Commonwealth of Virginia's Wet Settlement Act and Same Day Flips

By
Real Estate Broker with Long & Foster REALTORS®, Gainesville, VA VA License # 0225089470
http://actvra.in/47GM

The Commonwealth of Virginia has a Wet Settlement Act.  What is of critical importance in the wet settlement act is the duty of the Settlement Agent.  Here is how the code defines the duty of the Settlement Agent:

The settlement agent shall cause recordation of the deed, the deed of trust, or mortgage, or other documents required to be recorded and shall cause disbursement of settlement proceeds within two business days of settlement. A settlement agent may not disburse any or all loan funds or other funds coming into its possession prior to the recordation of any instrument, except (i) funds received which are overpayments to be returned to the provider of such funds, (ii) funds necessary to effect the recordation of instruments, or (iii) funds which the provider has by separate written instrument directed to be disbursed prior to recordation of any instrument. Additionally, in any transaction involving the purchase or sale of an interest in residential real property, the settlement agent shall provide notification to the purchaser of the availability of owner's title insurance as required under � 38.2-4616.

When it comes to folks who would like to sell properties the same day they buy them, what this means is that if you are going to purchase Property in the Commonwealth of Virginia, you must pay for it yourself BEFORE you collect funds to sell it. 

You see, if B is going to buy a Property from A for $100,000, then sell it to C the same day for $150,000, B can not pay A using C's money.  That is a violation of the Wet Settlement Act.  Why?  C's money can not be disbursed until C's deed is recorded.  And you can't record C's deed unless B's deed was recorded.

Bottomline:  You have to use your own money to puchase real estate if conducting a same day flip.

For more information on Virginia's Wet Settlement Act, please click the link.

Posted by

Chris Ann Cleland, Associate Broker- Licensed in Virginia, GRI, SFR, Northern Virginia Short Sale Specialist. Affiliated with Long & Foster, 7526 Limestone Drive, Gainesville, VA 20155.  To contact Chris Ann, call 703-402-0037 or email chrisann@LNF.com.  Or you can visit her website:  www.nvarealestate.net.

Header photos taken by Chris Ann Cleland.

The opinions expressed in this post are those of Chris Ann Cleland, not those of Long & Foster REALTORS®.

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Re-Bloggged 2 times:

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  1. Anne Clark 08/30/2010 10:38 PM
  2. Pat Fenn 08/30/2010 10:48 PM
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Topic:
Real Estate General Information
Location:
Virginia
Groups:
VA-RAIN
VIRGINIA
Virginia Foreclosures Short Sales and REO (and Pre-Foreclosures)
Tags:
virginias wet settlement act
flipping a property the same day you purchase in virginia

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Chris Ann Cleland
Associate Broker, Northern VA
Long & Foster REALTORS®, Gainesville, VA

Gene:  I know what you're talking about.

September 05, 2010 09:40 PM
Anonymous #15
Anonymous
Chris Burton

As an avid SS Flipper, I NEVER do this!  (the way your blog describes it).

I tell A from day one, in my Purchase Agreement, that I intend to flip for profit.

And the bank rec's this offer for their review.

I use Transactional Funding (extremely short term hard money loan, 3-30 days).

I close, in my own name, with my OWN $, and take title free and clear.

Then, immediately thereafter, I re-sell to C, and they use THEIR own funds to close B to C.

It's a flip for sure, but fully disclosed from day one, to all parties.

The RIGHT way to flip SS these days.

In the light, full disclosure, early and often!

Just some thoughts to add to you knowledge-bank.

Thanks for the great BLOG.

February 25, 2011 03:01 AM
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Chris Ann Cleland
Associate Broker, Northern VA
Long & Foster REALTORS®, Gainesville, VA

Chris:  It's great to hear that there is still someone out there that knows you can make money and still be 100% above board.  Thanks for the comment.

February 25, 2011 10:27 AM
Anonymous #17
Anonymous
wiliam evans

Your facts are completely wrong. of course someone can buy and sell (flip) the same day and not use ones own funds. I have conducted many such closings. The "wet settlement act" only applies if you are dealing with a bank loan. additionally, the act says you can't disburse until you record the deed it does not say you can't record the deed before you have the funds.

July 29, 2011 02:42 PM
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Chris Ann Cleland
Associate Broker, Northern VA
Long & Foster REALTORS®, Gainesville, VA

William:  I would suggest you consult with an attorney.

July 30, 2011 01:19 PM
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