Over-paid when selling your house?

Question

Last year I sold my house and was almost over paid. I noticed the principal was lower than what I actually owed.

Confused I mentioned this to the title personnel and they corrected the actual principal amount and paid me what was expected.

My question to you is if I did not mention anything would I be liable to return the amount over-paid? Would there be any possible litigation or tax issues?

Answer 1

The mortgage company would not have released the lien. The buyer's mortgage company would not have funded the new loan since the title would not have been clear.

I did have one deal where the lady's mortgage company had never filed a mortgage lien against the house. She found out while she was closing the sale. She decided that if she did not pay it off at closing she would be obligated to keep making the payments so she paid it off at closing. I wondered what would have happened if....

Answer 2

Yes, they would have gone after you for the overpayment. You had no legal entitlement to it and therefore could not keep it. There are no tax issues assuming that you paid it back. If you did not, it would have been treated as income to you.