A simultaneous closing, sometimes called “table funding,” is a transaction in which the seller sells the property, carries a note, and then sells the note at the same time the property sells, or within a very short time afterwards. This type of transaction falls in a gray area of the law. It could be considered a loan disguised as a sale.
The logic behind this questionable condition is that the seller never intended to carry the note, and if we bought the note, we could be considered a lender because we would be the first party to provide money.
If the transaction is judged a loan, the note broker and the note buyer could be required to comply with all licensing and disclosure requirements of the law. Failure to do so could result in severe penalties.If the transaction is judged a loan, it could also be considered as a usurious loan, charging an illegally high interest rate. This could also result in severe penalties.
Therfore, we only buy notes that are “old and cold,” where we entered the picture after the note was created and one or two months have gone by.