After close of escrow, can Escrow Company say they goofed and did not hold out enough money?

Question

I sold my home and 3 months after closing Escrow Company claims they made a mistake and did not hold out enough money to pay off a HOA assessment. Is that legal? I am unable to determine if I still owe the assessment since the accounting is difficult to understand since there were several assessments being paid on a monthly basis. HOA's demand at closing did not did not include the assessment in question. Now months later, escrow is saying that I owe it???

Answer 1

Yes, that does happen. It shouldn't and it's very poor customer service, but it does happen and if you should have paid something, you get to pay it now.

Look at it this way: THEY aren't going to pay it, and it's still due, so if you don't pay it, guess who will get the grief, and maybe a judgment or lien? Not the title company.

Answer 2

which assessments you as the seller pay are determined by your sales contract and local (state) law.

In many states, the usual rule is that charges warned but not formally assessed to the property are the buyer's liability while one time assessments that have actually attached are the sellers'. periodic payment assessments [monthly payments for the next N years variety] vary.

Usually, the closing agent [escrow company] does a fine job of figuring this stuff out. And sometimes they error.

That brings up a contract issue -- what did they argee to do in the process? -- which also varies by state. In some states, once they complete the closing, they are liable for any errors [what else are they paid hundreds of dollars for? -- the time it takes to prepare the figures isn't worth that much!!]. In other states, this isn't true and the buyer and/or seller are liable [preparation on a "best efforts" basis instead of a "results" basis].

consequently, you'll need to google your states laws on this and, after that, may very well need to consult an experienced local real estate attorney.

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or if the amount is relatively small, just pay it.

Answer 3

Yes its possible. That's why you sign a document stating that all figures are accurate as far as everyone knows at that point. It also says if there is an error you will come back and correct it. This is the exact reason they put that in there, although its rare. It happens with city water sewer and tax bills from time to time.

Answer 4

Yes, it can happen and make sure you see the final settlement statment to see where the money goes. Also make sure if you are really dissatisfied that you talk to someone above the escrow officer to ensure your satisfaction.