We sold my grandma's house and escrow won't give us a clean title because it came out that my grandma (who passed away) owes $15,000 on the house from a loan that was taken out in 1980, but no bank can find the loan!! In 2012 my grandma took out a $75,000 home equity loan and how come it was not caught then!? Does this estate have to pay this 35 year old loan? No statements or anything were ever mailed out. My grandparents were married at the time and my grandpa continued to buy acres of property and it never came out!! What can we do?
"Escrow wont clear a title". Escrow companies handle paperwork and facilitate the exchange of deeds, money, and other items between the parties. Escrow companies would have no power or duty to be clearing titles.
Your family likely need to go to court for the court to determine whether any money is to be paid to anyone.
The escrow company likely will put the money into the court registry via an interpleader action.
Your family can review the specific facts with attorneys to find out what the legal options are.
You are probably not obligated to pay the old debt, but that doesn't mean that a title company has to issue an insurance policy guarantying your buyer that the old loan is not a "cloud" on title. You will need to do some work to clear the old loan from title, and that could entail filing a "Quiet Title" action. I suggest you seek assistance from a qualified attorney.
DISCLAIMER: This answer does not constitute legal advice nor does it form an attorney-client relationship between the questioner and responder. You should seek competent legal counsel in your jurisdiction to address any specific legal concerns you have.
The escrow company will not be able to remove the 1980 mortgage. The title report shows that it was not released, so it looks like money is still owed, but that is very unlikely 38 years later.
Work directly with the title company that issued the title report. Expect you will have to investigate to find evidence that the 1980 loan was paid off. When would that have been paid? If paid by an escrow company, that escrow company can record a declaration of payment to remove that old mortgage. Investigate whether the $75,000 mortgage got a title policy. If that was insured, there may have been an escrow that paid the balance due for the 1980 mortgage. There is authority [61.24.110(1)] that the heirs could directly request the Trustee on that Deed of Trust to reconvey [release] that mortgage. But they will need evidence that loan was paid. It is usually easier to get a Request for Reconveyance from a successor mortgage company than it is to pursue a quiet title action.
There is no attorney-client relationship established between me and other persons who may post a question or answer. My opinions are without investigation of the facts, based on presumptions. My opinions may not be relied upon as the opinion of my employer or used against the company in a claim.
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