Legal Question in Real Estate Law in California

Escrowed Closed, Now They Want More Money

I bought a house through SHORT SALE w/ an FHA loan. Escrow Closed, I was handed the keys and moved in. 3 business (5 regular) days after escrow closed, the title company calls and says they made a mistake and I need to pay an additional $1095. Two days later, they say they got it down to I owe $1017 still.

They say that the sellar credited the account for inspections (which I had already paid myself outside of escrow and that I needed to pay the seller back for the credits).. I said if I already paid for them, why were they credited to the inspectors. I think they paid the inspectors twice, they claim no, but then take the credit and give back to the seller from credit acct. Why would I have to pay for credit to inspectors that I already paid myself. ..Does this make sense?

Basically want to know IF THEY CAN LEGALLY REQUIRE you to pay more money once escrow is ALREADY CLOSED and you are moved into your new house?


Asked on 2/06/09, 1:11 pm

1 Answer from Attorneys
Bryan Whipple Bryan R. R. Whipple, Attorney at Law

Re: Escrowed Closed, Now They Want More Money

A close of escrow is not a settlement and release of all claims of all parties, adn does not work to release anyone (unless, of course, the papers exchanged through escrow do in fact contain releases, which may be the case as to certain items).

Think of it this way. Suppose you had been told the house contained 1500 square feet, but upon moving in, it turned out to be only 1400. Suppose the seller said, "Tough luck, escrow is closed!" Your position, and rightfully so, would be that close of escrow does not release the seller from liability for a misrepresentation.

Similarly, claims for commission, inspections, etc. will survive COE unless specifically settled thereby.

That doesn't mean, of course, that you have to pay twice. The claim for extra money, may be invalid, but it is invalid for the reason it's already been paid, and not for the reason that escrow has closed. Your discussion should be with the claimant, not with the escrow holder.

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Answered on 2/07/09, 2:58 pm


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