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

[Karen Reyes-Arenas]

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. 

[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.