Key Takeaways
- Assignment transfers contract rights to an end buyer; double closing involves the wholesaler briefly taking title.
- Anti-assignment clauses, common in REO and institutional contracts, block assignments but not double closings.
- Transactional funding (1-3% cost) provides same-day capital for double closings, repaid from the B→C sale proceeds.
- State regulations on wholesaling vary significantly — unlicensed brokerage risk is real and requires legal counsel.
Assignment contracts and double closings are the primary transaction structures used in wholesaling — the practice of contracting to purchase a property and then transferring that contract (or the property itself) to an end buyer for a profit. These structures are legal but heavily regulated in many states, and improper execution can trigger legal liability, title company refusal, and even licensing violations.
Assignment of Contract: Mechanics and Restrictions
In an assignment, the original buyer (the "assignor") transfers their rights and obligations under the purchase contract to a new buyer (the "assignee"). The assignee steps into the assignor's shoes and closes the transaction with the original seller. The assignor receives an assignment fee — the difference between the original contract price and the amount the assignee pays for the assignment rights.
For an assignment to be valid, the original contract must not prohibit assignment. Many standard real estate contracts include anti-assignment clauses, and some sellers specifically add them. REO contracts, HUD homes, and most institutional seller contracts explicitly prohibit assignment. When assignment is permitted, the assignor executes an Assignment of Contract document specifying the assignment fee, the assignee's identity, and the terms of the transfer. The assignment fee is typically disclosed on the settlement statement.
State regulations vary significantly. Some states (including Illinois and Ohio) have enacted wholesaling-specific legislation requiring disclosure of the assignment fee and the wholesaler's role. Other states have interpreted wholesaling without a real estate license as unlicensed brokerage activity — particularly when the wholesaler markets the property to end buyers before actually acquiring it. Investors should consult a real estate attorney in their state before engaging in assignment transactions.
Double Closings: Structure and Transactional Funding
A double closing (also called a "simultaneous closing" or "back-to-back closing") involves two separate transactions closing on the same day: the wholesaler buys from the seller (A→B closing) and immediately resells to the end buyer (B→C closing). Unlike an assignment, the wholesaler actually takes title to the property — briefly — which means two separate deeds, two separate settlement statements, and two sets of closing costs.
Double closings solve several problems that assignments cannot. They allow the wholesaler to keep their profit margin confidential (since it appears on a separate settlement statement), they work when the original contract prohibits assignment, and they are accepted by more title companies. The primary challenge is funding: the wholesaler needs funds to close the A→B transaction before receiving the proceeds from the B→C transaction.
Transactional funding (also called "flash funding" or "same-day funding") provides short-term capital specifically for double closings. Transactional lenders fund the A→B closing, and the funds are repaid from the B→C closing proceeds — typically within hours. Costs range from 1-3% of the funded amount for same-day turnaround. The critical requirement: the B→C buyer's funds must be verified and available before the transactional lender will fund the A→B closing. If the end buyer's financing falls through, the wholesaler is stuck with a property and a transactional loan that may convert to much higher interest rates.
| Feature | Assignment | Double Closing |
|---|---|---|
| Wholesaler Takes Title | No | Yes (briefly) |
| Number of Deeds | 1 | 2 |
| Settlement Statements | 1 (with assignment fee disclosed) | 2 (separate) |
| Profit Confidentiality | Low (fee shown on HUD) | High (separate transactions) |
| Anti-Assignment Clauses | Blocks the transaction | Not applicable |
| Funding Required | None | Transactional funding (1-3%) |
| Closing Costs | One set | Two sets (both sides) |
| Title Company Acceptance | Some refuse | Broadly accepted |
Assignment vs. double closing comparison
Watch Out For
Marketing a property to end buyers before having it under a valid, assignable contract.
Marketing property you do not own or control may constitute unlicensed brokerage activity in many states, exposing the wholesaler to fines, cease-and-desist orders, or criminal penalties.
Fix: Always secure a fully executed purchase contract before marketing the property. Consult a real estate attorney in your state about wholesaling regulations, disclosure requirements, and licensing exemptions.
Failing to disclose the assignment fee or wholesale markup to all parties in the transaction.
Non-disclosure can violate state-specific wholesaling laws (like Illinois Public Act 102-0659), trigger title company refusal to close, and create potential fraud liability.
Fix: Disclose your role and compensation to all parties. Use proper assignment documents that clearly state the fee. Work with a title company experienced in wholesale transactions who can handle the settlement statement correctly.
Key Takeaways
- ✓Assignment transfers contract rights to an end buyer; double closing involves the wholesaler briefly taking title.
- ✓Anti-assignment clauses, common in REO and institutional contracts, block assignments but not double closings.
- ✓Transactional funding (1-3% cost) provides same-day capital for double closings, repaid from the B→C sale proceeds.
- ✓State regulations on wholesaling vary significantly — unlicensed brokerage risk is real and requires legal counsel.
Sources
Common Mistakes to Avoid
Marketing a property to end buyers before having it under a valid, assignable contract.
Consequence: Marketing property you do not own or control may constitute unlicensed brokerage activity in many states, exposing the wholesaler to fines, cease-and-desist orders, or criminal penalties.
Correction: Always secure a fully executed purchase contract before marketing the property. Consult a real estate attorney in your state about wholesaling regulations, disclosure requirements, and licensing exemptions.
Failing to disclose the assignment fee or wholesale markup to all parties in the transaction.
Consequence: Non-disclosure can violate state-specific wholesaling laws (like Illinois Public Act 102-0659), trigger title company refusal to close, and create potential fraud liability.
Correction: Disclose your role and compensation to all parties. Use proper assignment documents that clearly state the fee. Work with a title company experienced in wholesale transactions who can handle the settlement statement correctly.
"Assignments, Double Closings & 1031 Exchange Transactions" is a Pro track
Upgrade to access all lessons in this track and the entire curriculum.
Immediate access to the rest of this content
1,746+ structured curriculum lessons
All 33+ real estate calculators
Metro-level data across 50+ regions
Test Your Knowledge
1.What is the key structural difference between a contract assignment and a double closing?
2.Why might a wholesaler use a double closing instead of an assignment?
3.What is transactional funding and what does it typically cost?