Dear Mr. Feichthaler,

I provided seller financing to a buyer a few years ago, and she dutifully paid the monthly payments until the mortgage was paid off. However, she set payments on auto-pay from their bank, so the payments kept coming, $4,000 a month for 10 extra months. I didn’t even notice. She now realizes her mistake and has informed me she wants her money back. Do I need to pay her back? I already used the money to buy a new car, and don’t have the money to pay her.

— Peter C.

Dear Peter,

It is unusual that a borrower would overpay on a note and mortgage, but it does happen, especially when payments are made automatically. I trust you have prepared and recorded a Satisfaction of Mortgage, so at least your mortgage will not continue to be against her property. This should have been done at the time full payment was made, 10 months ago.

I address issues like this with clients by asking them a question — what would you expect to occur if you overpaid $40,000 on a mortgage on your house with Bank of America? Would you say, “It was my fault making the overpayment, let Bank of America keep my $40,000?” I think the answer for 100% of my clients would expect the $40,000 back. It simply isn’t the property of the bank, it is the borrower’s and was paid in error. In your situation, you are acting as the bank, and the buyer was the borrower. What claim to the funds do you have other than “Finder’s Keepers?” From a legal perspective, you probably don’t have any. I recommend you engage an attorney (not me) to review your options with you to see what defenses or rights of setoff you may have. If you ignore this situation, you can expect a lawsuit filed against you for return of the funds.

Eric P. Feichthaler has lived in Cape Coral for over 30 years and graduated from Mariner High School in Cape Coral. After completing law school at Georgetown University in Washington, D.C., he returned to Southwest Florida to practice law and raise a family. He served as mayor of Cape Coral from 2005-2008, and continues his service to the community through the Cape Coral Caring Center, Cape Coral Historical Museum, and Cape Coral Kiwanis. He has been married to his wife, Mary, for over 18 years, and they have four children together. He earned his board certification in Real Estate Law from the Florida Bar. He is AV Preeminent rated by Martindale-Hubbell for professional ethics and legal ability, and is a Supreme Court Certified Circuit Civil Mediator.

Mr. Feichthaler can be reached at eric@capecoralattorney.com, or (239) 542-4733.

This article is general in nature and not intended as legal advice to anyone. Individuals should seek legal counsel before acting on any matter of legal rights and obligations.