Legal Question in Real Estate Law in New York

Sellers purchasing Title Insurance to deliver title.

Am purchasing the property in CA cash. The Title report now 3 days before closing indicate an Exemption for a $23,200 debt since they could not find a letter of Satisfaction nor Reconveyance, yet sellers claim the debt (a deed of trust) was paid off back in circa 1980.

The CA Escrow company has indicated that proceeds from my purchase will NOT be used to pay off the debt that the Title report and Title policy are deeming exempt from their Title Insurance insurance, since the sellers are disputing it, claiming the debt was paid off decades ago but a letter of satisfaction cannot be obtained, since Safeco was acquired multiple times over the past decades.

This is the first time I've seen an Escrow company NOT withold money for a debt that there isn't any proof of satisfaction nor reconveyance for. What is going on? The escrow company tells me title will clear but it's just that the seller's title policy is not going to cover the $23,000 if Safeco attempts to collect the ambiguous debt in the future.

Is this considered the sellers attempting to convey the property I am purchasing (a regular sale) with a cloud over it?

Thinking forward, when I choose to re-sell the property, will the seller's 23,000 debt resurface as an encumbrance on my future title search/policy?


Asked on 4/25/14, 9:30 am

1 Answer from Attorneys

David Slater David P. Slater, Esq.

This will be a cloud on title and you may never be able to sell. An action should be brought in court by your seller to quiet title.

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Answered on 4/27/14, 4:08 pm


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