Can a bank be sued for not following regulations that require funds be verified in the buyers account before closing?

UPDATED: Oct 1, 2022

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Can a bank be sued for not following regulations that require funds be verified in the buyers account before closing?

The buyers of our home went to closing last month without the funds needed. The

woman was to gift her boyfriend with a cashier’s check for $117,000 but the bank who did the loan for our home never verified those gifted funds as being in the buyer’s account. So as we were with a moving truck on our way to our new home we found out it fell through. We lost money, etc. because they never verified.

Asked on October 3, 2018 under Real Estate Law, Iowa


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

No, it is not the bank's obligation in regards to you to verify the funds; they are not liable for not doing so. Banks do not guaranty that money represented to be in someone's account is in fact there. The person to sue is the buyer, since he breached his obligations, and possibly also committed fraud, by making a false representation: you would sue him for your losses, based on breach of contract and/or fraud.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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