Escrow for DOB violations during closing

Current situation for us is that we are 2 months into the executed contract. Since day 1, we notified the seller to address the 2 open DOB violations for the exterior retaining wall. We ran and paid for title search prior to signing the contact. They promised they will do everything and it will not be a problem.

Fast forward, the seller finally got the plans and permit approved by the DOB and will start work next week. We have less than 4 weeks before we hit the 3 months mark on the contract. The seller agent keeps telling us the seller is antsy and we should entertain the escrow for the violation in case. If not, the seller can just walk away from this deal and sell it to another party for more money now.

We contacted our bank mortgage and the bank attorney seems to be ok with the escrow for the violation as long as the amount held is reasonable. Our attorney describing the escrow process to us and said there is a risk in escrow for violations work. Funds will be held on both end, seller will give money to seller attorney for escrow and we have to give funds to be he ld by bank escrow. Sometimes the fund are NOT released and we have to sue them for it? Is this correct? why the heck do I need to give extra money out? its not normal for the seller to give money to our bank to be held? What happens if they don’t release the money? Has anyone had to deal with escrow for violation during their closing process? how was your experience?

namahs

in General Discussion 8 years ago

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resident2 | 8 years ago

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It sounds like either your attorney is not a townhouse Real Estate attorney or you are not understanding what is being said.
If you have a contract to purchase a house with conditions that the seller is obligated to complete. Then due to DOB or sellers contractors etc the seller cannot get it done in time for the “on or about” closing date in the contract, the seller CANNOT just cancel the contract and sell it for a higher price! You have a valid contract to purchase.
You the buyer can negotiate if you really want to close sooner rather than later, but you do not have to unless there is a “time of the essence” clause in the contract, which again if you have an experienced Real Estate attorney, I cannot imagine that he/she would have let that stay in.
Your Bank will extend the commitment, you may have to pay a “lock fee” to lock in the interest rate, but that will be much cheaper than taking on a DOB violation construction job.
If you do want to close and take an escrow, it is the seller that leaves the escrow if you are expecting the seller to complete the work. Or you can take a discount on the price from the sellers, for the work that the seller did not do; and that amount will be held in escrow to insure to the Bank that you get the job done, you pay your contractors, expediters etc to clear the violation, the escrow is released to you, it is held in your attorneys escrow account with an escrow agreement with the Bank.
Get at least 3 estimates from expediters & contractors to clear the whole job, the average price is what you will accept from the seller.