title searchers error

[elizabeth2]

What is the name of your state? NY
My mother-in-law gave my husband power of attorney to help her sell her home.Just before closing her lawyer called and said the title insurer found a Wachovia loan against the house and asked for the account number. My husband knew of she had a Wachovia loan that she had been paying on and said that he did not know it was attached to the house, he gave this account number to the lawyer. The house was closed on and after all her debts were paid she had 22,000$ left. Two months after closing the lawyer calls to say that the title searcher did not find a 34,000$ Wachovia lien on the house.My mother in law did not tell my husband(she may have forgotton as she now has dementia) that her other son had her take out a 34,000$ lien on the house and give the $ to him. She has paid back Wachovia the 22,000$ she had left. She has no more money or assets. The bank now wants my husband to pay the remaining $. Can a power of attorney be responsible for this? They are threatening to sue him for fraud since he gave the wrong account number. Isn't this the title searchers fault?

 

[seniorjudge]

This sounds like sloppy work on the part of the bank, the title company, and the lawyer.

Are you saying that the title company paid off the wrong lien?

In any event, there may still be a lien on the real estate.

Who bought the house?

Did the buyer have title insurance?

Was there a new loan?

Did the new lender have title insurance?

 

[elizabeth2]

At closing the bank loan that we knew of was paid off. The other 34,000 loan was not paid off since my husband had no knowledge of it and the title searcher did not do their job and actually search for liens on the house.

A man and his parents bought the house as business property (it has 3 units in it) and they rent it out. Yes, they had title insurance and got a loan for the house. I don't know if the new lender had title insurance.

What I think happened is the bank then went and foreclosed on the property, it then will recieve the money from the title insurer. Next they are saying that the title insurer will sue my mother-in-law (who is 77, and now lives in an assisted living facility) and my husband for the balance of the loan and for fraud since they allegedly provided false information when asked about the liens?

My question is:isn't the job of the title searcher supposed be to search for liens? why didn't they just do it and not rely on sellers info? if they had done their job the lien would have been paid at closing.
can we sue them for legal expenses if this goes to court?

 

[seniorjudge]

I'm sorry but the more you clarify, the more it gets muddy.

Please answer all the questions in my prior post plus this one: Do YOU have title insurance on this land?

 

[elizabeth2]

Maybe I should start over-
1. My husbands elderly mother owned a home that she inherited from her father. She became ill and went to live near her other son. She didn't want to sell and my husband agreed to help her rent it out. After 2 years and a lot of hassles and bills adding up she agreed to sell. Being ill she gave power of attorney to my husband to do the paper work to sell the home. He found a buyer, negotiated the price and signed documents at the closing.

2. A week before the actual closing his mothers lawyer called to say that the title searcher found a lien on the house (a Wachovia bank loan-about 5,000$)and did Gene know the account numbers. Gene knew his mother had a Wachovia bank loan and gave the lawyers the number.

3. At closing this loan was paid off.

4. A month later Wachovia calls the title searcher screaming that the house was closed on without paying off a 34,000$ lien. The lawyer calls my husband and we find out that in Aug 2002 his brother took his mother to the bank and had her take out a 34,000$ loan against her house and give the money to him.

5. We agree that she owes this money, but once she paid all her debts (credit card bills, etc) she only had 22,000 left, this was sent to Wachovia, leaving 12,000$ due.

6. The new owner has title insurance (I don't know about his bank loan) and the title insurance I think is paying the 12,000$. However they are threatening to sue my mother-in-law (who is now broke, has denemtia and breast cancer, and lives in a county run assisted living home-so they won't be getting any money from her unless her other son pays back the 34,000$ he "borrowed"-fat chance) AND my husband (who they say is responsible since he signed the paperwork and provided a false account number-HE DIDN'T KNOW ABOUT THE 34,000$ LOAN SO HOW WAS HE SUPPOSED TO GIVE ACCOUNT NUMBER FOR IT?)

7. There have been a lot of letters threatening these lawsuits but no actual case yet. Should we wait until formal notice to get a lawyer (hoping they'll see it was their fault in the first place?) or get one now? (the original real estate lawyer cannot represent my husband in this matter since he is also his brothers lawyer) What else do you think about this case?

 

[nextwife]

It this additional loan put "of record" AFTER the effective date on the title commitment provided for the sale, it may not have shown up in the title search. A title policy does not insure a seller from claims caused by their own actions.

 

[elizabeth2]

Yes, I get it, the seller (my mother-in-law) is not protected by the title insurance because she did take out the loan and she is responsible for paying it back. My real question is can my husband, who only signed the paper work as her power of attorney, be held liable? No one ever told him this loan existed (not his mother, not his brother and not anyone involved in the sale). If he had known he this would have been paid at the time of the closing while she still had enough money to pay it.

 

[seniorjudge]

...My real question is can my husband, who only signed the paper work as her power of attorney, be held liable?...

No.

Do NOT talk to anyone involved with this again.

Have hubby gather up ALL documentation relating to this transaction and consult with a good real estate lawyer.

This title company sounds exceptionally stupid...and the lawyer involved doesn't sound a whole lot brighter.

I could write about 10,000 words on the errors that were committed by people, but just let me emphasize that y'all get an attorney.

I do not think you have done anything wrong. POAs are generally not held liable for their actions...but see a lawyer. This is a very general statement.

 

[elizabeth2]

Thanks, I guess I knew we needed a lawyer but it's good to hear another opinion. Somehow we need to prove that we didn't know about the loan, but how does one prove that they didn't know something?

 

[seniorjudge]

... how does one prove that they didn't know something?...

I struggle with this very question every time my French-Canadian wife catches me doing something I shouldn't be doing!