HELP ! Escrow Co. shut down business middle of transaction
This is a BOA/FHA Short Sale transaction since Oct... it is approved and we are about to close in next week or so. But, Last Friday, the Escrow notified me that their business is closing down and the buyers and sellers have to sign the Cancellation of Escrow. Meanwhile, the listing agent was not responding to my messages/email/text for a week until Friday in his email that he had to arrange the funeral service for Sat. Feb.19, so far he still has not called me yet. Escrow co. faxed the Cancellation Form to Seller (husband) work but he said his fax was not working to send back to escrow and I told the sellers that I would come to his house to get signed form and he refused.
My buyers are very concern getting back the deposit money. The Escrow co. said, they can not release the deposit to buyers until the seller signed. My question is that what if the sellers do not sign on time to release the deposit. The escrow co. manager told me that money is safe and it is in the trust account and they are licensed by Department of Corporations. I know the fact that there are cases the trust account was empty out by the escrow co/owners.
I contacted California Asso Realtor CAR/legal dept. and real estate lawyer, etc. bec this is a long weekend I am not getting any answer. My broker said I just have to wait til Tues Feb.22. Listing Agent who is a broker works alone and not communicating well. most of our agents in this business work 7 days a week to get business done. but not him.
My opinion, Seller’s agreement should not be a requirement to cancel & refund of this transaction due to only reason the escrow co. no longer in business to complete this transaction. (Both sellers and buyers agreement is required only in the event of either sellers or buyers at default.) ! ? Buyers & Sellers are not canceling the purchase contract we are just canceling the escrow co. who can't provide services.
Any of you had experience like this? Any suggestions?
Thanks.
Replies to This Discussion
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Permalink Reply by Thom Colby CA Brkr 888-391-5245 on
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Noel - How unfortunate ! In this economy we never know when an Escrow Company of a RE Brokerage will shut down.
It is true only the escrow is canceling BUT, both sides have to sign teh cancellation and the Release of the Deposit - even when it is just to move that money to another escrow company.
In addition to contacting CAR Legal as you have done, I would suggest you contact an Escrow Company where you would move this transaction. They may be able to direct you as these things happen more often than you might think. Escrow Companies also have in-house attorneys.
Since today is a Holiday, you may not get anywhere until tomorrow.
Best of luck,
Thom ColbyBroker
Newport Beach CA
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Permalink Reply by Noel Hagen on
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Thanks so much, Thom. But what if the sellers not signing on time before any money run out in this escrow trust acct.? we don't have much time. I don't understand why sellers are not signing when this escrow co. is closing down. my clients are very worry not getting the money back on time.
I emailed/called the Listing Broker/agent that I hope he agrees with a new escrow co. I picked which is very reputable in this business and very convenient for both buyers and seller. I have no response from him. I have a feeling that they wanted to drag this transaction as long as they can. I can't even start to reopen the escrow because listing broker is not responding. The sellers and the listing broker accepted originally purchase offer with Buyer's choice of Escrow & Title Co., but when we were about to open the escrow he changed his rule! My buyers wanted the property so we went along with Listing broker choice of services and now we are in this mess after waiting for months to close this deal.
Do you know "Buyer's choice Act"? does it apply to Shortsale?
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Permalink Reply by Michael Hayley on
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I think you need a real estate lawyer asap.
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Noel -
Is this transaction in California? Never heard of "Buyer's Choice Act"....
Where is YOUR Broker?
If it were me, I would contact the Escrow Company tomorrow and ask what they need to transfer that escrow to another company. I suspect there is likely a legal document to transfer the funds and the escrow to another company. The Seller is probably worried the transaction will "end" if they sign Cancellation Instructions. And, yes the Buyer should be concerned about their deposit because at some point it would become "unclaimed property" (if Seller and Buyer don't release it) and it will go into the State coffers for a number of years.
Get this sorted out ASAP - call the new escrow company you would use and ask their advice or for their attorney's contact info - I'm sure you could get a 15 minute free consult.
