If you are a regular reader of my articles you know that I constantly remind both buyers and sellers of real estate to read everything, and I do mean everything. We too often will proceed to sign a document just because the real estate agent or escrow officer says to do so. Not a very good idea, as you maybe signing for something that you would not normally agree to or should not do. There could be conditions or costs that you may unknowingly be assuming.
I have seen this a number of times by those who have purchased a property that is on leased land, not realizing that there is a monthly lease payment to be made. There have been buyers who, unknowingly, agree to assume an assessment that was not paid by the previous owner, and cases where a buyer did not read that they are assuming a sellers past due homeowners association dues. So reading everything, before signing, is a must. Now how could this following case have happened when the professionals, whose responsibility is to read everything, but do not do so?
Buyers purchase a “Short Sale” property. Escrow completes the transaction and advises the selling agent that escrow is closed. The buyers take possession of the property, and within a few days are informed that the escrow has been reversed. Buyers must move out. How could such a problem get through without anyone knowing?
The sellers did not advise their listing real estate agent that they had both a second and third loan on the property. The title company properly informed escrow that there were these two additional loans, but escrow overlooked this important piece of information. Copies of the Preliminary Title Report were sent to escrow, to both listing and selling real estate agents, and to the buyers. Obviously no one took the time to properly read them. End result was that the holder of the first loan was paid off, so the holder of the second, now became the primary holder of the note; with the lender of the third now being in second position. Sounds a little confusing doesn’t it?
The buyer’s funds are now being held by escrow. Escrow cannot return the funds without approval of the sellers; I am unaware if the sellers have yet complied. The buyer spent monies to move in and out of the property, and want those expenses to be refunded to them as well as the amount being held in escrow. They, the buyers, also want to be compensated for the aggravation that they are incurring, but who is responsible to compensate the buyers?
Of course, I have discussed this problem with an attorney but, like such situations there must be more to it, and that information was not available to us to properly respond to caller. The escrow company made the error of overlooking the fact that there were two additional loans, and it would seem that they would carry the blunt of the problem. But why wasn’t the error discovered by either of the real estate agents, and was it the buyer’s responsibility of understanding that there were other loans that needed to be cleared before escrow could close? I wish that I could be a fly on the wall when all of the attorney’s get together to attempt to solve this bundle of errors.
Could this effect either of the real estate agents and their agencies to lose their real estate licenses? There is a possibility that this could happen, maybe not to the agency but the agents could be put on suspension or and be required to take additional training before they could again practice real estate. Does the Title Company have a responsibility? Maybe not, but I am certain that the buyers attorney will go for deep pockets as well as for the pockets of all of the others involved with the transaction. What about the lender, or holder of the first? What was their responsibility, if any? Will the holders of the second and third notes file any litigation to gain ownership of the property? I would think they are being harmed and would want some form of compensation.
This is a real mess, and wish that I could report the solution to you. Certainly, this will take a great deal of time to solve, and I do hope to be able to report the results when they do become available. You can understand why I so often say that reading everything is so important.
A SIMPLE QUESTION:
Q) Our home Warranty Company, under the warranty plan, is replacing the air conditioner, which is on the roof of our town home. They want us to pay for the crane to lift the unit to the roof. I thought that was covered under the warranty, so why should we be responsible for payment?
A) This question does come up from time to time, but normally after the unit has been installed. I have reviewed a number of the warranty plans regarding the replacement of the air conditioner units, certainly not all of the plans. The warranty company will repair the unit, or will replace the unit under conditions. Others will offer a rebate and the property owner can purchase their own replacement unit. When the warranty company installs the air conditioner adjacent to the property, there is no additional charge, and a few will charge for the crane if required to lift the unit to a rooftop, especially if it is higher than a single level. All of the warranty companies warranty folders that I have read, do have a minimum service charge – between $35 and $50.00 – in addition to the possibility of a crane charge. Read your agreement, as it is all in the print.
Louis Perlin CRS, GRI is a Syndicated Newspaper Writer, Author, Professional Real Estate Witness and Mediator. Lou can be reached by calling Marilyn Perlin Realtors, Inc at (760) 327-8401 or by E-mail: firstname.lastname@example.org.