Real estate mishap: Funds sent to the wrong account

Hi everyone!

I decided to join this forum because I’m dealing with what I think is a pretty unique headache.
Basically, I purchased a property about a year ago. It was an all-cash deal, so there isn't a mortgage tied to it on my end.
About two months ago, I started the process of getting a lien release from the Federal Reserve, which was the institution handling the seller's original loan.
Here is where things got messy: I transferred the full amount to the account the seller provided, which turned out to be his own account at a different bank, JP Morgan Chase. Because of how it was structured, the Federal Reserve is refusing to issue the lien release, and to make matters worse, the company that sold me the property has gone into bankruptcy.

Help!

It’s tough to find much leverage here—it basically looks like you handed cash directly to the seller rather than transferring it to the lender holding the mortgage. In this scenario, we're talking about the Federal Reserve.

Did you have a lawyer or a real estate agency managing the closing, or was this more of a "DIY" situation? Did you even sit down with the Federal Reserve to negotiate anything at all? And honestly, why wasn't the lien release issued the moment the payment cleared—why wait ten whole months to finally raise the issue?

Maybe try reaching out to the bankruptcy trustee, there might be a way to claw something back if you play your cards right...

The whole purchase was basically handled by our attorney. We all signed the contract right there in his office. To be honest, none of us really pushed for that waiver because, looking back, nobody realized just how critical it actually was or how much of a headache it could cause later on.
How much does that mortgage actually weigh down the property? Especially if I decide I want to sell it down the road.

You need a lawyer—and I don’t mean the one who handled the closing. Look, the mortgage might not be a headache for the seller, but for you, the buyer? It’s everything. Did the seller really hire a lawyer who thinks a mortgage is just some minor detail? 🤦

I hate to say it, but you're in a tough spot.

I’m trying to wrap my head around just how much this mortgage actually encumbers the property, and more importantly, whether my ownership status is actually at risk here.
Also, what does it legally imply that I'm listed on "list b"? I discovered today that several other neighbors in my building were also essentially taken for a ride by the exact same seller. 😁
How much leverage do we really have with an attorney if the preliminary purchase agreement specifies one bank account, yet we all ended up paying into a completely different one like a bunch of sheep?
😵

JPMorgan Chase gave the former owner a loan and filed a mortgage against the property. If that guy defaults, the court is going to step in, sell the apartment, pay off the bank first, and then—if there’s anything left over—hand it to you. So, yes, your ownership could absolutely be put at risk here. You don't just buy a place that has an active mortgage attached to it; that's common sense, right? If a mortgage already exists, you have to work with the bank holding that lien to get it cleared—essentially using the sale proceeds to settle the debt so the title comes clean.