Buyer Needs Escrow Money for Repairs
Ask the Real Estate Lawyer: Real Estate Law Q&A
By Ilyce R. Glink and Samuel J. Tamkin
Summary: A buyer and seller agree to set aside money in escrow for the repairs needed per the home inspection. Now the seller won't release the funds. Sam gives advice on how to solve, and avoid, this type of problem.
Q: When we closed on our house, the seller left $10,000 in an escrow account for repairs to be made per the inspection report. We sent two estimates to the seller’s lawyer and when they asked for greater detail, we gave them more information.
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Our attorney has made repeated calls to the seller’s attorney’s office to have the money released but the title company will not release the money to us. Our attorney told the title company not to release the money to the seller. Now the seller claims that the work we need to have done is too costly. What do we need to do to get the money released?
A: At the closing of your home, you and your seller should have signed some sort of document that indicated why you and the seller agreed to set aside$10,000. This agreement should have detailed with some specificity the work that needed to be done to your home.
It would not be fair to the seller if you used the $10,000 as a fund to rehab your home and spent the money in a way unrelated to repairs that the seller agreed to. Likewise, it would be unfair to you for the seller to hold up the release of the money to you for repairs that are legitimately within the scope of the agreement you made at the closing.
The first thing you need to review is the agreement relating to the $10,000. The document should specify that the money is being held for a certain period of time to give you an opportunity to get estimates to make repairs allowed under the agreement and get reimbursed for those repairs.
If you are certain that the repairs you are requesting reimbursement for are precisely within the scope of your agreement with the seller, you may want to obtain more detailed estimates as to the work you plan to have done. You may also wish to show more than one estimate to show that you in good faith are trying to have the work done without taking advantage of the seller’s money.
Once you have done these things, you must make an additional written demand of the seller to release the money. A copy of the demand for the money must also be delivered to the title company holding the funds.
If the seller refuses to release the money, you will have to sue the seller to get the money. If the agreement you signed included a statement that the prevailing party in any litigation is entitled to attorneys’ fees from the losing party, you may be in luck and may be able to recover your costs of getting the money. You should discuss these options with your attorney.
Samuel J. Tamkin is a Chicago-based real estate attorney. Ilyce R. Glink’s latest book is The REAL U Guide to Bank Accounts and Credit Cards. This column is distributed by Real Estate Matters Syndicate. This column may not be resold, reprinted, resyndicated or redistributed without written permission from the publisher. If you have questions for Sam and Ilyce, write: Real Estate Matters Syndicate, PO Box 366, Glencoe, IL 60022 or contact them through Ilyce’s website www.thinkglink.com.