Condo Buyers Be aware of possible litigation in community before signing escrow papers, your deposit into escrow could be at risk. When an escrow is opened, the buyer's earnest money is deposited into an "escrow account". These funds are refundable to the buyer if the buyer finds the property unacceptable and cancels the transaction within their "contingency period".
What most buyers do not know is that when they sign the escrow instructions there is a clause that authorizes the escrow company to use money from the escrow account to pay for the Homeowners's Documents, like the CC&R's and other HOA transfer documents. This is usually a "sellers' expense, but since the seller does not have any money in the escrow account it comes from the buyer.
The problem occurs when a buyer cancels the escrow after these funds are spent. The escrow company can't give the buyer back their full deposit because they don't have it! This way of doing business seems odd considering how many transactions do not close these days because of no fault of the buyer.
Condo buyers or any buyer purchasing a home where there is an HOA is at risk.
For more information on this topic contact Tina Maraj, www.TinaMaraj.com 714)403-7901
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