Escrow's Worst Nightmare - Calling the Buyer for Additional Closing Funds

There is nothing worse for an escrow officer than calling a buyer and asking them to bring in additional funds in order to close.  Here's a quick success story we had last month that prevented this from happening...

Last week, Theresa and I had an interesting situation pop up at Chicago Title Gilbert on one of our relocation account transactions.  As you may know, when the seller is a relocation company (we'll call them relo for short), there are a few extra hoops to jump through.  Relo insists on seeing the back-up for every single seller charge on the HUD-1.  Home Warranty, HOA fees, county taxes, and fees paid by listing agent.  Most of the time, this involves tracking down any invoices the listing agent may have paid during the listing period.  These are things like gas and electric, water, landscaping, etc.  This is all pretty standard, and Theresa has been working with some of the same managers at the relo companies for years now, so she knows the drill.


The escrow in question, invoved a problem with county taxes.  In Maricopa County, property taxes are paid in arrears, twice a year.  First half late Nov 1, Second half late May 1.  This is usually confusing to most buyers and sellers, and I've developed a quick little calendar I use at the closing that makes it very clear how tax proprations and payments are handled (but that's another post)  


So on our problem child, an escrow closing in September, Theresa had shown as paid the 1st 1/2 2009 taxes in escrow, and prorated the 2nd 1/2 taxes between the seller (relo) and the buyer.    Relo approved the audit we sent them, and we signed the buyer and collected their closing funds.  One day later, relo called to say our HUD-1 was incorrect, and that they had paid the entire 2009 tax bill 3 days ago.  To avoid getting too technical or teach a math class, the net effect of relo making that payment meant the buyer would have to come in with an additional $1700, and they would not get any of that back until one year later when their lender did an escrow analysis of their tax and insurance impound account, dicovered the overage, and refunded it to buyer. Not good!


I personally know some escrow officers that would simply say it is not their problem, call the buyer and tell them to bring in the additional $1700.00.  I don't know about you, but to me, that just ain't right!


Theresa and I kicked around a couple ideas and then remembered we have a friend of a friend at the assessor's office.  We contacted her, explained our problem, and she was able to flag the tax parcel so the 2009 tax payment from relo would not be processed.  We then called relo and asked them to stop payment on the tax check.  Bottom line was we DID NOT call the buyer with the request for the $1700.  In fact, the buyer didn't even know that any of this occurred.


Isn't that what an agent is looking for in a title company and escrow officer?  We can't avoid every nightmare, but why not look for any and every possible solution before making that dreaded call?