Title company refusal to release “lease back funds” to buyer

Dallas, Texas
Real Estate Deal Analysis & Advice
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Title company refusal to release “lease back funds” to buyer

Karen Reyes-Arenas
Member since 2024 · 6 posts · 0 votes

Has anyone ever dealt with a title company refusing to release the funds on an agreed upon lease back. So both seller & buyer agreed on a (residential temporary lease agreement) so that the seller will have time to move our after closing. The lease states 10k will be held as a deposit by the buyer & if the seller/tenant does not move out, the seller/tenant shall pay $200/day until they move out. These sellers/tenants overstayed 41days!!! The buyer/landlord had to go through a proper eviction process & have them evicted by the court. There is a stamped writ of possession by the court with details & a date of possession of the property, this was turned into title to release the funds due to buyer. However the title company refuses to release funds with out both the buyers & sellers consent. Why would they need consent when there is already a legal binding lease/contract in place to avoid these issues!? Now Title has hired a lawyer and threatened to take both seller and buyer to court if they do not come to an agreement on the release of funds. However again, there is already an agreement. 

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Tom GimerBusiness Member
DMV · Member since 2017 · 3k+ posts · 3k+ votes
2y

@Karen Reyes-Arenas This is a contract matter and nobody can answer the question properly without reviewing the actual contract language. Post-settlement occupancy agreements usually deal with issues in addition to rent/holdover, such as physical damage to the property. There are often dates for providing information to title, and sometimes automatic release provisions for when a party does not timely provide the information. If this agreement was not drawn up properly, the title company may feel like the contract does not address the situation.

That said, the answer may be buried in the fact pattern... the title company doesn't have an in-house attorney so they may not know what they can legally do. There are many title companies who don't have the confidence to make a decision based on the facts in front of them and instead require joint written instructions for everything relating to escrows.

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  • Jonathan R McLaughlin
    Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes
    2y

    ouch, following. Surprised. Sorry not to have helpful advice but very curious to hear how this resolves.

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  • Karen Reyes-Arenas
    OP
    Member since 2024 · 6 posts · 0 votes
    2y
    Quote from @Jonathan R McLaughlin:

    ouch, following. Surprised. Sorry not to have helpful advice but very curious to hear how this resolves.


     Thank you. I can’t wait till it’s resolved it’s been so stressful. 

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  • Tom GimerBusiness Member
    DMV · Member since 2017 · 3k+ posts · 3k+ votes
    2y

    @Karen Reyes-Arenas This is a contract matter and nobody can answer the question properly without reviewing the actual contract language. Post-settlement occupancy agreements usually deal with issues in addition to rent/holdover, such as physical damage to the property. There are often dates for providing information to title, and sometimes automatic release provisions for when a party does not timely provide the information. If this agreement was not drawn up properly, the title company may feel like the contract does not address the situation.

    That said, the answer may be buried in the fact pattern... the title company doesn't have an in-house attorney so they may not know what they can legally do. There are many title companies who don't have the confidence to make a decision based on the facts in front of them and instead require joint written instructions for everything relating to escrows.

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  • Karen Reyes-Arenas
    OP
    Member since 2024 · 6 posts · 0 votes
    2y
    Quote from @Tom Gimer:

    @Karen Reyes-Arenas This is a contract matter and nobody can answer the question properly without reviewing the actual contract language. Post-settlement occupancy agreements usually deal with issues in addition to rent/holdover, such as physical damage to the property. There are often dates for providing information to title, and sometimes automatic release provisions for when a party does not timely provide the information. If this agreement was not drawn up properly, the title company may feel like the contract does not address the situation.

    That said, the answer may be buried in the fact pattern... the title company doesn't have an in-house attorney so they may not know what they can legally do. There are many title companies who don't have the confidence to make a decision based on the facts in front of them and instead require joint written instructions for everything relating to escrows.

    Thank you for your insight. So what is the point in a contract then if it’s not upheld. 
    We agents rely on a contract to ensure our clients will not be taken advantage of. Now that they have been taking advantage by the other party of the contract, title decides to make matters worse and take them to court to prove what? And in doing so, titles lawyer has outlined that they will be paying themselves from the money withheld by title. It’s just so frustrating to the client who did everything by the law. 
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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    2y
    Quote from @Karen Reyes-Arenas:
    Quote from @Tom Gimer:

    @Karen Reyes-Arenas This is a contract matter and nobody can answer the question properly without reviewing the actual contract language. Post-settlement occupancy agreements usually deal with issues in addition to rent/holdover, such as physical damage to the property. There are often dates for providing information to title, and sometimes automatic release provisions for when a party does not timely provide the information. If this agreement was not drawn up properly, the title company may feel like the contract does not address the situation.

    That said, the answer may be buried in the fact pattern... the title company doesn't have an in-house attorney so they may not know what they can legally do. There are many title companies who don't have the confidence to make a decision based on the facts in front of them and instead require joint written instructions for everything relating to escrows.

    Thank you for your insight. So what is the point in a contract then if it’s not upheld. 
    We agents rely on a contract to ensure our clients will not be taken advantage of. Now that they have been taking advantage by the other party of the contract, title decides to make matters worse and take them to court to prove what? And in doing so, titles lawyer has outlined that they will be paying themselves from the money withheld by title. It’s just so frustrating to the client who did everything by the law. 
    it is not the title company who upholds the contract between you and the seller. They are an intermediary holding the money. If both you and the seller can not agree on the disposition of the funds...it isnt the title company that upholds the contract, it will be the courts that do. So you may need to sue the seller, win a judgement, then the title company will release the funds as the court orders. 
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