If you closed through a mortgage company you may have had an Insured Closing Protection Letter. It probably cost you or the seller $25 - $35 and it will be on your Closing Disclosure or HUD-Settlement statement. That ICL (or some call it a CPL) will insure over certain things, misuse of funds is definitely one but I think it also covers lien position. Seems your problem could be covered by This. If you got a copy of commitment or policy look for the contact info for the underwriter (First American, Old Republic whoever) and call them. If there are several of you that this has happened to that person will likely be prohibited from issuing further title commitments. If you paid for the insurance SOMEONE WILL MAKE YOU WHOLE. I might recognize the closing agents name if you want to pm me.
Icl/cpl would likely only be demanded by a lender. Very unusual for a borrower/buyer to request one unfortunately.
A copy of the closing statement showing charges and to whom they were paid would really answer a lot here.
