buyer didn't want home warranty

Last month we closed a transaction - conventional loan with a large down payment.  On the HUD-1, pursuant to the sales contract, the seller paid for a home warranty.  We remitted the fee to the home warranty company.

Today I received a call from the buyer who said he had contacted the home warranty company and cancelled it.  They told him they would be sending our check back to us.  He was calling me because he wanted that money.  I told him I couldn't redirect the money to him.  I would be refunding it to the seller.

He then explained that he never wanted the home warranty and had asked the real estate agent to change the contract and have the seller give him a credit for the fee.  There was no seller assist in the contract so there wouldn't have been any problem, I think, getting approval from the lender to do this.

For some reason his agent told him to just take care of it outside of the closing.  This is how people get into trouble.  There is no way the consumers would know that doing things outside of closing isn't kosher.

home inspections and home warranties

Here's a comment I posted in a conversation on the Inman site. They are discussing referral fees.

The very idea of a home inspection company sending a kickback to a real estate broker makes me want to puke.

I can think of no better example of abusing a fiduciary duty and one more great reason for consumers to ignore referrals coming from their real estate agent when selecting inspection companies.

Savvy consumers should hire inspectors who are not suffering from conflicts of interest such as maintaining a referral relationship with the real estate agent. That basic conflict alone is sufficient warning to beware, but add a kickback to the equation and you've got a more serious problem than a RESPA violation.