Legal Question in Real Estate Law in Washington
Recovering Money From Contractor
I recently had a construction loan foreclosure, in this process, I paid a deposit to a contractor in which work was never done. The contractor has agreed to pay me back, however the Bank is claiming that the money is owed to them. I recieved a cancellation of debt, my question is, if I recieve the money from the contractor, am I obligated to give it to the Mortgage company, if the mortgage company recieves it, are they obligated to write down the amount of my debt, and finally if they pay me and I keep it, does the mortgage company have the right to re coup.
1 Answer from Attorneys
Re: Recovering Money From Contractor
If I am following you correctly, then I would say, yes, if the funds are repaid, they ought to go to the bank, since you presumably took the funds you borrowed and gave them to the contractor. Thus, these funds are owed to the bank since it was their money to begin with and it has not been repaid.
If you keep the money, I'd say, yes, they have a right to recoup the funds. They would also have to adjust the amount of the write down or debt cancellation, to credit you for the amount recovered. Let me put it this way. It was the bank's money that was paid to the contractor through you and you were supposed to repay the bank. Now that you are out of the picture in terms of owing a debt and the bank is still out that money, the proper thing for you to do is forward the money to the bank upon receipt.
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