Buying a House, Escrow Company Force Me to Clear Past Statute of Limitations Debt

[maxim_2010]

My question involves real estate located in the State of: California

I am buying a house and its in the process of being completed. The loan is approved and money is transfered to the escrow company already. But suddenly today the escrow company told me that I must pay $3000 to a collection agency or they won't complete the escrow. The escrow company said the collection agency can place a lien on the house.

The $3000 debt is from an account with last payment date of 2001 August. I am in California and it is obviously past the SOL. The escrow company says I need to get a cashier's check in that amount payable to the escrow company and then after the escrow is completed, they will forward the $3000 to the collection agency.

I am in a bind because if I don't pay the $3000, the escrow company will cancel the escrow and I'll be responsible for losing the deposit, all fees, etc.


1. Do the escrow company have the authority to force me to clear this debt?
2. How can the collection agency or the creditor still collect on this debt when it's past the SOL? How can they place a lien on my house for this debt?

What should I do in this situation?

[maxim_2010]

Update: Sorry, left out a key detail. Escrow called me and said I needed to clear the debt from the OC or they will not fund the loan. I checked the documents and there was indeed a line in the prior to funding instructions that says this: "Evidence That The Collection For "OC Account #" has been satisfied" in the last line. The escrow said that the OC can put a lien on the house so I must clear the debt before they will continue with the funding.

I don't know how I overlooked this but since this line is in the loan documents, does that mean I acknowledged the debt is valid when I signed it? Since the SOL is expired, doesn't that mean I legally satisfied the debt already?

[LawResearcherMissy]

Since the SOL is expired, doesn't that mean I legally satisfied the debt already?

No. All expiration of the SOL means is that if the OC or a CA drags you into court, you can raise an affirmative defense of the SOL being expired and have the case dismissed.

You still owe the debt, the creditor simply cannot obtain a judgment against you for it.