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FUNDS RETAINED FROM THE SELLER – THE USE OF ESCROW ACCOUNTS AFTER A CLOSING

August 9, 2016 Leave a comment

There are a few categories of real estate transactions in which certain potential liabilities could occur or “appear” after the closing.  In this regards, I want to shed some light on how to handle these situations through the use of an escrow accounts are, communicate why sometimes funds need to be withheld from the seller, and when and how are the funds subsequently disbursed. 

In this regards, any deposit into an escrow account requires an “escrow agreement” to be executed by the parties and the entity holding the funds.  I want to further note, that the closing notary is not a party to this agreement.

The purpose use of the escrow account I am referring to in this post is quite specific and different to the use of escrow accounts for a closing across the United States.  The issue I want to cover, is the need to withhold funds from the seller to protect the buyers from a potential condition that may require funds from the seller in the future.

Once a property is sold, the seller may elect to “travel the World” or go and find new adventures elsewhere.  If the buyer of a property is confronted with a situation after the closing which the seller is responsible for, the buyer may have some difficulties in achieving compensation from the seller.  While this is not a common occurrence and not all possibilities can be predicted, there are some circumstances which warrant the use of an escrow account.

An example of the potential need for an escrow account after the closing are property taxes. 

A seller of a property has to transfer the rights to the buyer with zero balance owed and with the records properly updated.  Sometimes, a property is not appraised for property tax purposes and the taxes have not been paid up to the date of the closing.  Under such circumstance, a buyer may elect to proceed with the closing anyhow. 

The amount of the tax exposure would be estimated by the title insurance company and the funds equivalent to this estimate would be withheld from the proceed of the sale and deposited into an escrow account until the tax situation is cleared.  The amount finally owed would be paid from the escrow funds and any leftover balance (if any) would be returned to the seller.

Another situation is a loan which has been paid-off but the mortgage was not timely canceled by the seller.  The buyer or his/her title insurance company would demand that a given amount of money be placed into an escrow account while the mortgage is being cancelled.  Once the mortgage is successfully removed from the Property Registry, the funds held in the escrow account would be disbursed to the seller.

Regardless of the situation which warranted the use of an escrow account, once key element is noteworthy.  The agreement to deposit the funds into an escrow account is by the parties in conjunction with the title insurance company who manages the escrow account.  This agreement will manifest the requirements needed for the funds to be released in the future.  Until those requirements are met, the funds will not be released.

The parties must understand that the eventual disbursement of the funds depends on: (1) full compliance with the requirements of the escrow agreement to the satisfaction of the entity managing the escrow funds; and (2) a consent by both parties to this entity . 

Why (and When to) Speak to a Real Estate Lawyer When Purchasing a Property in Puerto Rico

May 20, 2015 Leave a comment

I am frequently asked when is the oportune time for a buyer to speak to a real estate lawyer when performing a real estate transaction in Puerto Rico. Through this video I clarify when and why.

Yes, the answer may seem obvious to most readers.  My recent (surprising) experiences on this subject have motivated me to publish this video which I hope you will enjoy.

Yours,

Santiago F. Lampón

Adverse Possesion Claims – A note about “possesion”

August 28, 2012 1 comment

I present to you a new video on the subject of adverse possession.  In this video, I focus on an aspect of adverse possession claims in Puerto Rico which is easily misunderstood.  As an additional note, you may also read my recent article on this subject here.

I hope you enjoy the video and the article, and always remember that you may post questions or comments on this or other subjects.

Adverse Possession in Puerto Rico

August 20, 2012 Leave a comment

On January 24, 2008, I published an article on this blog which I have expanded and re-published at www.PuertoLegalBlog.com which you may access and read here completely free.

The revised article is fully applicable to adverse possession claims in Vieques.

Yours,

Santiago F. Lampón

Exequatur in Puerto Rico

August 15, 2012 Leave a comment

Dear Subscriber:

Here is a link to my newest article on the subject of “exequaturs” in Puerto Rico.  Click on the link and you will see a definition on what the process is and its uses.

http://www.puertoricolegalblog.com/exequatur-in-puerto-rico/

I have had to work with many of these in Vieques.

Yours,

Santiago F. Lampón

Forced Heirs Law in Puerto Rico – An Introduction

August 13, 2012 2 comments

Dear Subscriber:

I present my latest video, this one on the subject of Puerto Rico Foced Heirs Law, a subject I commonly confront in my practice.  Please remember that I welcome any questions or comments on the subject, and perhaps your question can become the subject of my next video or post.

Very truly yours,

Santiago F. Lampón

Wills Not Executed in Puerto Rico

July 27, 2012 Leave a comment

Dear Subscriber:

Here is a link to my video on wills not executed in Puerto Rico.

Very truly yours,

Santiago F. Lampón

Forms of Deeds in Puerto Rico – Some further comments

July 21, 2012 Leave a comment

Dear Subscriber:

A reader posted a question on my video post about Forms of deeds in Puerto Rico.  The question was very interesting and got me to write a detailed comment in response.  Follow this link to gain access to  this additional information which I hope you will find useful.

Very truly yours,

Santiago F. Lampón

The Form of Deeds in Puerto Rico

July 16, 2012 2 comments

Dear Vieques Law Subscriber:

I have adventured into the area of using videos to communicate various aspects of law in Puerto Rico.    I found that through a video I am able to present some examples and additional information which I am not able to do through an article.  This video will give you a taste of such an accomplishment.

I do want to note that this is my first attempt, and I am sure I will improve the overall quality as I do more of these.  Hopefully you will still enjoy it and find it useful.

You may post comments about the video (or anything else for that matter) here in Vieques Law Blog, or directly in the video channel the link will take you to.

Very truly yours,

Santiago F. Lampón

Powers of Attorney and Real Estate Transactions in Puerto Rico

July 11, 2012 Leave a comment

Dear Vieques Law Subscriber:

I have posted an article on this subject which you may read here.

Please follow the link above for the article.

Very truly yours,

Santiago F. Lampón

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