is assignable as well as any contracts that I would use with a seller directly (not using my license) because they do not say that they can’t be assigned.

One other option that may be possible in the scenarios you have listed above is using the simultaneous closing. This would be like a double close but without the need for the flipper to bring the cash to purchase the property. Basically, the title company will use the funds from the end-buyer to fund the purchase of the property from the original seller. The flipping investor is in the middle and ends up with an check from the title company for the difference.