Differences

This shows you the differences between two versions of the page.

--- residential_closing [2026/05/20 03:58] – created admin
+++ residential_closing [2026/05/22 14:48] (current) – admin
@@ Line 1: / Line 1: @@
+====== Residential Closing with Tokenization Fork ======
+//Process owner: [[legal-engineers:kyler-wandler|Kyler Wandler]]//\\
+//Type: Business Process (BPMN 2.0)//\\
+//Jurisdiction: [STATE] (escrow-state assumption)//
+This process models a residential real estate closing in [STATE] with explicit branching for the funding type. The traditional financing path and the crypto-funded path are modeled as one process rather than two, because the title work, RESPA timing, and recording steps are common to both — only the funding leg diverges.
+===== Description =====
+The process starts when the purchase agreement is fully signed. Two parallel tracks then run concurrently: title work, and funding. Both must complete before the RESPA-mandated waiting period begins.
+==== Title work (top branch) ====
+  - **Title search ordered** — title company runs the chain.
+  - **Title insurance bound** — owner's policy and (if traditional financing) lender's policy.
+==== Funding (bottom branch) ====
+The funding branch contains an exclusive gateway on funding type:
+  * **Traditional financing path** — loan application → underwriting → clear-to-close. Standard residential mortgage workflow.
+  * **Crypto-funded path** — wrapper entity formation (LLC by default in [STATE]; series LLC where supported) → OFAC/BSA compliance check → crypto held in escrow (qualified custodian) → conversion or direct settlement at closing.
+The two sub-paths converge at "funds verified" before joining the title branch.
+==== Common steps (after join) ====
+  - **RESPA waiting period (timer event)** — Closing Disclosure must be delivered at least 3 business days before consummation under TRID. Modeled here as an intermediate timer event.
+  - **Deliver Closing Disclosure**
+  - **Closing executed** — signing.
+  - **Deed recorded** — recording with the [STATE] county recorder. Recording timing depends on whether [STATE] is a race, notice, or race-notice jurisdiction.
+===== Decision logic =====
+The funding-type decision routes based on a single input — declared funding source on the purchase agreement — but downstream compliance requirements differ substantially:
+^ Funding type ^ Wrapper entity required ^ OFAC/BSA check ^ Custodian required ^
+| Traditional cash/mortgage | No | No (handled by lender) | No |
+| Crypto, direct | Recommended | Yes | Yes |
+| Crypto, via tokenized SPV | Yes | Yes | Yes |
+| Hybrid (partial crypto) | Case-by-case | Yes | Yes |
+===== Inputs =====
+  * Fully executed purchase agreement
+  * Buyer KYC documentation
+  * Source of funds documentation (heightened scrutiny on crypto branches)
+  * Property legal description
+===== Outputs =====
+  * Recorded deed
+  * Title insurance policies issued
+  * Compliance file (retained per BSA recordkeeping requirements on crypto branches)
+===== Open questions for review =====
+  * Does the 3-business-day TRID window apply identically when settlement is crypto-funded? Edge cases around "consummation" timing have not been definitively addressed by CFPB guidance.
+  * Is "wrapper entity formation" the right level of abstraction, or should this expand into a sub-process showing the entity-selection decision (LLC vs series LLC vs trust vs DAO-LLC)?
+  * Should OFAC/BSA check sit before or after wrapper formation? Compliance practice varies.
+  * Recording-before-funding vs funding-before-recording — modeled here as funding-before-recording per [STATE] assumption. May not match local practice.
+===== Related =====
+  * [[processes:legislative-intake|Legislative Intake]] — upstream source of changes to tokenization rules that affect this process
+  * [[decisions:paralegal-upl-scope|Paralegal UPL Scope]] — defines what scope a paralegal can perform in this process without attorney sign-off
+----
+===== Diagram =====
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