My niece in Seattle has been emailing me about her big problem. She sold her first home about 2 years ago. Then took the proceeds and bought some investment property.
The buyer of her house called her last month to tell her that she can’t get an equity line BECAUSE MY NIECE’S LOAN IS STILL RECORDED ON THE PROPERTY. Oh, and the buyer is an attorney. And she’s mad. She wants my niece to pay off that $14,000 loan right now and get it off the property!
My niece called the escrow company. Sure enough, she paid $676 for an Owner’s Policy on that $235,000 sale. The escrow officer said, “Why didn’t you disclose that you had a second mortgage? You better just pay off that loan!”
My (by now) emotional basket-case niece calls me, “I DON’T HAVE $14,000! But I’ve been making all the payments, just like I was supposed to! WAAAAH! What do they want me to do?! I didn’t know that loan was a mortgage on my property, I thought it was an EQUITY LOAN!”
I told her to just take a deep breath. That it was an (OH SH…!) problem of the Title/Escrow Company. Everyone wants her to just magically come up with the $14,000 to make THEIR problem go away. That she is just an ignorant first-time seller. That they got PAID to clear all liens off the property. “Sit tight,” I told her, “I’ll get back to you.”
Anyone encountered this one before? How should the Title Company make it right for the buyer?