Dual Escrow Explained (CFFL 583)
Dual Escrow Explained (CFFL 583)
Transcript:
Jack: Jack, Jill here.
Jill: Hi.
Jack: Welcome to the show today. In this episode, Jill and I talk about dual escrow explained.
Before we get into it, let’s take a question posted by one of our members on the LandInvestors.com online community. It’s free.
Jill: Okay. Tom asked, “I’ve got this deal in California. The property is in a trust. Two trustees, husband and wife. Wife contacted me. She wants to sell. Husband no longer alive.”
Jack: I love how this is written. “Husband no longer alive.” Stop.
Jill: I know.
Jack: “I have the grant deed certificate of death.” Stop. Go ahead.
Jill: Oh, is that okay?
Jack: Yeah I like it.
Jill: Alright. “Is that enough to record the new deed in California? If yes, what should this deed look like? Does the name of the deceased husband still have to be on the new deed? Or should I just attach a copy of the death certificate and the affidavit of death of trustee to the deed with a signature of the one person who is still alive, who is the wife?” Mouthful.
Jack: So, I can answer this or you can.
Jill: Go for it.
Jack: So, this is how you need to think of a trust. A trust is an institution. Think of it as a five gallon bucket that can own property. You as an individual can own property. You’re an entity. A LLC is an entity that can own property, just like a trust. So, if a trust owns property, like the dead guy’s trust, the dead guy’s 1987 trust, that’s the entity that’s going to convey the property. In fact, people put trusts together so they don’t have to go through all this malarkey when someone dies. The trust is just the grantor. So, the trust, no matter who’s alive, if the trustee is still alive or not, the trust names trustees after people pass away so that they have execution power for this document.
Jill: Mm-hmm (affirmative)
Jack: So, the trust is going to convey the document as it’s written. If some person is dead, you don’t need to deal with it at all. It’s addressed somewhere in the trust, if I’m understanding this question correctly. Whoever the grantee is, the new person who’s going to own the property, the dead guy’s 1987 trust conveys to Jill K. Dewitt, an individual, and it’s over. You don’t have to file any affidavits. You don’t have to file any of that stuff.
Here’s what you’re confusing it with, Tom. Mr. and Mrs. Smith, a married couple, own a property in California, and Mr. Smith is dead and just Mrs. Smith is there.
Jill: What happened to him?
Jack: He died. She killed him slowly.
Jill: That’s what I was wondering.
Jack: She talked him to death.
Jill: Oh my gosh, Jack.
Jack: She nit, nit, nit, nit all day for 45 years and he died.
Jill: Death by words.
Jack: He just couldn’t get up one day because he just couldn’t take it.
Jill: You’ve been telling me that it’s going to be death by words.
Jack: Good question, by the way.
Jill: Thank you. That’s a thing now.
Jack: So, Mrs. Smith is walking around-
Jill: Mr. Smith just stopped eating purposefully.
Jack: He fasted in protest.
Jill: He did.
Jack: A Mrs. Smith protest.
Jill: He let his body shut down just to make it stop.
Jack: Or maybe Mrs. Smith … Maybe he talked too much, and Mrs. Smith put a cap full of Pine-Sol in his …
Jill: Oh, because he was the problem.
Jack: Yeah.
Jill: You know that could happen.
Jack: Over 15 years, that’s a lot of Pine-Sol.
Jill: That could happen. He could be the problem.
Sorry, go ahead.
Jack: Where are these thoughts coming from, Jill? Are you a little upset tonight?
Jill: I’m actually feeling really good right now. Drink this.
Jack: She’s like, I feel really good right now because we’re talking about killing your spouse.
Jill: No. I know it always tastes like this. Just go ahead and eat it, it’s fine. It must have started to turn. It’s okay.
Jack: You know, he’s catching onto this Pine-Sol thing. We’ve got to move to-
Jill: We’ve got to move to something else now.
Jack: To bleach.
So, one of the people’s dead. We’re not going to go into why. Now you’re talking about the death certificate thing. Fortunately, your property is in California.
Jill: And he had a big life insurance policy.
Jack: You can file a certificate of death. You couldn’t do that in California. A lot of states you can’t. Our database is packed full of half dead couples.
Jill: Like a [inaudible 00:04:46]
Jack: The last time I looked there’s like 9,000 properties-
Jill: Part of a half dead couple. That’s a thing?
Jack: I’m going to try to explain it, but you’re making me laugh.
Jill: I’m sorry. I can’t believe you used that term. That’s just hilarious.
