Legal Question in Real Estate Law in Illinois

This is a follow up question on the thread below. I called the Health Department and although they do the lab test for the well water around the area, the results by default has comment that says it is recommended that water testing be done every 6-12 months. But the water test passed now and that's what the private company faxed to my lawyer.

My husband went to the new homeowner to talk to him in a professional manner to release the money but he told my husband that my husband should go through a lawyer. He said he will wait for a year and test the water again.

I looked at the handwritted contract we signed during closing for the escrow and it said we will pay for everything including repairs if the well water testing does not pass. But it did and the new homeowner is now saying he wants to wait for a year and test it again! Our lawyer during closing is charging us a lot of her services and we cannot afford to pay her, miss work to file for litigation and everything. We don't know what to do. Is it even up to the new homeowner to release the money even though the contract says it should be released when the water testing pass? Please help.

Question

We sold our house. During closing the well water test showed that we did not pass. At that time, we signed a contract that we will put 3K in an escrow account, fix the water, test it again and if it passes, the buyer and lawyer will release the escrow. The second test passed. The buyer does not want to release the money because he talked with the Health Dept and they said that they were going to wait for 6 months. What can we do?

6/17/10, 12:21 pmAnswer (1 of 2) You should check with the Health Department and see why they want to wait 6 months. If their regulations say that this is a standard procedure then you have to wait or appeal the department's judgment (administrative appeal).

Once you get cleared by the Health Department your buyer and his/her lawyer are legally obligated to release the escrow money. If they don't then they're in breach and you can try and sue them for damages according to the contract. If you pull back from the deal before you deal with the Health department then you're in breach and the buyer can sue and force you to comply with the contract even if you don't want to.

Caroline Palmer

Oak View Law Group

200 South Wacker

Chicago, IL 60606

6/17/10, 12:42 pmAnswer (2 of 2) What did the escrow agreement say? The county does not have any authority regarding the disposition of the escrowed funds. The terms of the escrow agreement control.

Thomas Moens

Moens Law Offices, Chartered

1523 52nd Avenue

Moline, IL 61265


Asked on 6/18/10, 6:56 am

2 Answers from Attorneys
Caroline Palmer Law firm of Caroline Palmer

You do need to contact the buyer through their attorney. If you're represented and they are represented, then according to the bar rules then both parties must communicate through their attorneys.

In this case the agreement controls and unless you agree to the buyer's terms, then as I stated before, the buyer and his attorney are obligated to comply with them. I expect that if you take a copy of the results of the water testing and a copy of the escrow agreement to the bank where the funds are being held the bank will release the money.

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Answered on 6/18/10, 10:30 am
Stephen Messutta

First of all, how much money are we talking? You could very well chase it for more than it's worth. It may be worth splitting if it's not too much.

Second, is the cash critical to you? If the existing escrow is THAT badly drawn up, and they are agreeable to wait and so are you, GET THAT IN WRITING NOW that there would be "one more test" and that's it and buyer can't do anything to screw up the testing..... (ie get someone to draw it up much tighter), and that if it's enough $$ try to get the escrow interest-bearing. This is called "reforming" the agreement and even if you sued that would be an optimal possible outcome.... PS if it does NOT pass the second time what does the escrow say -- is the deposit your limit of liability or are you still liable for more???? Without seeing it there's just no way to tell.

Third, if the escrow says "test" then it shouldn't mean "tests" and it should mean the one test. So in court that would be a point in your favor but if the escrow agreement doesn't provide for attorney fees you lose in the end.

Fourth, "agreements" drawn up at closing usually are minus the thought process and homework due diligence. In your neck of the woods should the attorneys have known about the testing procedures/timing? If I was the closing attorney and the escrow backfired because of my drafting, I would stand behind what I drew up. Again, it's very hard to second guess good faith attempts to wind things up at a closing. There isn't enough information to determine if there's any errors and omissions claim option.

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Answered on 6/18/10, 10:31 am


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