Mortgage Company Escrow mistake

[JimComey]

What is the name of your state (only U.S. law)?
Tennessee
I sold my house in 2015. Real estate taxes for that year were settled at closing so no problem.

When I went to pay my real estate taxes for 2016, in mid December, I was told by the county tax assessor that they had all ready been paid by my mortgage company. I don't have a mortgage.

I contacted the company who paid the mortgage and the people I sold my house to to alert them to the problem. The mortgage company assured me that would take care of it.

I went to pay my 2017 taxes this week and the mortgage company had paid them again. I contacted the buyer of my house and we determined that their mortgage company did not pay their taxes last year or this year but had used their escrow to pay mine.

They now plan to pay the correct taxes then dun me for the tax amount they paid for me in 2016 and 2017. My county assessor will not transfer funds from my tax account to theirs.

I know what is right, I want to know what is legal. Do I have to pay them at all? If I do have to pay them, can I pay over a period of 3 or 4 months instead of all at once? While I am inclined to pay, I am curious as to what recourse they have if I do not.
Thank you.

 

[adjusterjack]

Do I have to pay them at all?

Yes. The law doesn't allow you to profit from somebody else's mistake. Once the lender pays the proper taxes you'll owe the lender what it paid for your taxes.

If I do have to pay them, can I pay over a period of 3 or 4 months instead of all at once?

That's entirely up to the lender. Ask about it.

While I am inclined to pay, I am curious as to what recourse they have if I do not.

They will sue you and get a judgment which will cost you even more than just the amount of taxes. Trust me, a money judgment is not something you want tainting your credit score for ten years.

 

[JimComey]

Yes. The law doesn't allow you to profit from somebody else's mistake. Once the lender pays the proper taxes you'll owe the lender what it paid for your taxes.



That's entirely up to the lender. Ask about it.



They will sue you and get a judgment which will cost you even more than just the amount of taxes. Trust me, a money judgment is not something you want tainting your credit score for ten years.

Thank you for your response. I will check about payments.

 

[latigo]

What is the name of your state (only U.S. law)?
Tennessee
I sold my house in 2015. Real estate taxes for that year were settled at closing so no problem.

When I went to pay my real estate taxes for 2016, in mid December, I was told by the county tax assessor that they had all ready been paid by my mortgage company. I don't have a mortgage.

I contacted the company who paid the mortgage and the people I sold my house to to alert them to the problem. The mortgage company assured me that would take care of it.

I went to pay my 2017 taxes this week and the mortgage company had paid them again. I contacted the buyer of my house and we determined that their mortgage company did not pay their taxes last year or this year but had used their escrow to pay mine.

They now plan to pay the correct taxes then dun me for the tax amount they paid for me in 2016 and 2017. My county assessor will not transfer funds from my tax account to theirs.

I know what is right, I want to know what is legal. Do I have to pay them at all? If I do have to pay them, can I pay over a period of 3 or 4 months instead of all at once? While I am inclined to pay, I am curious as to what recourse they have if I do not.
Thank you.

You ask what legal recourse the mortgage company would have?

It would be a lawsuit seeking restitution for the amounts mistakenly remitted to your benefit. The legal concept being known as "unjust enrichment".

 

[HRZ]

THey made the mistake...and as a practical matter they may need to agree to a prompt repayment schedule not an instantaneous cure ...propose a repayment schedule that is prompt but also one youncan meet and see what happens .....you are NOT entitled to unjust enrichment because they made a mistake ...take the high moral road and get cure underway Before some court orders a cure.

 

[justalayman]

THey made the mistake...and as a practical matter they may need to agree to a prompt repayment schedule not an instantaneous cure ...propose a repayment schedule that is prompt but also one youncan meet and see what happens .....you are NOT entitled to unjust enrichment because they made a mistake ...take the high moral road and get cure underway Before some court orders a cure.

He had intended on paying the taxes for both years already. That means he has (had?) the money in hand to pay them. Unless he squandered it thinking he somehow wouldn’t have to pay the taxes he knew he owed he should still have the money.
Op also suggested tax assessor transfer payments made from the wrong account (his) to the proper account. Unless he paid immediately he would be 2 years delinquent. Was that his intention or was he going to just pay the taxes due?

They don’t have to agree to anything short of accepting payment in full right now. They can sue the op already if they do choose to. Op might want to approach them with a friendly attitutude rather than nasty thinking he has the upper hand. He doesn’t.

Best case scenario: escrow company is willing to accept a reasonable repayment schedule. Worst case scenario: op pisses them off and they sue him and obtain a judgment. That judgment will end up on op’s credit history and the escrow company can take whatever legal actions op’s state allows to grab the money.

 

[HRZ]

I see this as a problem for the buyer of prior home ...the entity he entrusted to pay his taxes failed to get it right .

( I never once entrusted my lender to get my RE taxes right )

What's the buyer doing to help cure the problem?

 

[LdiJ]

What is the name of your state (only U.S. law)?
Tennessee
I sold my house in 2015. Real estate taxes for that year were settled at closing so no problem.

When I went to pay my real estate taxes for 2016, in mid December, I was told by the county tax assessor that they had all ready been paid by my mortgage company. I don't have a mortgage.

I contacted the company who paid the mortgage and the people I sold my house to to alert them to the problem. The mortgage company assured me that would take care of it.

I went to pay my 2017 taxes this week and the mortgage company had paid them again. I contacted the buyer of my house and we determined that their mortgage company did not pay their taxes last year or this year but had used their escrow to pay mine.

They now plan to pay the correct taxes then dun me for the tax amount they paid for me in 2016 and 2017. My county assessor will not transfer funds from my tax account to theirs.

I know what is right, I want to know what is legal. Do I have to pay them at all? If I do have to pay them, can I pay over a period of 3 or 4 months instead of all at once? While I am inclined to pay, I am curious as to what recourse they have if I do not.
Thank you.

Their recourse is with the bank that made the mistake. The bank's recourse is with you, who were unjustly enriched by their mistake.

You are not directly responsible to the buyer nor would I suggest that you pay the buyer directly. The bank needs to fix things for the buyer and they will likely do so whether you pay the buyer or not, which is why you need to let the bank square things with the buyer.

 

[HRZ]

I agree...buyer leans on his lender to fix the problem .

When they get it fixed...you need to pay up. Be careful that some late penality is not dumped in your lap.

 

[justalayman]

I agree...buyer leans on his lender to fix the problem .

When they get it fixed...you need to pay up. Be careful that some late penality is not dumped in your lap.

Op already stated escrow company plans on taking care of the other guy. Escrow compmany doesn’t really have a choice as their liability to the other party is seperate from all of this mess. Either they pay the taxes they should have on the other tax parcel or risk being sued themselves.