Legal Question in Insurance Law in California
Lender as loss payee & loan payoff
I had loss for which the insurer issued a payment. The payment is issued to myself and to the lender for the property that had the loss.
The lender has a ''loss draft'' department which will hold the insurance payment and will issue drafts from an escrow account as repair work is completed.
I'd like to understand what would occur if I were to payoff the loan before rebuilding is completed (presumably from a sale).
Would the lender be compeled to release all (remaining) $ from the escrow account? If so, in what time-frame would this occur? Would it occur at immediately as part of the payoff or could they hold onto the escrow funds for a longer amount of time?
1 Answer from Attorneys
Re: Lender as loss payee & loan payoff
The lender should release funds as part of the escrow. However, you are probably better off just completing the repairs before selling the property. That should speed up everything for you.
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