This episode details the structural complexities of a several-hundred-thousand-dollar same-day close transactional deal, revealing how different title companies handle the critical title transfer moment differently. The core risk: if the B2C buyer drops out after the transactional funder has already taken title, the funder holds a property without equity-side margins and no guaranteed exit timeline.
Key Takeaways:
- Buyer Assessment Drives Transaction Risk Transactional deals shift risk from asset quality to buyer reliability—thorough lender communication, contingency verification, and signing timeline confirmation are essential when wiring funds before simultaneous doc release.
- Assignment Plus Personal Guarantee Structure Taking title on both A-to-B and B-to-C sides with personal guarantees from the deal originator provides legal recourse and skin-in-the-game alignment when edge-case buyer dropout scenarios occur.
- Title Company Variations Complicate Standardization Every title company handles same-day closes differently regarding signing sequences, notarization timing, and doc release protocols—experience across multiple transactions reveals necessary structural adaptations.
Listen to the full analysis of transactional funding risk mitigation, structural evolution through repeated deal experience, and when compressed margins justify near-zero risk requirements.
(Podcast transcript below)
Hi, Chris Duff over at Serious Land Capital Vacant Land Funding Partner. Today, just wanted to share some updates and learnings that we’ve had for a very large transactional same-day close deal that we’re working on several hundred thousand dollars at stake here. So.
I know I’ve commented before and it’s just a trend within the industry, double close is being more common, allowing you to offer more money upfront to the seller. Maybe it takes a bit longer for them to actually receive their cash, but if that’s not as much of a concern for them, gives more opportunity to participate in a higher volume of deals, even if the overall absolute.
dollars to potentially work with from double closes might be diminished, but probably relative margin is more accurate there because absolute dollars could actually be quite a bit higher at lower relative margin deals, just going higher up the value chain for respective land deals there. So something that
has come across that’s really seems to be different, different for whatever title company that we work with for these transactional deals. You know, whether they’re same day closes or, you know, one possibly two business days in between is handling that title transfer piece in the middle and trying to mitigate the risk as
close to 0 % as possible. So that everybody just kind of, you know, takes it for granted that, okay, these deals should just be pretty simple. You know, I find some capital for the transactional side already lined up a buyer, just going to need the capital very short period of time, pay a couple points on that potentially, or some minimum fee and
can move on. And, you know, that in principle and on paper, works extremely well. And we’ve participated in those deals in the past, but our structure has changed bit more to really cover those edge cases, particularly associated if the B2CN buyer drops out of the deal. Because then it’s just kind of a catastrophe from
a number of reasons. First, if you don’t get the…
purchase agreements assigned to you as the transactional funder, and you haven’t set up documentation appropriately for an underlying lien on the actual property and a mortgage, or if you set up a lien on the operating entity of the client that you’re working with, then you’re potentially left holding the bag without any real recourse until a
backup buyer is potentially found. And given how narrow some of these margins of transactional deals can be, there’s no guarantee of that, especially when days on market can extend quite far out for certain land pieces. And usually we’re not going to be diligent seeing the underlying asset quite as much as we would if we were doing a full equity.
purchase because again, theoretically the risk is supposed to be more mitigated with buyer already lined up. So it’s more of a buy side risk or, or, know, and buyer risk, versus asset risk. so we have to assess from that perspective and, you know, let’s say that we do get the, property assigned to us and the BTC buyer still dropped out and then we’re left.
holding the property title, but again, there’s no guarantee we’re going to find another buyer in a reasonable timeframe. And even worse is that we’re holding a property with almost assuredly not having equity side margins. Otherwise it probably wouldn’t have been a double close in the first place. But
That’s just something else to keep in mind. That’s kind of worst case scenario in regard to that. So we had to keep thinking, all right, how do we structure these, you know, to if we assume the risk is probably going to be below one, 1 % most of the time. And generally we’re to be assessing that B2C buyer. If a lender is involved, we’re going be talking specifically with that loan agent, make sure all contingencies are in place. How exactly does the paperwork flow?
When is the exact time of title transfer taking place? How long is in between that? You know, does the end buyer need to sign docs confirming that their wire will be, you know, signed off on their side to actually close the deal? That’s something we learned more recently is that even if wire is an escrow, like all the end buyer funds, if they don’t
sign off on the closing docs, the title company can’t just decide to close the deal on their own. They need the buy-in from that end buyer. So we need full participation from that side. And generally, we’re not able to sign docs simultaneously. So that’s another avenue that we tried to explore is, can we, you know,
just be on the phone with the title company, wait for the B2C buyer to come in and then we can wire in our funds to escrow, but only sign when we’re dead certain or as certain as possible that the end buyer is going to sign their docs. But because when we run the assignment,
type closing scenario, then because there’s that title transfer involved, the deed has to be notarized and, you know, potentially associated docs. So generally we’re going to have to be signing docs at least a day before assuming RON, remote online notary isn’t available. So you’re, you’re not able to close that hole quite as much, at least in the circumstance that we’re operating in for this larger deal. Again, every title company we’ve worked with for one of these has been a bit different.
So we finally arrived at a structure where okay, we think it’s acceptable risk to not be doing a simultaneous dock release even if our Wire is going to be in there. We’re gonna have to sign off anyway. We’re taking some risks that we’re gonna end up with title here But because we assess the B2C buyer so well And they’ve actually looked to bump up closing to close even sooner that that’s as good of a sign as possible if
if the end buyer was trying to extend out or, you know, still some trepidation about the lender and so forth, that would make me a lot more cagey about the deal. But because the end buyer is really the primary risk here, that drives a lot of the decision making for reducing the risk as close to zero as possible. But, you know, with all those extra protections in place, so how we adjusted it was we had a…
assignment for both sides, both A to B and the B to C side. So our firm would actually be signing the docs. We take title for those few minutes in between the same day close. And we throw a personal guarantee on top of our standard transactional funding docs, defining our fee to the client who’s working with us.
So that gives them a certain period of time to remedy finding another B2C buyer if the current one drops out. And if they’re not able to do that, we effectively have the legal wherewithal to go after their personal assets. We were also assessing their individual financial positions here.
you know, if that sounds like a lot, yeah, it definitely, is, and it’s something that we’ve had to go back and forth with and adjust our structure. Cause the more we’ve dug into these transactional deals and the more experience we’ve been getting with them, the more complexities arise and, you know, trying to prevent those edge case scenarios is just so important because if you’re throwing out, you know, hundreds of thousands or more dollars into a deal with very limited margin, like
for the return that you’re getting on that, the risk has to be effectively 0 % to consider getting in these deals in the first place. So investing a lot more for covering those edge cases, which would still be painful if they ever happen, but it gives us a lot more comfort to understand that we’ve covered as many of the loopholes as possible and protected our position.
and putting just a better alignment of risk to the client who’s brought us the deal since we’re the capital partner within it. Effectively, it’s transferring a lot of that skin in the game to who brought us the deal in the first place. So just to update you all on that structure here, I’ll let you know when we’ve…
successfully it should be next week. But with that, if you’re ever looking for funding and SiriusLand.Capital, land daily diligence on Mondays and Thursdays, zero cost for any deals that you’re trying to review, whether you want funding or not, then landpricer.ai. We’re about to get a new website out. I know the current one is broken as far as email signups. There’s just a…
A lot trying to be processed at the moment, but yeah, that’s for the simplest and most accurate way to assess land deals. And of course, the Dave Denniston on conference in early August use my last name, D-U-F-F, all lowercase for $200 off your ticket. Take care now everybody, bye.
