Assignments and double closings in Texas: what investors need from the title company

Both structures work in Texas when the paper trail is complete

Investors who buy under contract and resell usually choose between two structures. In an assignment, the investor transfers the right to buy to an end buyer, who closes directly with the original seller. In a double closing, the investor buys the property and resells it, usually the same day, in two separate transactions. Texas allows both. What decides whether the deal closes on time is the paperwork the title company receives and the funding plan for each leg.

A title company is a neutral escrow agent. It does not take sides between the seller, the investor and the end buyer, and it cannot hide one party's numbers from another when the law or a lender's instructions require disclosure. What it can do is tell an investor early what it needs, find the title problems that distressed properties tend to carry, and close both legs cleanly when everything is in place.

This guide covers the rules that matter most in Texas, the differences between the two structures, and a checklist for opening the file.

Assignment or double closing: how they differ at the title company

An assignment is simpler and cheaper. A double closing keeps the two prices separate and lets the investor own the property, which matters if the investor wants an owner's policy for its own purchase or plans to hold the property even briefly. The right choice depends on the contract, the end buyer's financing and the investor's money.

The Texas disclosure rule for selling a contract interest

Texas regulates people who market a property they have under contract but do not own. Under Occupations Code Section 1101.0045, a person who is not a licensed broker may sell or offer to sell an option or an interest in a purchase contract without a license only if the person discloses the nature of that interest, which is an equitable interest, not legal title. Since January 1, 2024, that disclosure must be in writing and given to the seller and any potential buyer. The Property Code carries a parallel disclosure requirement in Section 5.0205.

The statute also makes clear that using an option or contract interest as a way to engage in real estate brokerage without a license is not allowed. Where that line falls on a given pattern of deals is a question for the investor's own attorney, not for the title company. You can read the Texas Real Estate Commission's explanation on its website.

For the title file, the practical point is simple: expect the escrow officer to ask for the signed disclosures along with the contract and the assignment. Missing paperwork is one of the most common reasons an investor closing gets pushed.

What the title company needs for an assignment

An assignment file starts from the original contract between the seller and the investor. The title company needs to see that the contract allows assignment, or that the seller has agreed to it, and it needs a signed assignment that names the end buyer and states the fee. Then the end buyer becomes the party the commitment and the policy are written for.

• Original executed contract with all addenda and amendments, including any clause on assignment.
• Signed assignment naming the assignee exactly as it will take title, and stating the assignment fee and how it is paid.
• Written equitable-interest disclosures to the seller and the end buyer, where Section 1101.0045 applies.
• Earnest money receipts, and instructions on how the investor's earnest money is credited or refunded at closing.
• The end buyer's lender instructions, if the purchase is financed, since the lender must approve the assignment fee on the closing statement.

Because the assignment fee is paid at closing from the end buyer's side, it appears on the closing statement. Investors who do not want the seller to see it sometimes choose a double closing instead. That is a business decision; the title company will show whatever the transaction actually is.

Funding a double closing: good funds come first

The hardest part of a double closing is usually money, not title. Texas title companies operate under TDI's good funds rule (Procedural Rule P-27): they may not disburse from an escrow account until good funds for that transaction have been received and deposited. Cash, wires and certain certified instruments qualify; personal checks above a small threshold do not until they clear.

That rule shapes the investor's plan. The first purchase, seller to investor, must be funded before the seller is paid. Whether the end buyer's funds may be used to fund the first leg depends on the underwriter's guidelines, the title company's policy, and above all the end buyer's lender, whose closing instructions often require the seller in its transaction to already own the property and the full flow of funds to be disclosed. Some investors use short-term transactional funding for the first leg. Others simply bring their own cash.

Settle this before the closing is scheduled. Tell the escrow officer how each leg will be funded, from whom, and when the money will arrive. A plan that works on paper but surprises the end buyer's lender on closing day is the most common way a double closing fails. Our page on wire fraud explains how to confirm wiring instructions before sending money for either leg.

Financing limits on fast resales

When the end buyer uses a mortgage, the lender's rules on recent resales can matter more than the title company's. The best known is FHA's property flipping rule, 24 CFR 203.37a: FHA will not insure a purchase loan if the resale contract is signed within 90 days after the seller acquired the property, measured from the settlement date of the seller's purchase. Sales of HUD-owned homes and certain other properties are excepted, and resales shortly after day 90 can require extra documentation of value.

In a double closing, the investor is the seller on the second leg, and its acquisition date is the first closing. That makes a same-day FHA resale ineligible. Conventional and private lenders set their own rules, and a large price increase over a short period draws questions from lenders and underwriters about value and about whether repairs were actually made.

Investors selling to financed buyers should ask the buyer's lender early what it requires. The title company can confirm dates and recorded prices but cannot change a lender's eligibility rules.

Title problems that come with distressed properties

Investor deals often involve properties with a history: long vacancy, a deceased owner, unpaid taxes, a foreclosure, or years of deferred maintenance. Those properties carry more title risk than a typical resale. The usual items in the commitment include:

• Property tax liens and delinquent tax suits, which must be paid or resolved at closing.
• City liens for mowing, demolition, securing a vacant structure or other code enforcement.
• HOA assessment liens and the resale certificate the association must provide.
• Abstracts of judgment against the seller, including judgments against a person with a similar name that must be ruled out.
• Old deeds of trust with no recorded release, even if the loan was paid off years ago.
• Heirship and probate gaps when the record owner has died. Our guide to liens, heirship and probate property explains the cure options.

Each of these can be cleared, but some take time, and some need a party who is hard to reach. The earlier the commitment is ordered, the more time there is to cure or to renegotiate. Our problem title page describes how we handle the harder files.

Should the investor buy an owner's policy on the first leg?

In a double closing, the investor owns the property for a short time, and many investors skip the owner's policy on their purchase to save the premium. That saving has a cost. When the investor resells by general or special warranty deed, it gives warranties of title to the end buyer. If a defect from before the investor's ownership later surfaces, the end buyer's title insurer may pursue the investor on those warranties, and without its own policy the investor has no insurer standing behind it.

Investors who hold properties, renovate them over months, or buy in an entity they will keep using usually find the policy worth having. Our article on buying a Dallas home with cash explains what the owner's policy covers when there is no lender, and owner's policy vs lender's policy compares the two. The premium is promulgated by the state, so it is the same at every Texas title company; the premium calculator shows it for a given price.

Checklist for opening an investor file

1. Send the executed contract with every addendum, and say up front whether the deal is an assignment or a double closing.
2. For an assignment: the signed assignment, the assignee's exact vesting name, and the fee.
3. For a double closing: both contracts, the closing order, and the funding source for each leg.
4. Signed written equitable-interest disclosures to the seller and the end buyer, where they apply.
5. Entity documents if the investor or the end buyer is an LLC or partnership: formation documents, company agreement and signing authority. See our list of entity authority documents.
6. The end buyer's lender contact and closing instructions, as early as possible.
7. Any information you have about the property's history: probate, liens, code cases, HOA.
8. A decision on the investor's own owner's policy for a double closing.

We handle residential and investor closings in Dallas as part of our residential title and escrow work. When your contract is signed, you can open a title order and an escrow officer will confirm what the file needs for your structure.

Frequently asked questions