News from Vero Beach, FL that may help you. . .How many ways are there to express on both a professional as well as human level that you're thoroughly disgusted by someone's "poor" business practices? For me, it includes "totally unacceptable" to "outright despicable" and plenty of other equally descriptive terms in between, which can only begin to express what I'm actually feeling right now about a local escrow company.
This company was used by the majority of the real estate firms in our immediate area, including several neighboring counties - specifically for the purpose of holding a client's funds in "escrow" until a real estate transaction closed. Most of us, I'm sure would typically visualize that the very word "escrow" would mean "safe." Funds held in a safe place for a specific purpose and time. Even Webster's definition uses the term "in trust." Well, think again! Safe would definitely mean that the funds would be there when needed or demanded.
At this time we don't really know "the details" of what has happened - but we do know that they've closed their doors and have ceased operations.
This escrow company was in business for over nine years and was one of three (3) companies owned/operated by a local real estate attorney, which also included a Title company and yes, a law practice.
The fax was dated Tuesday 9 /4 /07, which was the first, business day following the long labor-day weekend.
This is just a snapshot of the instructions all professionals received from the escrow company:
•1. Escrow services ceasing all operations, effective immediately
•2. All "un-deposited" monies will be returned to the source [usually a real estate office].
•3. Don't deposit checks because bank "instructed not to honor any checks that have not already cleared."
•4. To return any such checks to them via mail.
•5. Advise all of our clients to stop any wiring of funds/automatic deposits
•6. They're unable to return any funds that have been deposited with them/cleared at this time.
•7. They're "working on a solution that will allow all funds to be returned "within a short period of time."
•8. We will be kept informed.
•9. The office is closed - do not fax anything.
Naturally, as professionals we've speculated the various possible reasons for this outcome but we don't really know at this time exactly what has caused the problem. We do know that there are both local and state official investigations in process to establish the facts and we all hope to hear in the coming days exactly what happened - and more importantly, we all want to know WHEN the funds will be forthcoming for our respective clients/customers.
Our company's broker has already taken some action- and on behalf of a customer who has been directly affected, I am also taking some additional action in hopes it may make a difference.
In the meantime we have buyer's who've made an offer on a property that wasn't accepted and simply want their money returned, and/or buyer's who are waiting to close on a transaction, who may be unable to because they don't have sufficient funds because they don't have the "escrow deposit." Of course this equally affects sellers who think they're closing and now may not be able to; affecting their plans to perhaps relocate/secondary purchase. Then there are the people who have closed and the monies have been dispersed - and the closing agent has then received the bad news that the check from the escrow company hasn't cleared. The fall out continues because we don't have the answers and/or the time frame of resolution. We are all very impatiently waiting for the facts to surface.
So, why would you be interested in what is clearly just "our local news?" Well, hopefully it will serve as an eye opening opportunity for you to heed an important warning because it could just as easily happen in your own back yard. I had hoped to have more facts prior to this posting but I also didn't want to delay because the intent here is to prevent others from these potential problems by simply making a different decision today.
I believe it's imperative that all my colleagues - everywhere - think very carefully before depositing a client's/customers funds into an escrow account.
This information is obviously not applicable for real estate companies who continue to have their own escrow account; this is for the hundreds - and much more likely thousands that use an escrow company.
I think this situation will inevitably create yet another disclosure for our client's, perhaps they'll be provided a choice of several potential escrow solutions for their deposit, which are likely to include their own attorney's escrow account, the closing agent's escrow account and/or an escrow company account - if they so choose. There may even be contracts without binder deposits - everything is negotiable. Certainly, it'll be a disclosure that will require their signature and dated - and most certainly this incident will be a required disclosure.
Bottom line - there are many, very fine, quality real estate professionals who work very hard every day and who really do put their clients and customers best interests first. Yet they find themselves unintentionally dealing with those, who as I clearly understated earlier, operate under "questionable business practices," that directly affects our business, the industry as a whole and most importantly, harms the public. This is also happening at a time when the market continues to be very sluggish; in fact this situation may even add to our market problems, at least for a while. We all know this is an industry that is rife with [potential] liability; therefore, for what it's worth - I hope this proves to be a very helpful and valuable warning - and one which I hope you'll heed!
I look forward to any comments and perhaps examples of similar experiences elsewhere.