Let me see if I understand your facts. . . You have two properties under one mortgage. You want to see one property and apply the proceeds to the mortgage. Correct?

There are two possible answers to your question. EITHER the bank will simply allow the transaction, because you are going to use the cash to pay down the mortgage. Or, this transaction may already be permitted under your mortgage. You would have to read your mortgage. It appears that you might have a cross-collateral loan. Frankly, without having the documents to review, I cannot give you a complete answer. However, I cannot imagine a good reason for the bank to oppose your transaction..

Now, if you intended to use the closing proceeds for some reason other than reducing the mortgage debt, the bank would likely refuse.

Hope that helps.

-Matt

That’s a great question. Actually, there are several questions involved here.

Fistly, where is this building? What state? What town? I’d need more information, but my first question concerns the zoning. Mixed use properties generally require a variance or special zoning. You might have the current owner seek a variance or rezone the property. Or you rezone it now with the seller’s permission. If you can’t get the rezoning, then you walk away from the purchase.

If you get the zoning, you’ll need to create a corporation (in most states) to serve as the governing building association. Or, you can sometimes organize a condominium through contracts. In either case, you’ll need a plat, new legal descriptions, new deeds, a set of rules or governing documents, etc. Again, I’d need to know whether you live to give you a detailed answer.

As to the 203-k fha loan, I’d suggest you ask a mortgage broker. In fact, see the blog post about the HomePath loan program and contact Mickey Brooks. He can help you with details on specific loan programs.

In theory, when you rezone the building, you are creating two seperate properties with seperate legal descriptions- the living unit and the commercial space. So, in theory, you’re buying two properties simultaneously. To be more precise, your non-profit is buying one unit and you are buying the living unit in the same building on the same day. If your seller is willing to work with you, you can create two purchase agreements that are contingent on full performance of each other. A good real estate lawyer and a good loan broker can make this work for you.

Best of luck.

Matt

I’d like to purchase the condo with 203-k fha loan, and close both transactions simultaneously.

Then I wouldn’t have to get funding on the commercial property because we have 10% to put down on it, and the amount we’d need to finance would be the same as the purchase price on the condo.

Is this legal? Are there title companies who still do double closes? I know it used to be fairly common to do deals of this sort, but I’ve been having trouble finding anyone who can advise me on this transaction.

Thanks!

A title search is akin to a professional service. One title company would not want to rely on the work of another title company, with one issuring the work of the other.

Let me make an anology to explain this further. If your CPA prepared your tax return, another CPA would not guarantee the quality of that accounting work without knowing everything that was done to prepare the return. The second CPA would be a fool to insure the work of another CPA. So, the second CPA is going to do all the same work the first CPA did in order to be certain that the tax return is correct.

Title companies are in a similar situation. The search could be dione well or poorly. The only way a title company knows if a title search is accurate is to do the title search itself.

I’ve never seen one title company guarantee the accuracy of a title search done by another title company. It appears that is the issue here.

Hope that helps.

Matt

Thanks for the reply. I am set to close on Tuesday. The double closing is not the issue. My title company understands what I’m doing and they are fine with it.

The issue that I had difficulty with was with the banks title company. I want them to pull title and insure it. However, I want to use my title company like a title company would use a mobile closer. They (the banks title comp.) overnights the closing docs to my title company, and my title company watches me sign and collects the funds. My title company then overnights the docs back to the banks title company and wires the funds to the bank.

This did not happen. The banks title company, after pulling title and getting the deed recorded, canceled the title they pulled. However, I just want to use their title work, but just close at my title company. Isn’t this how mobile closings are done? Anyway, my title company will issue the title now, but I have to pay for the banks title work. While this is understandable, I’m having difficulty understanding why closing at my title comp is such a big deal if I’m using the banks title work. I hope this helps somewhat and thanks for the advice…

Dustin