By Jill Bright | Guest Author Diana Hoffman | Chicago Title
Here is a real-life scenario:
One of our Escrow Officers with more than 20 years of experience in the escrow industry has developed a great reputation that has brought on many referrals. On one occasion, a real estate agent she knew referred one of his family members to her. He had found a lot for sale on one of the hottest real estate websites. This site allowed owners to list their homes for sale without the benefit of a real estate agent.
The sales price was $150,000 for a vacant lot so the buyer felt he had found a hidden gem. Escrow was opened and the Escrow Officer reached out to the seller who was only available by email because he was currently working overseas.
The Escrow Officer sent her opening packages to the buyer and seller to complete and sign electronically but then she took one more step. She reviewed the property tax website which included a mailing address for the seller. Followed by sending an introductory letter to the seller via overnight delivery at the address listed on the property tax website.
Since the buyer had cash on hand – the transaction moved quickly. The Escrow Officer then received a response to her letter which stated:
Mr. & Mrs. Smith are long-time clients and friends of mine. I am assisting them in communicating with you. The Smiths are in receipt of your letter regarding their property. This is a fraudulent transaction. The Smiths have never listed this property for sale. I have copied Mr. Smith in this email. Please advise what the Smiths should do to protect their property and stop this fraudulent transaction.
First, the Escrow Officer called the seller to confirm the letter was accurate. The seller was relieved because the property had an actual value of more than $1,000,000 and thanked her for contacting him.
Next, the Escrow Officer called the buyer who was shocked and said the deal felt too good to be true. He asked the Escrow Officer to put him in touch with the seller’s real estate agent to see if they could work something out. In the end, the Title Company resigned from the transaction, returned the earnest money to the buyer, and canceled the file.
The Escrow Officer did not skip a beat. She opened the order but immediately performed her due diligence. Absentee property owners are under attack. Our industry, product, and title insurance are more valuable than ever before. Title insurance is an insurance policy but it works differently than other types of insurance because the coverage provided is based on items that can be found in public records.
Title companies eliminate risks by a thorough examination of the items of record affecting the property. Title clearance is performed by providing prospective buyers and lenders with information concerning which items may or may not affect the property.
The title report helps determine what must be addressed before the transaction can close. Overall, dollar-for-dollar, title insurance is the best investment a property owner can make to protect their interest.
Article provided by contributing author:
Diana Hoffman, Corporate Escrow Administrator
FNTG National Escrow Administration