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The buyer hasn't used the money we gave them for repairs. If it is returned to us, is it ours to keep?
When we sold our house at the end of July we put $4500 into an escrow account for the buyers to repair damages found during their home inspection. We got a call today from the title company that if the buyers don't use it by the end of this month it will be returned to us. Does that mean we are no longer contractually obligated to finance the repairs and the money is ours to keep or could the buyers come after us at some point for the money?
4 Answers
- teran_realtorLv 71 decade agoFavorite Answer
I looked at some of your earlier questions, and it seems the buyers used an FHA loan. If that's the case, and the repairs were required by the underwriter, then that lender had better get moving - or they will be buying the loan back.
The title company is probably just tired of having the money on their hands - they have probably contacted the buyer already and gotten no response, so they're contacting you. They are not concerned with whether the buyer could come back to you.
The reason that someone (title company, lender, attorney) holds the money until the repairs are done is because FHA guidelines limit how much money the seller can contribute to the buyer for closing. You cannot just "write them a check at closing" as so many Realtors are fond of suggesting.
FHA doesn't care who pays for the repairs - they just want them done.
Check your contract and see if there is a limit (time-wise) that the buyer has to do the repairs, and what happens if they fail to comply - it might not even be specified. The expectation is that the buyer will get the repairs done and the lender will stay on them to do so.
Do contact your Realtor and have them contact the buyer's Realtor. They need to get this done, or the whole situation could end up in the hands of attorneys.
Source(s): Have sold HUD homes with FHA 203(b) with repair escrow many times. Money can be paid to contractors for the work, or to reimburse homeowners for materials only (not labor) if the homebuyer does the work. - kemperkLv 71 decade ago
This can be a teeny weeny bit sticky. Usually, if the buyer does
not make the repairs by a certain date, the title company,
wishing to get its responsibility taken care of, can step in and
say, "hey buyer..."
Usually the contract will state when the repairs are to be made
but if the buyer just does nothing, JUST like someone leaving
money in an acct and not using it for 7 yrs, it escheats --reverts--to the state. In this case, it is returned to the seller.
[make sure the buyer knows this]
Source(s): RE broker - If you only knewLv 41 decade ago
No you're obligated unless it specifically states in the contract if the buyer didn't use the money it would be returned to you free and clear of obligation. Read your sales contract and contact the lawyer you used at the closing if you have further questions regarding this matter to be legally compliant.
Source(s): Residential Mortgage Closer, 7 years
