We sold a home in Virginia a few years ago and had $13,000 held in escrow for home repairs. The repairs were never done and, since then, the new buyers have lost the home to foreclosure. Where does that escrow money go? Am I entitled to get it back? Also, isn’t there a requirement that the money be reported to the state as not claimed after a certain time frame?
You pose an interesting question. Presumably, when you sold your home, you set aside money for certain repairs that your buyer was going to take care of. However, we would assume that if the cost of those repairs was lower than the $13,000 you deposited, you’d get that money back. Otherwise, we think that you wouldn’t have deposited money into an escrow but given the money to the buyers.
When you deposited the money in escrow, you should have signed a document that outlined when and how those funds would be disbursed. Since you closed in Virginia, you probably were not represented by an attorney, but rather that the closing was handled through a closing attorney.
If you have a copy of the escrow agreement, you might want to see what it says about the timing and disposition of the money. Usually, a repair escrow would detail the amount of money deposited, how and when the money would be disbursed and for what purposes, and some timing requirements. Take a look at the agreement or, if you don’t have a copy, call the closing attorney and obtain a copy.
It’s possible that the document has a provision for the return of funds unused by a certain date. Given that you closed several years ago, we’d hope that the document had a time frame of one or two years before money was returned to you. If the time has come and gone, you can simply make a written request of the party holding the funds to return the money.
As an aside, it’s possible that your deal with your buyers may have put that money into an escrow but that the money was no longer yours. In certain situations, buyers of homes are unable to take money from their sellers unless that payment is approved by the buyer’s lender. Some buyers may set up the payment in a different form that pays third-party contractors for work done after the closing. But the essence of that deposit into the escrow is that the buyer controls who gets paid and when. It would be as if the buyer owns the money.
While you may not know now who “owns” the funds, you need to review the escrow agreement and talk to the closing attorney. If you still have an interest in the money, you should find a way to get it back. If your buyer has an interest in the money, the buyer is entitled to it, and if the buyer can’t get the money, eventually the money will have to be turned over to the Commonwealth of Virginia as unclaimed funds.
The timing for unclaimed funds may vary, but you might want to talk to a real estate attorney in Virginia to go over your issues. We don’t mean the closing attorney that handled the closing, but a new attorney that will review it from your perspective. While you might pay money for that advice, if the attorney determines that you can get the money back, it will have been worth the fee you pay the attorney.
Ilyce R. Glink ’s latest book is “Buy, Close, Move In!” Samuel J. Tamkin is a Chicago-based real estate lawyer. If you have questions, you can call Glink’s radio show (800-972-8255) any Sunday from 11 a.m. to 1 p.m. Contact Glink and Tamkin through the Web site thinkglink.com.