Does a lender have the right to withhold funds fromthe purchaser of a homeregarding the construction of deck?
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Does a lender have the right to withhold funds fromthe purchaser of a homeregarding the construction of deck?
Purchase agreement states the seller to provide labor for deck, buyer (us) to provide materials. Appraisal does not note any hypothetical situations, and deck was not included in appraisal, appraised to loan amount plus 20% down. Seller has since provided us with money in lieu of labor, which is fine. We have purchased deck materials, provided receipts but lender will not release escrow until we pay to have additional appraisal of deck. Can the lender continue to legally hold this and require payment? Not sure why this money was ever withheld from us and not the seller.
Asked on July 1, 2011 under Real Estate Law, South Dakota
Answers:
FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
To answer your question, you need to read the terms of the loan that your lender provided you in conjunction with the appraisal that the lender is relying upon to make the loan. Does the appraisal or any third party reports sent to the lender mention any potential code violations or improper construction needing repair?
If so, this is most likely the reason why the lender is holding up the close to make sure required work is done and a new appraisal made to make sure the home appraises for the amount of the pruchase price to protect its loan to be funded for the purchase.
In a nutshell, the lending institution seemingly wants the escrowed money earmarked for work to be done on the deck to actually be used for the work and not pocketed by you as the buyer where the deck work must be completed before close of escrow.
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