Have you ever dealt with a company that frustrated you so much so that you wondered how they could stay in business? This happened to me recently. Despite the headaches, I will withhold the company name for a couple of reasons:
- I am not in the business of destroying someone else’s business.
- Having established and running small businesses of my own, I know how much effort goes into establishing a business, keeping it viable, and making it thrive.
- If you are a real estate broker in southeast Michigan and would like to steer clear of this title company, please ask the question via the contact page on this website. Identify the name of the title company that you are about to use, and I will simply indicate “Not the one” or “This is the one.”
- If anyone from this very company that caused me so much headache and wasted time were to read this post and want to improve, hopefully, this writeup will help them do just that.
Most investors, like us, have a favorite title company that we know performs efficiently and effectively, leading up to and at closing every single time. Whenever I am in the driver’s seat, I get to use my favorite one. When the choice is in someone else’s hands, we need to go along with it. This is how we were introduced to this title company from hell.
Among the many issues encountered, I will focus solely on the one involving the handling of money. Thanks to the information sharing by local, state, and national associations of REALTORS®, I have been aware of how to prevent potential frauds from occurring. Several years ago, when no one used to suspect fraudulent activities, some buyers lost hundreds of thousands of dollars. In many cases, funds ended up being wired overseas, never to be seen or recovered.
Making a long story short, for brokers (like me), the best way to steer clear of fraud is to NEVER be involved in the handling of any money transactions, such as earnest-money deposits (EMDs). Our role is simply to advise our clients on how best to make fund transfers airtight.
From the start, it has been our policy that we do not accept EMDs at our office. Instead, our clients are advised to deposit the money directly at the title company where the closing is scheduled to take place. Every title company should have an escrow account(s) set up specifically for this purpose.
On 10/12/2020, one day before the scheduled closing date, I received an email from the processor indicating that she could not find either the wired funds or EMD. My immediate thoughts were: “You must be joking. What kind of a disorganized outfit is this?” Thanks to our client who had records of both deposits, we were able to provide information to that effect. The EMD was brought to the title company by our client on 09/29/2020, and the remaining funds for closing were wired from the client’s bank directly into the title company’s escrow account on 10/08/2020.
Shortly thereafter, the processor was able to find the wired funds, but not the EMD. Then she said, “You must have the EMD because we don’t have it.” This was an immediate red flag about this title company. I said, “Excuse me?” “We do not accept any EMDs at our office.” “In fact, our client deposited the EMD himself at your office on 09/29/2020.”
Either this title company is extremely disorganized, incompetent, and/or one or more of its employees is/are fraudsters. My hunch is that there is a fraudulent insider(s) who needs to be reported to the police and fired.
Regardless, the moral of the story is that if you are an agent and/or broker, NEVER get in the middle of money transactions.
Happy investing!
p.s. As if the above story was not enough, as of this posting, which is several days after closing, we are still waiting for the commission check – issued by this title company using a Chase account – to clear at our bank. (Typically, checks clear within 24 hours of post-closing deposit.) Our bank indicated to me that there has been a slight modification with the issuer’s information on the check and, therefore, was withholding the funds for the protection of both the title company and me.
