[CA] Do I have legal recourse against my mortgage company?
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You may have legal recourse against the mortgage company to force them to release the remaining funds from your escrow account. The mortgage company, acting as an escrow holder, has a fiduciary duty to comply with the escrow instructions and to act with reasonable skill and ordinary diligence. If they fail to do so, you may have a cause of action for breach of contract or negligence.
Breach of Contract:
An escrow holder must comply strictly with the instructions of the parties involved in the escrow agreement. If the holder fails to carry out an instruction it has contracted to perform, the injured party has a cause of action for breach of contract (Tribeca Companies, LLC v. First American Title Ins. Co., 239 Cal.App.4th 1088 (2015)).
If the mortgage company is withholding funds without a valid reason and contrary to the escrow instructions, you may claim that they have breached the agreement.
Negligence:
If the escrow holder acts negligently, they can be liable for any loss caused by their breach of duty (Gordon v. D & G Escrow Corp., 48 Cal.App.3d 616 (1975)).
If the mortgage company’s delay in releasing funds is preventing you from completing the rebuild, this may qualify as negligence.
Duty to Act with Reasonable Skill and Diligence:
Escrow holders must exercise reasonable skill and diligence. Failure to do so can support recovery under tort law (Diaz v. United California Bank, 71 Cal.App.3d 161 (1977)).
Conflicting Demands and Interpleader:
If the escrow holder faces conflicting demands, they can withhold funds temporarily or file an interpleader action—but they can’t simply refuse to act without justification.
Conclusion:
You may pursue legal recourse under breach of contract or negligence theories if the mortgage company is unreasonably withholding escrow funds needed to complete reconstruction. You could start by sending a formal demand letter through an attorney citing these cases and requesting release of funds within a specific timeframe.
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Do I have any legal recourse against a mortgage company to force them to release my money from an escrow account?
I understand your concern. Have you already tried reaching out to the mortgage company to request the release of the funds from the escrow account?
Yes.
Can you provide more details about the specific terms of your agreement with the mortgage company regarding the escrow account?
I had a loss due to a fire. My home was destroyed. The insurance company paid me $600,000 and the mortgage company put it in escrow for me to rebuild. They have distributed half of my money. I’ve used over $100,000 of personal funds to get the home to 90% complete. I need the funds to pay contractors and complete the few remaining steps.
Is there anything else the lawyer should know before I connect you? Rest assured they’ll be able to help with releasing your escrow funds.
Yes.
Greetings, my name is Esquirechamp. I see you have a question about legal recourse against a mortgage company to force them to release your money from an escrow account. What state is this occurring in?
California.
You may have legal recourse against the mortgage company to force them to release the remaining funds from your escrow account. The mortgage company, acting as an escrow holder, has a fiduciary duty to comply with the escrow instructions and to act with reasonable skill and ordinary diligence. If they fail to do so, you may have a cause of action for breach of contract or negligence.
Breach of Contract:
An escrow holder must comply strictly with the instructions of the parties involved in the escrow agreement. If the holder fails to carry out an instruction it has contracted to perform, the injured party has a cause of action for breach of contract (Tribeca Companies, LLC v. First American Title Ins. Co., 239 Cal.App.4th 1088 (2015)).
If the mortgage company is withholding funds without a valid reason and contrary to the escrow instructions, you may claim that they have breached the agreement.
Negligence:
If the escrow holder acts negligently, they can be liable for any loss caused by their breach of duty (Gordon v. D & G Escrow Corp., 48 Cal.App.3d 616 (1975)).
If the mortgage company’s delay in releasing funds is preventing you from completing the rebuild, this may qualify as negligence.
Duty to Act with Reasonable Skill and Diligence:
Escrow holders must exercise reasonable skill and diligence. Failure to do so can support recovery under tort law (Diaz v. United California Bank, 71 Cal.App.3d 161 (1977)).
Conflicting Demands and Interpleader:
If the escrow holder faces conflicting demands, they can withhold funds temporarily or file an interpleader action—but they can’t simply refuse to act without justification.
Conclusion:
You may pursue legal recourse under breach of contract or negligence theories if the mortgage company is unreasonably withholding escrow funds needed to complete reconstruction. You could start by sending a formal demand letter through an attorney citing these cases and requesting release of funds within a specific timeframe.
Thanks.