Jack: Our database is packed full of uncompleted deals that are because of half dead couples. One person died and they didn’t prep for it correctly. In Arizona specifically, and so it’s a mess. You’ve got to undo it, you’ve got to go to probate is what you have to do. And so for an asset that’s $4,000, $5,000, $10,000, it’s almost … The cost of probate doesn’t rationalize that.
Jill: Exactly. It’s a walk away thing.
Jack: California, in its wisdom, solved that. There’s a procedure that you file an affidavit and then you file a death certificate, original death certificate and who the surviving Pine-Sol, the Pine-Sol giver can get the property and convey it correctly.
Jill: Yeah. That’s why they live in California.
Jack: Most of the time it’s the kids, it’s not the spouse. The spouses usually kill each other.
Jill: You know, I hate the … Yeah. So, by the way I feel bad for these phone calls, by the way. It’s a tough situation, and when you get into this business if you haven’t had one, you’re probably going to get one of these at some point. Then you’re going to have someone call you, and it’s just too much money and too much work to undo the mess. And I feel bad telling them that not only do I not want the property, you’re going to have a hard time finding someone to buy it because it’s just a mess, and I’m sorry that you’re in this situation but this is the reality.
Jack: After you send out a few thousand letters and you’ve been doing this for a while, let’s say a year, you’re going to get strange phone calls. People are going to call and say, “Thank you for your letter. Thank you, thank you.” They’re too excited. “Thank you so much. You know what? I’ll just sell it for $100, because” … Never mind you’re like the fourth person that called, and it’s just a mess and it needs to be untangled.
Jill: Right.
Jack: Estate planning … There’s a lot of property that just goes back to the state because people have not estate planned correctly, and they just don’t know what to do. It’s complicated for most people.
Jill: Exactly.
Jack: For a while … And we don’t do it anymore at all because we don’t need to … We would undo these things for these people just for … We would do it for free. But what we would get out of it is the property. In fact, there’s a whole career. If you’re into that kind of thing, there’s a whole career for you out there. You’ve just got to get a lot of offers in the mail.
We stopped doing it, unless there’s a tremendous amount of money involved. We do, what I call, low hanging fruit transactions where they’re easy to do, and our answer is we just send out more mail because it’s so cost efficient. It’s way more cost efficient to spend 0.50 on a letter than it is to spend a tremendous amount of time and energy …
Jill: Trying to make this happen.
Jack: … undoing legal issues.
Jill: Exactly.
Jack: They’re not really legal issues. They are estate issues.
If you have a question or you’d like to learn about Pine-Sol, reach out to either one of us on LandInvestors.com.
Today’s topic: dual escrow explained. This is the meat of the show.
So, what the heck is dual escrow anyway, Jill? How would you define it? It’s not a test, by the way.
Jill: Dual escrow is when the property is like passing straight through a middle person, traditionally. That’s the only reason you’re doing it, because otherwise it would just be a normal escrow, a buyer and a seller. But dual escrow is usually when you have a seller and a seller and a buyer.
Jack: That’s right.
Jill: And the person in the middle is really a buyer and a seller.
Jack: So, why the hell would you do that anyway? Here’s why. I send out a letter, and the seller says heck yes I’ll sell you my property. I’m signing the purchase agreement, and so I jump up and down and I go to the bank, I get a cashier’s check, do the whole thing. And I contact an escrow agent, and I say my seller over here has agreed. Here’s my purchase agreement. I would like to open escrow, and I would like you to complete my transaction. And the escrow agent says great. And then I say by the way, I’m not going to be the owner of this property for very long. I already have another guy.
Jill: Like an hour.
Jack: Yeah.
Jill: Or like a minute.
Jack: So, if it’s okay with you, I would like you just to keep escrow open. I’m going to buy it for about 20 minutes, and then this guy over here, he’s going to buy it from me for $10,000 more. That’s dual escrow. Rather than opening escrow and then completely closing it and then …
Jill: And then doing it all over again.
Jack: … reopen it and ordering a new pot, it’s just all easier and way cheaper to do it all once. It turns out that’s what we do all day long, and that’s what our members do all day long. They don’t buy property to use it. They buy it just to resell it for more.
There are dual escrow friendly companies out there or branches, and there are not some dual escrow friendly. In fact, 10 years you’d be hard pressed … It had a real negative connotation.
Jill: I don’t think people even understood.
Jack: Yeah that’s what I think, too.
Jill: What are you talking about? Are you buying it or not? Well, not really, because I’m selling it to that guy.
Jack: Yeah. Now in this day and age everybody knows it.
Jill: So, you’re an agent? No, no. I’m not that, too. You know what I mean?
Jack: You’ve obviously had this conversation.
