RELEASE OF MORTGAGE

Once upon a time, a buyer was about to purchase a property that still had an outstanding mortgage with a local bank. Since the seller didn’t have the funds to settle the loan, he asked the buyer to pay off the remaining balance directly to the bank—an arrangement the buyer accepted.

On the day of closing, the buyer paid the mortgage balance to the bank and gave the seller the agreed net proceeds.

Two weeks passed, but the bank still hadn’t released the title. Curious about the delay, the parties followed up—only to discover that the bank was withholding the title until the seller paid off HIS SON'S delinquent car loan.

If you were the buyer, what would you do?

What if the seller refused to settle the car loan, arguing (correctly) that it was legally separate from the property and not grounds for the bank to hold the title?

In another real estate transaction, the bank refused to release the property title unless the seller first settled his outstanding credit card balance. The catch? The seller was in the middle of a dispute with the bank over those charges—and was unwilling to pay.

This raises a critical issue: even when a buyer pays in full and fulfills their end of the agreement, the transaction can still be held hostage by unrelated debts tied to the seller.

Why does this happen? Is it legal? More importantly, how do we protect buyers from getting caught in the middle?