HARRISBURG PA – A change to the Pennsylvania Real Estate Licensing and Registration Act, signed into law last Monday (July 6, 2009) by Gov. Edward Rendell, might prevent heartache for future purchasers who find their dream home deal has fallen through.
Senate Bill 241, written by Bucks County (PA) state Sen. Tommy Tomlinson and passed unanimously by both the House and Senate, alters “the way consumers may receive escrow funds in real estate transactions,” a press release from his office reported.
Current law requires that escrow funds – monies held on deposit while a real estate deal is pending – get tied up if it isn’t completed. Unless the buyer prospects file a lawsuit to retrieve their funds – and even if they do, there’s no guarantee they’ll win – the money remains inaccessible.
When the new law takes effect, on Sept. 6, escrow funds could be released if all parties have earlier agreed in writing.
Escrows have become a much-lamented problem as, given financial difficulties presented by the current economic recession, a number of new home builders filed for bankruptcy. Several purchasers reported they had amounts of $20,000 or more tied up in escrow accounts, and they could neither close on the home they wanted or have their money returned to buy a different one.
“This legislation will provide that escrows may be released if there is a prior agreement and the parties agree to the release of some or all of the monies, or a court orders release of the monies,” Tomlinson said. “This will provide clarity and protections to a process that presently ties up money and fails to give direction on how the money is distributed.”
The change which is not retroactive.
This article was originally published on the Polley Associates‘ blog