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Legalease
Legalease, Lawyer
Category: Real Estate Law
Satisfied Customers: 16361
Experience:  13 years experience in RE Law, including LL/Tenant, contractor disputes, comm'l prop. issues
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I have just closed escrow on a house,i had a lien for

Customer Question

Hello,i have just closed escrow on a house,i had a lien for $73.000 on the property,i negotiated with the lien holder for a 10% reduction,they sent a demand for $63,000,which was constantly being updated due to various problems with closing.I was assured by escrow that everything was in order and we would be able to close the next day,i received the closing details and saw that the lien holder had been paid the full amount,without the discount,they told me that it was the final demand and that a check had been issued to them,they suggested i call them and ask for a refund in the difference.At no time was i advised that the lien had increased to the full amount,i asked for documentation regarding this and was told it was all verbal.I have asked them when they noticed that their was an increase,to date i havent heard.Doesnt the escrow company have a fiduciary duty to inform me of any increases on the account?
Thank you
David Mccann
Submitted: 1 year ago.
Category: Real Estate Law
Expert:  Legalease replied 1 year ago.

Hello there David --

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While the escrow company does not necessarily have a fiduciary duty to notify you of every change on the account or to one or two line items in the escrow payout instructions, they DO have a fiduciary duty to send to you the FINAL statement of the account and what they intend to pay out to which party on the day of the closing -- and delivery of that final document to you puts the duty in your hands to review the document for accuracy and to review each listed payee fund recipient's lien item to make sure that you are in agreement with the amounts that they have listed on their escrow payout document (whether that document be the HUD 1 form or some other form that they used to set forth the income from the closing and the names and amounts of the payee recipients with the final balance to come to you).

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Now, it sounds like the escrow company did not get the final statement out to you until AFTER the matter had been closed and all parties were paid and that was not the correct way for them to do it. They should have made sure that you had the latest form and at least a verbal or an email authorization from you to proceed with disbursing the funds to all payee recipients listed on the escrow closing statement.

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Depending upon the amount of money in question here, you may want to have a local attorney look over all of the materials and tell the attorney what happened. You may be in a position to file a lawsuit against the escrow company or, if the amount is less than $12,500 then you could also file a small claims court action in CA in the county where the house that was sold is located. The only potential snag I see here is whether or not you got the agreement to the 10 percent reduction in writing from the collection agency (or their client) -- while verbal contracts and agreements are enforceable, unless you have something to back it up such as a witness to any of the conversations with the collection agency or recordings of the calls or even an email reference, the collection agency will most likely deny that they agreed to the ten percent reduction in the amount. While your argument right now is with the escrow company and their failure to send you a full copy of the closing statement BEFORE the money was disbursed, the escrow company will most likely support the collection agency in their position because it suits them to do so. What you and your attorney need to do is focus the court on the fact that even if it turned out that the collection agency would not give that discount, at least you would have known about that BEFORE the closing happened (if you were sent the statement in a timely manner) and you could have decided whether or not you were going to proceed with the closing at all --- the escrow company took that choice out of your hands when they paid out the monies on the closing statement without confirming with you FIRST that everything was correct.

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I hope that helps. I wish I could give you a definitive way to get your funds without taking legal action, but this is a situation that turns heavily on the facts of what happened and how it happened and both the escrow company and the collection agency know this.

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Please let me know if you have any further questions. If not, can you please press a positive rating above in the ratings section to pay me for my time assisting you today. I am paid nothing unless you press a positive rating above (the middle star or the fourth or fifth star on the right of the middle star are positive ratings). Pressing a positive rating will not cost you any additional money -- it is simply the trigger to Just Answer to pay me for my time. THANK YOU VERY MUCH

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MARY

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