[WSBARP] wrong written payoff - and closing halted

[Bickel, Dwight]

The lender is not required to state that the indebtedness is satisfied on a request for reconveyance.

In most cases (this happens more often than you would imagine), the response from the lender that the payoff was insufficient is done AFTER the closing legally occurred. The post says “closing halted,” but I am confident the closing was not halted. There’s no way the lender received the payoff prior to the closing.

In that event, the lender is obligated to reconvey its deed of trust based upon the incorrect payoff because the escrow/title companies, the purchaser and the new lender reasonably relied upon that for the closing.

The lender is not required to state the debt is paid, and is fully entitled to collect all that is due from the seller. The lender cannot require the escrow company to pay it, or even require the escrow company to enforce collecting from the seller. In most cases, the escrow disbursement of proceeds was delivered to the seller before notification by the lender that the payoff is insufficient.
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