Title Company Will Not Return Escrow Money
I placed a bid on a condo in Hollywood, FL. $4,000 were placed in Escrow. The bank I was dealing with did not approve the total amount of the total for which I was approved for a 100% loan due to the value of their appraisal coming in at a lower value. The seller would not reduce the price of the property but also decided to keep the $4,000 because she said that I wasted her time in waiting for the bank's decision and she lost her buyers. Please have in mind that the buyer had a notation to show the property to all potential buyers even while I was awaiting my loan to get processed. This all happened in April. The Title Company said that the seller would not return the money and they would place it in the courts back in May 2004. To this date, the moneys have not been placed in the courts. I placed a lien on the seller's property and both she and the Title company went ahead and sold the property to someone else even with the lien. I have contacted the Financial Services Department for the State of Florida but have not yet heard from them because they do not want to return my escrow money. Does anyone have any other suggestions as to how I can get my money back?
Did you seek help from your RE Attromey?
Don't have the funds to have an RE Attorney. The property was being sold as a www.Buyowner.com property with no attorneys.
Not sure about FL, but in NY you can go to the local courthouse & for a small fee, explain your case to an attorney & they can let you know if you have a case or not (usually civil or criminal matters). Try the local courthouse in the county where the house is.
How much does it cost to have a RE attorney review a contract in FL? Can't be more than NY. It's understood that we're working w/limited funds, but ~ $800 is small in the grand scheme of things. You've been without working capital since April & still have to battle to get it back. Network & get yourself a good RE attorney if you're planning to stay in the REI biz.
Good luck!
Call and talk to the escrow officer at the title co. and see when they'll be filing their "Interpleader Action" there in court to place the money in court and have the court disburse as per rights of B&S.
Law in every state, to my knowledge, requires this be done at specified times after it's been sitting in their accounts with arguing parties...2-4 years, it varies.
I've seen & heard this, even had it happen to me a couple of times, and it's made me learn to write up P&S Agreement VERY carefully if/when I'm enclosing EM to escrow..
I now specify exactly & precisely what's gotta happen for the escrow co. to be able to keep my money in case of disagreement and if NO agreement within certain number of days after I sign it, they WILL refund ALL my EM.
Escrow co. doesn't like these any more than you or I and they're delighted to have clear, unequivocal instructions about what to do if no deal.
This kind of thing is exactly the reason many REIs only submit EM promissory note with their offers, so if it's accepted, they've agreed to convert it to cash within 24-48 hrs, etc.
Only one who makes money with Interpleaders is lawyers, and they love them as they're so easy...they just plunk the $$$ with the court and walk away, with no further responsibility for what happens, who gets it, etc.
Fun for the lawyer who does it, but not so for you and me.
it's a no brainer: call an attorney to explore your options.
describe the case and ask if he/she will pursue it on contingency. If not let them estimate their fees.
It may be resolved by something as simple as a lettter sent by the attorney. May be mediation.
May be more - such as sueing - but then you definitely want the lawyer on a contingency basis.
John Merchant is right, you should always, always have it clearly and precisely stated in your purchase or escrow contract what happens to deposits or earnest money in the event of dissolution of the agreement for any and all reasons.
The title\Escrow company in FL upon excepting funds, is then acting in a fiduciary capacity on behalf of both partys and is required to follow the terms of your contract with the seller.
I don't no the details of your contract, but most standard contracts have a Financing provision stateing that the agreement is contingent upon the buyer recieving specific terms of financing. If they are not met then the contract is 'null and void and the buyers earnest money is returned.
Anyway the bottom line is you need to review your agreement with the seller. (I doubt she had a "wasting time" provision). and if according to that agreement upon dissolution of the contract you are due your money, then I would show that to the title company or include a copy it of demanding the return of your funds. If they have disbursed the funds to the seller thereby violating the contract- you can file a claim against there surety or fidelity bond. (but only if you can prove it). You can also complain to there underwriter-(they hold a lot of wieght with there title agents)
--but if according to the contract she is entitled to keep it than its hers. expensive lesson.