Jill: Oh, gosh yes I have. You’re collecting a fee? No, no, I’m not doing that, too. Seriously. This is the conversation.
Jack: Wait, Jill, you’re a real estate agent?
Jill: No. That’s the … You can’t do this then.
Jack: Hold on a second.
Jill: You have to have a license. No, I don’t.
Jack: This is what happens in reality. I’m glad you brought this up.
Jill: Thank you.
Jack: I’m the escrow agent, you’re the buyer.
Jill: Okay, good. Am I the middle guy?
Jack: Wait, Jill … Yeah, you’re the person who instigated this whole mess.
Jill: I did.
Jack: You’re the one who sent the letter out.
Jill: I did instigate the whole mess. That’s how they see me.
Jack: Wait a minute Ms. Dewitt. Who are you then? You’re the buyer of the property?
Jill: Not really. I’m actually turning around and selling it to this gentleman over here.
Jack: Well, are you going to … So you’re only buying it for $10,000? You know this property is worth $180,000.
Jill: I know that. Thank you very much. Next.
Jack: You must be a dishonest person.
Jill: No. I thought you were going to say, so you’re an agent, you’re getting a commission? No. So, you’re getting this? No, no, no. Well, then you have to be an agent. No, I don’t.
Jack: I’m sorry, I’m just not understanding.
Jill: So, by the way when you call any … If you’re trying to do this …
Jack: This is real life.
Jill: This is us role playing, right. And this is true. So, if you call a title company and you find yourself in this conversation, hang up.
Jack: That’s the best advice I’ve ever heard.
Jill: Thank you.
Jack: Find another escrow agent that’s younger than 90.
Jill: Yeah, hang up. Yes, but they don’t get it, and that’s okay. Move on. Your job is not to educate them. Just hang up and find someone else who does get it.
Jack: I spent decades trying to find an escrow agent, a national-
Jill: Yeah, trying to find a girl.
Jack: Decades trying to find an escrow company that would number one, just close a deal that I have without title insurance, because that $10,000 sometimes you just don’t need it. And number two, do a dual escrow closing without all the questions and stuff.
Jill: No talking.
Jack: I got so sick of it. Jill and I together got so … If you can’t hear it in her voice, she’s just [inaudible 00:11:56] So, we started a company called Title Mind, which we’ll be releasing next month, that does all this, and you don’t have to explain it. We understand what you’re trying to do. You’re sending a letter out, you’re buying a piece of property, you’re going to own it for an hour or less, and you’re going to resell it to somebody else and you don’t want to go through all the explanation, and you don’t want to do it every single state.
Jill: Isn’t it exciting? I’m really thinking about it.
Jack: Yeah. You have the name of a person who can do all of your deals, and it’s the same person no matter where they are in the country.
Jill: Won’t it be great? Hi, I’m calling to do a dual escrow. Okay. What’s that person’s name? Okay. What’s that person’s name? Okay. Great. I need this, this, this, and we’ll get it done.
Jack: That’s what it is. It literally-
Jill: Be like ohhhh.
Jack: Go to Title Mind. You fill out a form with all the stuff that Jill just said, and we open escrow and we close your deal, and then we keep escrow open for as long as you need us to until you resell it. And then we close that deal.
Jill: Perfect. Exactly.
Jack: All for one set fee. It’s not a percentage. There’s no prorations. There’s none of this silly, silly stuff that this industry has grown into. There’s no commissions. There’s no real estate agent. There’s no lenders. It’s the future.
Oh, you like it now, don’t you?
Jill: You’re making me cry. I’m so proud.
Jack: Short but beautiful episode, I think.
Jill: Thank you.
Jack: Join us in the next episode where we discuss one deal leads to 10 deals leads to 100.
Jill: And we-
Jack: Answer Chris H’s question-
Jill: About letters from years ago.
Jack: Yeah. That’s a good idea.
Jill: You are not alone in your real estate ambition.
Jack: I’m real excited about this company.
Jill: Yeah. That’s going to be-
Jack: Wish it was around 20 years ago.
Jill: I know. This is-
Jack: This is one of those … I should have started this a long time ago.
Jill: I know. This is one of those like Parcel Fact. Man, if I had this back then, how much more efficient I could have been.
Jack: I know.
Jill: So, it’s funny when I tell our members. I’m like we got here as fast as we could. I’m even telling myself, well we created it as fast as we could.
Jack: Yeah. You say that?
Jill: Mm-hmm (affirmative)
Jack: That’s a good line.
Jill: Even for ourselves. Yeah.
Jack: Excellent line.
Jill: Thank you.
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