Legal Question in Real Estate Law in California
Title company negligence
One year after the close of a re-fi on a second home the title company sent me a bill for over $13k for a prepayment penalty they overlooked. Actually they had it listed on one sheet deep in the signing documents but failed to carry the cost through any of the documents (approx 8) that showed payout. I had told the loan agent I was concerned about a prepay fee but was told there wasn't one. I would not have proceeded with the loan had I known. I would have known if the Title Company had reported the fee properly. The Title Company paid the prepay then waited a year to contact me. Didn't I have a 3 day right of rescission? Is this unjust enrichment?
3 Answers from Attorneys
Re: Title company negligence
Here's a very quick analysis: the title company made a mistake, but it doesn't owe you $13K nor does or did the mistake create or affect a right of rescission or unjustly enrich someone. Their mistake caused a one-year delay in your attention being called to your duty to pay the prepayment penalty, so you're now probably going to have to pay interest and maybe an additional penalty. I can see the title company being responsible for that. However, I think it is your own responsibility to know the terms and conditions of your own contracts, including the fact that a loan you are refinancing carries a prepayment penalty. If the loan agent misinformed you by telling you there was no prepayment penalty, you might have a case against him, but he would probably deny telling you that, and the outcome of trial would be in doubt.
Re: Title company negligence
Here's a very quick analysis: the title company made a mistake, but it doesn't owe you $13K nor does or did the mistake create or affect a right of rescission or unjustly enrich someone. Their mistake caused a one-year delay in your attention being called to your duty to pay the prepayment penalty, so you're now probably going to have to pay interest and maybe an additional penalty. I can see the title company being responsible for that. However, I think it is your own responsibility to know the terms and conditions of your own contracts, including the fact that a loan you are refinancing carries a prepayment penalty. If the loan agent misinformed you by telling you there was no prepayment penalty, you might have a case against him, but he would probably deny telling you that, and the outcome of trial would be in doubt.
Re: Title company negligence
I assume the "Title Company" was the escrow agent and you are talking about escrow agent misfeasance. If you are damaged by professional negligence you can and should contest and if necessary sue.
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