Q: I had money placed in escrow when I sold my house. The money was for a repair agreed to in the contract, although the new home owners did a full replacement.

My closing attorney has been trying to reach the buyers for the last 3 years since we closed to try to release the escrow money to them. They never responded to him.

He told my buyers that he would give me back the money if he didn’t hear from them in 30 days. They didn’t respond, so he sent me the cash. Now they’re requesting the money. What are my options?

A: The money was put in escrow to repair an item. The fact that the buyers replaced the item rather than repaired it doesn’t mean that they’re not entitled to apply the amount in the escrow account toward the replacement.

However, the buyers had a responsibility to make the repair promptly and to obtain reimbursement from the escrow. If they waited too long, they may lose the opportunity to be reimbursed.

There are two issues here, one moral and the other legal.

When you sold the home, the agreement for the repair should have had certain conditions in the document. That document should have given a certain amount of time for the buyers to make a repair and make a claim to the escrow. If they failed to make a claim within the allotted time, they would lose the right to claim reimbursement.

If the escrow agreement gave no time limit, then, the closing attorney may have been in error returning the money to you and the buyers should still be entitled to reimbursement.

From the moral point of view, you have to determine whether you agreed to reimburse the buyers for an item required and whether they spent the money to make the repair.

If the buyers fixed the item and it cost them the full amount that was held back from the closing, you probably knew when you put in the money at the closing that you would never see the money again. There’s a part of you that believes the buyers should keep the money. That may not be a legal determination but may be the right outcome.

I’m not sure your closing attorney made the right decision. While the buyers should have responded far sooner to his request, the attorney could have simply cut a check to the buyers after the closing and called it a day.

For more details on other options you might have regarding this escrow account, please consult your own real estate attorney – not the closing attorney.