Call if you want to chat (only if in CA)
Thom Colby
Broker / Negotiator
Newport Beach CA
888-391-5245
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This is what I got for "Buyer's Choice Act" & also Auction.com is offering this in their disclosure doc! I think there is going to be revision of this Act which include Short Sale as well! I am trying to do some more research on this.
http://www.hud.gov/offices/hsg/ramh/res/respamor.cfm
http://democrats.assembly.ca.gov/members/a17/Pressroom/Press/200904...
I already got real estate lawyer and also contacted the new escrow the buyer wanted to use if we going forward with this transaction. If we can't agree to use which new escrow co. we can't open escrow. I emailed to Listing broker that buyers are not canceling the contract and all terms and conditions are same as previous.. Of cause he understood and so as his sellers. Here is one more thing, the escrow agent who notified me that their office is shutting down, but this agent and another one opened up their own escrow and they wanted to take along.. My buyers said no more they are going to use out of town escrow co. of the listing broker's choice.
Yes, I am in California, Los Angeles. I will chat with you later today.
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@Noel -
AB957 Buyer's Choice Act pertains to REO or Purchased through REO only.
RESPA addresses Title Only - not Escrow
Section 9: Seller required title insurance
Section 9 of RESPA prohibits a seller from requiring the home buyer to use a particular title insurance company, either directly or indirectly, as a condition of sale. Buyers may sue a seller who violates this provision for an amount equal to three times all charges made for the title insurance.
Make sure to use an Escrow Company not affiliated with any RE Brokerage.
Interesting about the people who notified you starting their own Escrow company - that feels unethical !
Where's your Broker in all of this?
Thom Colby
Broker / Negotiator
Newport Beach CA
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Thom, You are great! I am just hoping that "Buyer's choice of Act" will include short sale soon. My broker got the lawyer, but asked me to wait until tomorrow morning to see if the listing broker would respond. Other friend broker just told me to write up a letter to escrow to release the deposit immediately.. but the buyer don't get the money back I see nothing but law suit. seller not performing we can cancel the contract. what else can we do?
Yes, I feel the same way some people are so unethical and it is unbelievable that they are in this business.
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UPDATE:
Dept. of Corp. talked to the owner of the escrow and the owner told me that his escrow co is not closing at all ! Some of his employees opened up their own co. and wanted to take the businesses with them! My buyers got the deposit back after chasing down the listing agent (w my lawyer) and the sellers to sign the cancellation of escrow.
I picked the new escrow co. to reopen the escrow (1 wk left to COE) with new closing date (1 week delay -requested by listing agent) because his sellers are not ready!! But now Listing agent telling me that sellers may not be selling and they will decide when they want to move out ! The buyers and buyer's lender (also BOA) were almost ready to fund. I figured that sellers were using the buyers/short sale process to delay moving out. these sellers are enjoying the free ride and they abused the system . The buyers wasted the time (5months) and lost thousands of money on this fraud short sale. I hope the govt & lenders should prevent this kind of situation to protect the buyers and all parties involved and especially all the tax payers.
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Noel - Thanks for the update - when your buyers got their money back - they should have looked for another house to buy. This deal "smelled" all the way through! I hope everything works out for you and your clients.
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Thanks, Thom. yes, we started to look for another house right away after the buyers got their deposit back but at the same time, we thought we were about to close in less than 1 week so the buyers wanted to see if the transaction will go through successfully with this reputable escrow co that I and other agents used in the area. We couldn't even reopen the new escrow because the sellers wouldn't sign the Addendum to reopen the escrow. The buyers were so disappointed w the short sale properties now. They were packing and giving notices to the landlords and wasted time and inspections fees, lawyer's fee, appraisal fee, etc... The buyers reported to their loan officer at Bank of America and the loan officer will report to upper management. Sellers Lender is Bank of America/FHA as well! I wonder the BOA Short Sale Dept would revoke their approval to complete the sale (120 days to complete) since there is a breach of contract by the sellers.
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