Are we legally obligated to pay an extra $500 out of pocke for a closing adjustment mistake?
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Are we legally obligated to pay an extra $500 out of pocke for a closing adjustment mistake?
We recently purchased a new home and during the process we gave the sellers a deposit of $500 in good faith, which we agreed would be returned to us (the buyers) when the purchased was finalized and the documents were signed. We then agreed to pay $500 to the sellers for the kitchen appliances. The day we closed on the home and we were signing the loan documents the sellers brought the $500 good faith deposit to return to us, we told them to keep it for the kitchen appliances. However, we didn’t realize until we all returned home, that the loan company put the $500 in the loan documents as a deposit to the seller and in turn they were shorted $500 by the loan company in the sale of the home. So instead of seller the home for $147,000, the loan documents say price $147,000 deposit of $500 check cut for $146,500. Since all parties signed it and it was turned in before anyone realized what it said, the loan company said there is nothing they are willing to do to help anyone out. So now the sellers are coming after us for an additional $500. So are we legally obligated to pay the sellers another $500 out of our pocket for the kitchen appliances even though we all agreed the good faith deposit would be used for the appliances? After all, it’s not our fault the loan company messed up the loan documents and we had an agreement that the $500 we gave in good faith to hold the house would be used for the appliances instead of being returned to us (the buyers) on the day we closed on the loan/house.
Asked on November 11, 2011 under Real Estate Law, Michigan
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
If you closed escrow on the property and the funds were distributed to the sellers and you paid what you paid and have legal title to the home and there is a $500 shortfall due to escrow's fault owed the sellers, then escrow has to come up with the $500 out of its own pocket.
The whole purpose of the escrow company is to make sure everyone gets what they are entitled to per the final escrow instructions and closing statements.
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