By Jill Bright | Guest Author Diana Hoffman | Chicago Title
One of our Escrow Officers conducted a search online and found the real property owner of the rental property. She called him immediately to verify if he was selling his property.
The owner was shocked. He knew nothing about the sale of his rental property. He asked her what he could have done to protect himself from being a victim. The Escrow Officer explained the best way is to have the tax bill go to his mailing address.
The mailing address notifies a title company the property is not owner-occupied and gives the title company a method to contact him and confirm he was selling his property. If his address had been correct, she would have sent him notice at the opening of escrow like this:
Thank you for choosing Chicago Title Company. We are delighted to be of service to you. We are in the process of preparing a preliminary report or title commitment for the sale of the property listed above.
Should you have any questions or be unaware of this transaction, please contact the undersigned immediately.
This simple but effective step would have prevented the imposter (who turned out to be the tenant of the property) from almost succeeding.
SPOILER ALERT! The Escrow Officer was able to successfully unwind this deal. However, this situation could have all been avoided. “How?” – well let’s start at the beginning.
First, the buyer was an investor who simply knocked on the door of the property and negotiated the sale with the person who answered. The investor was led to believe the man who answered the door was the owner of the property. Next, the buyer wrote up an offer and the seller accepted it – escrow was opened. Since the investor was a cash purchaser, the sale was scheduled for a quick close as soon as escrow had everything she needed.
The seller was a busy man, so the escrow officer booked the signing with an approved signing agent. The signer gave the notary the runaround having her go to a couple of different work locations to track him down. The notary finally caught up with the seller at a gas station where he claimed to work so when she asked him for his driver’s license, he told her he was just dropped off and did not have it with him.
The seller convinced the notary to let him sign her journal confirming he would send her a picture of his I.D. later. The notary placed her notarial seal on the deed and delivered it to Chicago Title. However, the seller never sent the notary his I.D. nor did the notary tell the escrow officer what occurred, so the deal closed. When the seller was unable to present I.D. to pick up his proceeds check, the Escrow Officer discovered the seller was an imposter. She immediately reached out to the escrow administrator who gave her directions on how to unwind the deal.
First, the Escrow Officer contacted the payoff lender, explained what happened, and asked them to send the payoff back. Next, she filed an escrow loss. She then sent the check register to her corporate escrow administrator who contacted the taxing authorities and utility companies to explain what occurred and request a refund. All the payees were cooperative in returning the payments.
After that, the Escrow Officer advised the buyer the deal was being unwound and explained why. She wanted to be sure the investor knew as soon as possible so he did not incur additional costs by beginning the demolition of the property. Finally, she contacted the buyer’s hard money lender and advised them. She let the lender know she would need a reconveyance in exchange for a return of the loan proceeds.
Why would the notary do what she did? She did not feel safe. There were a lot of other men at the gas station who were making her feel uncomfortable, so she was focused on getting his signature and leaving as soon as possible.The safety of our employees and approved notaries is of utmost importance to us. No one faults the notary for acting quickly to get out of an unsafe situation. However, the notary failed to follow Company policy in allowing the purported seller to sign without requiring I.D. Thus, it was the notary’s obligation to immediately report to the Escrow Officer that the purported seller had not produced his I.D. at the signing. Had she explained what occurred, the Escrow Officer would have never closed without ensuring the seller was properly identified. It was a very unfortunate but critical lapse in judgment.
As a result of the notary’s lapse in sound judgment, she will never be authorized to conduct signings on behalf of the Company in the future. The Escrow Officer did everything in her direct power to follow Company policy. She booked the signing with an approved signing agent and took added precautions by requiring I.D. before giving the seller the proceeds check. Additionally, the Escrow Officer knew the Company policy regarding absentee owners and had the owner used the correct mailing address (instead of the property address) on his tax bill, she would have sent him notice as soon as escrow was opened.
The deal took a twist. The “seller” kept calling the Escrow Officer wanting to know where his proceeds were. She told him she could not give it to him since he never presented proper I.D. — either to the notary or to her in the office. The “seller” was so bold to then send over a copy of his I.D. His last name was the same as the real owner of the property, but his first name was different. Fortunately, he did not call back — indicating he knew the jig was up.
The moral to the story – our Escrow officers are trained to detect and prevent fraud which ultimately protects you!
Article provided by contributing author:
Diana Hoffman, Corporate Escrow Administrator
Fidelity National Title Group
National Escrow Administration