-- if it is unclear or doesn't specify, than an attorney would come in handy. -- but even without one you yourself can start making documented formal demands for the return of your funds-- but without instruction from your escrow agreement this one may be between you, the seller
and the court and with both of you making claims on it. the title company will have to let the court settle it..
Rememder though, the title company is obligated by law to follow the escrow agreement to the T.
Let us know what happens..
Good luck
Wow, that situation wouldn't happen in Texas....because the title companies will not make any decision about whether to tender the earnest money over to a seller(even when there is clear evidence of a default by the buyer). So, unless the buyers and sellers provide a release that earnest money will stay with the title company....and will eventually escheat to the state of Texas.
Actually, since they started doing that, years ago, I have always complained about the fact that title companies do not exercise their proper role as an escrow agent, and turn over the earnest money to a seller when the buyer does back out. AFTER ALL, EARNEST MONEY IS FOR THE PURPOSE OF BINDING THE BUYER TO FULLFILL THE PURCHASE CONTRACT. And, I try to get serious earnest money from a buyer to rule out the flakes.
In Texas the title companies are so afraid of lawsuits, they dont act without that executed release. So, I often use my own escrow account at the bank to avoid that situation (even though it invites scrutiny from TREC- since I am a licensee.
In
From my last conversation with my attorney in South FL, I had this very problem, and I recall that the seller can not sell the house. (Not so sure)
Did you have a financing contingency? Did you do your due dulligence? How many lenders did you apply to?
Thank you for your replies.
It was my understanding that the Title company would be neutral to the whole contract. However, I just learned that the Title company works with the seller not the buyer. I don't know if this is a Florida thing or what. Also, I contacted the state of Florida Financial Services who have finally responded and said that since the sale was a private sale, they cannot get involved.
For those of you inquiring on the type of contract, the seller used a standard contract used in Florida which states that the agreement is contingent upon the buyer receiving specific terms of financing. The Title Company in this case, however, is not on my side. They have worked with the seller in other sales of condos she has made. Moreover, they were sent a copy of the Notice of Lis Pendens that was recorded in the county records and they went ahead and sold the property with the Lis Pendens.
It is not the end of October and the Title Company has not placed the money in the court as they had mentioned they would file for an Interpleader (that was back in April).
Certified letters to buyer with copies to the Title Company were sent prior to filing the Lis Pendens. I've not received a response from either party. However, someone suggested that the Mortgage company for the New Owner would be interested to know that they approved a loan on a property with a Lis Pendens. The Mortgage company would likely pay it off and then charge the New Owner the moneys of which the New Owner would have to go back to the seller to then sue both the seller and Title company for not disclosing at closing.
What do you think?
Again, :"wow". In Texas, a lis pendens will stop a title company from doing a deal untill a release is filed by the person who filed it. Title companies in this state are timid as hell.
I'm suprised that the title company released the EM. Typically there are terms that spell out what happens if you don't qualify for the loan, and typically you should get the EM back. I'd read the contract closely to see what it says about that.
As for the lien, did you record it with the county recorder? If not, the sale may have taken place and the new lender financed the deal before the courts recorded the lien.
Good luck!
-Joe
It is true that title companys in Florida will be a bit more loyal to the seller as they are the ones who send them business. --but that is not an excuse for not exercising thier escrow dutys properly. --- If like you said the contract had a financing clause and you where due your escrow funds back than like I said you may have a claim on thier surety or fidicuary bond. These bonds will be on record with the state and thier purpose is to protect the public in case of error or negligence by the title company. --
Buddy- I agree with you, but it has to be spelled out. The title company should as you say act properly in thier role as an escrow agent, but acting properly is following the instruction given to them by the buyer and seller precisely. So I agree that when selling a property you should spell out in the contract what has to happen for the buyer or seller to keep the escrow funds.