JohnSoPa- What have you decided upon doing- keep the money or give it back?

John will be giving the money back whether he's decided to do it voluntarily or not.

John also seems to have left the building; must not have liked our 'advice' to him.

I would not hesitate to give the money back IF I had not caught it from the start. It's not mine, it's not honest, it's not worth it.

Pretty Harsh responses here on this question. I think we are all assuming this guy has 10K sitting in the bank to fix a problem that was created by a professional. The scope of the transaction was not defined - if it was the sale of a $100,000 home then I agree it would be hard to miss a $10K mistake. On the other hand, if it was a $800K transaction it might not be as obvious. If this individual did not know of the issue, and has re-invested the money in his new home, he may not have the ability to simply write a check or drop down a credit card.

So, just to be devils advocate here, what about Errors and Omissions Insurance on the part of the professional? Are they not covered to handle these sorts of issues. Why should their lack of quality in workmanship and the mistake it created become a financial burden to this individual?

BTW, I think the HUD statement pretty much demonstrates all of the financial transaction and it is agreed to by both parties as part of the signing of the final closing documents.

I guess the answer here depends on which side of the transaction you sit in my eyes. I'm not as convinced it is black and white in the eyes of the courts and would advise this client to hire an attorney prior to any further discussion on this matter.

HUD agrees that it ends, but you sign documents that give the title/mortgage Company the right to find mistakes, fix errors, and perform further inquiries.

The bottom line is that if someone received 10k back from a transaction, they had an inkling that the money that was not theirs. I think we're being harsh because, if he'd LOST 10k, he'd have spoken up and would expect his money back. Mistakes happen and we have to do what's right to fix them. If the situation was reversed, he'd be the one screaming for justice.

"Pretty Harsh responses here"

Really???

What if were your $10,000 the guy had; would you want it back right away??? :p

But "Harsh" or not, the point is that it's not now, and never was his $10,000; he owes it back to whoever it belongs to.

The problem was created by a clerical or computer error of sort sort. He got 10 grand he shouldn't have, he knew it then, he knows it now, and he needs to give it back.

I can't imagine any court saying it's OK for him to profit from someone else's mistake.

Exactly.

I still disagree that he will be REQUIRED to pay this back. Everyone had given their apparent "moral" answer to this, but the reality is that he MAY not be required to pay it back.

He does need to see an attorney for advise on this, and it may well be that he will have to pay it back. But his chances are also that he may not.

I guess there aren't any real estate agents that left off an appliance on a contract, or to include something on a contract that they had to take care of either personally or via their errors and ommissions insurance. This is no different.

You knew you got an extra 10K--even if it were a 800K home--you knew you weren't suppose to. It's just the ethical thing to have done to step up and said something when it happened. Pay up..you agreed to fix any mistakes and errors on the HUD. Don't make them track you down....it won't be pretty!!

Bull!!

This is HUGELY different.

What if you were cashing a commission check for $1,000 at a bank and the teller gave you an extra $100 dollar bill.

Would you give it back???

Should you give it back???

Would you give it back of you knew the teller would have to pay the $100 out of her own pocket???

The 10 grand belongs to someone and it is not our guy here.

I posed this specific question to an insurance underwriter for an errors and ommissions company in Washington DC at the NAR Mid-Year last week.

This situation does come up, and it is one that is covered by errors and ommissions, and in fact many escrow companies cover these themselves without even using their E&O insurance.

In their opinion, it was a professiosal error.

So, as I said, it is not so cut and dried as to if he needs to pay it back. I'm not taking a moral stand here, only answering the question that was originally stated.

I agree with Wa Homes. Especially considering the person might not have known it was an error, might have already spent it, and might have a really tough time coming up with ten grand right now.

Some paid professional at closing screws up, and Joe Anybody now has to scratch and scrape to come up with ten grand to pay them back?

Most agents are broke or going broke, yet all of you except one are nailing this poor guy to the cross. How many of you guys could write a check for ten grand right now? I bet not many. I bet I could count on one hand how many of you could do it.

So I steal $50,000 from a bank and I go spend it all, they catch and arrest me and want it back... since there's no way I can come up with it that is your justification for them not being liable?

Weak!

-J

I think you may be missing a part of the puzzle here Josh. When the bank makes a mistake it is not tied to a contractual event like the purchase and sale of a home. Everyone involved in the process of a home sale has Errors and Omissions insurance to handle such mistakes, because there is no question they do happen.

I have not stated that to keep the money is ethical or not. It's not my position to put my opinion on it. The fact of the matter is that someone who was a PAID professional, and PAID by the buyer and seller in this transaction, made a mistake. Neither the buyer or seller have a responsibility for their mistake and should not have to pay for their mistake.

If this seller/buyer had to go out and borrow money to pay this back, it would come at an expense to them, an expense they should not have responsibility for and should not have to pay.

It's no different than when you get in a car wreck. Should some poor insurance company have to pay to fix your car when you make a mistake and rear-end another car, is that fair to them to pay for your mistake? No, it's not fair, but that is what insurance is for, to cover for mistakes.

This particular insurance is called ERRORS and OMISSIONS for a reason - an error or an omission.

I am not a Lawyer, but I believe this is called unjust enrichment. The money must be returned. It may be a hardship to return all the funds at once, but I think the closing company would be willing to work out some type of repayment. The buyer was not damaged, he was made richer. How is he suffering? Unless he can't sleep at night knowing he just took $10,000 that's not his.

The closing company may be covered by E & O insurance, but their rates will suffer over the long run.

Do the right thing and give the money back!