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Escrow - Closing without sufficient funds on hand

By
Real Estate Agent with COMPASS DRE# 01339266

This week an agent who hangs his license under my Brokerage closed a short sale with the approval of the Seller and Lender.

Two days later the escrow company hadn't issued commission checks so I called to enquire why there was a delay. The escrow officer requested I send her a breakdown of the commission between my brokerage and my agent. I confirmed that I had sent this information to escrow weeks ago, but that I would resubmit the commission allocation.

The escrow officer then called the agent to say that she had insufficient funds on hand from the escrow proceeds to issue complete commsission checks, and that my agent would need to negotiate with the Seller and Lender to recover any shortfall in commission.

Upon hearing this unacceptable explanation, I called the escrow officer and insisted it was her duty to only close the escrow after ensuring she had sufficient funds on hand to make the necessary disbursements. It was obvious this escrow officer would not listen to reason, so I aksed to speak to the owner of the Escrow Company. Reluctantly she gave me his contact number and I called and left him a message. As I write this post, I have still not received a reply call from the owner of the escrow company.

I called and attorney at the California Association of Realtors who confirmed that the escrow officer appeared to have acted negligently, and the attorney recommended I report this to the Department of Corporations and the Department of Real Estate - and that any shortfall in commission be claimed through the small claims court.

I emailed the escrow officer again and explained this position to her.

About an hour later I received an email from her stating that the commission checks, in full, were being prepared and would be available later in the day.

There's a twist in this tale. Later in the day the Escrow Officer called to say he "boss" was reviewing the facts and she would let me know his conclusions.

So is escrow doing a 180 degree turnaround on what they said they would do?

Why was this unpleasantness necessary?

Would didn't the escrow officer assume her responsibility to begin with?

I fully appreciate that our business involves a lot of pressure and stress, especially in the current market, but that's no excuse for negligence.

I'm curious to hear if fellow members would report this incident to the appropriate authorities, or just let it pass?

Comments(6)

Bob & Carolin Benjamin
Benjamin Realty LLC - Gold Canyon, AZ
East Phoenix Arizona Homes

Good grief -- after all the time and effort of working a short sale an agent for sure expects to be paid. Sounds like it turning out OK now.

Dec 10, 2008 03:40 PM
Kris Wales
Keller Williams Realty - Lakeside Market Center - Macomb, MI
Real Estate Blog & Homes for Sale search site, Macomb County MI

Not a chance in the world I would let this pass.  Please keep us updated.  From your post it sounds like you still don't have checks in your hand.

 

Dec 10, 2008 11:44 PM
COMPASS PALM SPRINGS | Stewart Penn
COMPASS - Palm Springs, CA
COMPASS Palm Springs - Broker Associate

No - no checks yet and the escrow officer keeps changing her story .... something definitely isn't right.

Dec 10, 2008 11:54 PM
Mike Butson
The Davis Company - Austin, TX
Realtor & Sales Trainer

In this time of cutbacks and escrow company consolidations, it gets tougher and tougher to do business. Some of the efficiencies we used to take for granted has disappeared. 

Dec 11, 2008 01:53 AM
Anonymous
Christopher Hain

Sounds like a lawuit and DRE action on the horizon...

Dec 26, 2008 02:44 PM
#5
COMPASS PALM SPRINGS | Stewart Penn
COMPASS - Palm Springs, CA
COMPASS Palm Springs - Broker Associate

It's a fresh new year, but I'm still undecided whether to pursue this matter or not.

What would you do?

Stewart

Jan 04, 2009 07:44 AM