Legal Question in Real Estate Law in California
Escrow company's liabilty when const. loan is breached by lender
Hello. I am a multi-unit residential property developer and acquired my construction loan through a private money brokerage company (licensed) When in escrow to get the loan, I believe the contract was written as if the entire amount was available to us for the project and held in an escrow-type account for us to draw off of as needed for construction. Now, before we've even received the building permits, the lender is trying to back out of the loan we've mutually agreed to and had recorded. Their real problem is that they do not have the money as promised however. What, if any, responsibility does the escrow company who facilitated the transaction have to us, the borrower in such a situation? Aren't they supposed to ''guarantee'' that the funds are in place as our contract states it should be? Thank you for any assistance or referrals to the appropriate governing agencies you can offer to me.
3 Answers from Attorneys
Re: Escrow company's liabilty when const. loan is breached by lender
I think Mr. Whipple's response is closer to the point than the first one. The escrow company only has a duty once they receive the funds. It is not their responsibility to help the lender come up with the funds. It would appear here that your beef is with the lender, not the escrow company, unless they received the funds and the funds disappeared.
Very truly yours,
Re: Escrow company's liabilty when const. loan is breached by lender
It depends on what contract says about having the monies. If it says they are being held, then they should have them.
Joel
Re: Escrow company's liabilty when const. loan is breached by lender
I can't be sure, without reviewing all the documents (lender's commitment, escrow instructions, closing statement, trust deeds, and so on), but there is at least a suggestion here that you are mistakenly trying to shift blame for a failed (or misunderstood) loan transaction from your lender (or yourself) to the escrow holder.
Escrow companies aren't perfect, and they make their share of mistakes that screw up deals, but my hunch here is that you have a misunderstanding with your lender, which may be your fault, their fault, or you're equally to blame.
It's also possible that your lender is improperly trying to sabotage your deal, possibly because they had a change of heart, or as often happens they were planning to re-deploy funds from a payoff that didn't happen.
This is doubtless a big enough deal in terms of dollars at stake that you should be dealing with a sharp eal-life lawyer rather than a bulletin board, even one as good as LawGuru!
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