If he gives them cash it is.

fire09 said:

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You agreed to provide warranty, which has an established and agreed cash value, as a concession in the sale. That money isn't yours to keep because the buyer chose to convert that value from a home warranty back to cash. I'm confused why you are confused about this. You didn't have to agree to the warranty, you chose to. How he converts or recognizes this value which you agreed in writing to provide him is no concern of yours. Your closing document governs this. Him turning down the warranty with the expectation that a fair cash value would be substituted as a replacement shouldn't deny him the right to that concession all together unless specifically stated as such in the closing docs.

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If I recall, usually the concession for a home warranty isn't just 'here's some money for a warranty'. Which warranty to buy and which company etc. is stipulated in the closing documents and I even think the buyer is the one who has to go about choosing it not the title company. So… contractually, I'm pretty sure you are wrong on buyers option how the value conveys once the concession is actually agreed to. All this stuff has to be stipulated and itemized else the concession process is extremely prone to fraud.

OP should look at all of the closing docs and see if it is stipulated that way. If it is, just tell the realtor no thanks… feels a bit like fraud and the deal is done so pound sand. You can't be exchanging cash under the table outside of closing documents or you are part of mortgage fraud. Hard stop and isn't really even a debate. When you call that out, you'll never hear from that realtor nor buyer again and if they did call and cancel it, pretty sure you'll get the pro rata funds back at some point anyway. Never give cash to a buyer under the table. It's not legal. So not a scam per se… but they are trying to get you to aid their fraud… possibly unwittingly. Just firmly say you aren't going to do anything not stipulated in the closing documents at closing and move on with your life.

fire09 said:

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Here's what happened. You guys agreed to provide a warranty for a term and set dollar amount. Your title company went and bought the ****tiest low cost warranty they could. The buyer, who is in real estate knows *insert ****ty warranty company name here* is either not worth the hassle to file a claim, OR they had their maintenance person go through the house with a fine tooth comb and make sure everything was solid, and decided the warranty wasn't necessary.

Since you agreed to provide the value of the warranty as part of your concession on the sale, that money goes to the buyer, not you. If you take that money, and the buyer takes you to court, you would likely lose if the contract was written correctly.

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Just… no. Closing documents are legal docs. Without opening all of those back up, if the Title Company was arranging the warranty, etc. which they definitely were if they are sending the cash back to the OP then if the buyer took the seller to court for the $475, they'd have no leg to stand on in their case. In fact, if they even tried, a court would review and throw it out before the seller had to even waste their time.

There is no legal risk here. In fact, if you sent the buyer money back out of the contract then you are actually creating a legal risk (albeit probably a very small one) not only for you but also your wife, possibly her broker since they know about it, the other realtor and the seller.

People are bagging on this thread at this point but it is interesting in some ways. Loads of known real estate professionals in here seem confused by it and that's because not a lot of people think through the process and ask why when it comes to this stuff. I'm neither a real estate pro nor am I a lawyer but there's always a reason for the itemizations and conveyances in them.

The Title Company's job is to make sure they are all executed properly so if you are getting a refund after a buyer declined coverage whatever that means, then you have your answer.

I don't intend to do anything further except have the realtor ask the title company what happened to the $ and if the answer is the funds are still there at the title company ask them if they intend to provide me a refund. That's actually already happened but we'll ask one more time , and then likely just drop the whole thing . I agree with your comments.

halfastros81 said:

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I don't intend to do anything further except have the realtor ask the title company what happened to the $ and if the answer is the funds are still there at the title company ask them if they intend to provide me a refund. That's actually already happened but we'll ask one more time , and then likely just drop the whole thing . I agree with your comments.

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Do what you want-get your money. Don't listen to the silly fools on here making fun of you. Just a bunch of hens. You have a valid point, especially if this person does this in bulk as stated. Go get the money if you feel he is just pulling a fast. The real estate geniuses on here are just a bit full of themselves-going so far as to insult your wife, Good Lord! Ignore them.

It's hard to get a title company to hold $500 until a minor, agreed on repair is done. I'm surprised this money is still at title months later.

A LOT of people in here assuming the buyer had a mortgage.

Which the seller never says that they did.

With all the talks about fraud and crime- that seems to be a piece of the puzzle.

Diggity said:

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As far as the Fed's getting involved. Give me a break. After having seen real fraud run rampant in Rice Military for years, and nothing being done to anyone, I'm not going to hold my breath on that.

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Nobody is saying feds are going to get involved. Similar to a contractor who kicks cash back to a homeowner on an insurance claim under the table, if a mortgage is involved (and if there's a stated concession in a contract for a home warranty from somebody who is a known rental buyer… I'd say it is highly likely there is), doing this is technically fraud.

I'm not suggesting anything but sending a note back in writing saying this is technically fraud if you just don't want to hear from the other party ever again. Then… wait for your money to get returned to you and call it a day. Sounds like that's what the OP did so good choice.

it's an odd scenario for sure.

Obviously, title company doesn't want to play referee here. I would imagine once the buyer realizes they won't get the cash from the title company, they'll just default back to getting the warranty, then cashing it out. Just an added step. Everyone will be able to sleep easier at night, knowing they haven't committed technical fraud.

Diggity said:

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it's an odd scenario for sure.

Obviously, title company doesn't want to play referee here. I would imagine once the buyer realizes they won't get the cash from the title company, they'll just default back to getting the warranty, then cashing it out. Just an added step. Everyone will be able to sleep easier at night, knowing they haven't committed technical fraud.

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See… I don't think that's true.

The stipulation is something to the effect that if the buyer chooses to get a warranty seller pays no more than $xxx. This is why the Title Company being involved and who paid for it matters. If the buyer cancels, the check isn't going to come back to them… it'll go back to the Title Company… or it will go back to them, the Title Company will get notified and send them a notice for the money back.

ATM9000 said:

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Diggity said:

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it's an odd scenario for sure.

Obviously, title company doesn't want to play referee here. I would imagine once the buyer realizes they won't get the cash from the title company, they'll just default back to getting the warranty, then cashing it out. Just an added step. Everyone will be able to sleep easier at night, knowing they haven't committed technical fraud.

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See… I don't think that's true.

The stipulation is something to the effect that if the buyer chooses to get a warranty seller pays no more than $xxx. This is why the Title Company being involved and who paid for it matters. If the buyer cancels, the check isn't going to come back to them… it'll go back to the Title Company… or it will go back to them, the Title Company will get notified and send them a notice for the money back.

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I can promise you in practice, the reimbursement would go to the buyer, because it's their warranty. The issue here seems to be that they didn't even order the warranty.

The title company helps order the warranty as a service/convenience. It's not a requirement, and the buyer can order it outside the transaction and get a credit on the closing statement. They just have to show an invoice.

If it was bought that would be true, but homeboy got cute and declined it.