wicked

Traditional title examination involves the judicial use of technology while not replacing human expertise. That said, it takes a bit of time and a bit of money and that's where we're caught in this crazy Catch 22. People want you to do all the work and pretty darn fast - almost never fast enough but if for some reason they change their mind, then they wonder WHY we processed it in the first place. HUH?

It only happens when the title order comes from a real estate agent or mortgage lender on behalf of a consumer. You see, consumers are pretty darn smart. They select our company for quality of service, expertise and fair price. Consumers understand that the ordering of those services is a hiring decision. I explain Choose and Save and the value of placing a deposit up front versus being billed for cancellation should the transaction not close. Consumers make their choice - deposit up front or not - but either way they get it and if the deal falls thru, they understand they owe us for services rendered and always pay.

In the case of real estate agents and mortgage lenders, they don't always get it - many do, but many don't.

Here's the case on my mind today. I received a call from a loan officer on August 20th - we had done business with him before but not for some time as he switched to working for a mortgage lender that is owned by a real estate company who also owns a title agency and he normally routes his business to the affiliated companies. In this case, he needed a speedy and efficient title agent, this client was a family friend, and so he chose our office. That's very nice and we are happy to help. So.....

I ordered the abstract - a full 60 year search from a qualified expert abstractor with whom we have worked for years. [cost $130] I assigned the file to one of our closing coordinators, MC.

On 8/21, MC called the buyer and left a voice mail explaining who she was and giving him a courtesy heads up and a 48 hour window to opt into the Choose and Save Program. MC also created letters to the seller and buyer and to all municipal agencies. She created a file and faxed title confirmation sheets to the loan officer and real estate agents asking if they had preference for closing time, location or closer. MC cut checks payable to the various municipal agencies and sent them out with the lien letter requests. [cost for lien letters $165]

BTW - The "hello letter" MC created and mailed to the buyer on 8/21 contains - in bold - a heads up that we are processing a title order on their behalf and that if we are NOT to be doing so that they need to contact our office immediately as we have advanced money for abstract and lien letters and there will be a title cancellation fee for services rendered. There is an extremely small window in which we can cancel these things if there has been some kind of mistake.

After completing a full traditional title examination, we produced a title insurance commitment and mailed it to the buyer on 8/29 including copies of maps found at the courthouse and our plotting and a letter which reiterated that there would be a title cancellation fee should the transaction not close.

Yesterday we received a call that the transaction was being cancelled due to property inspection issues. MC informed the buyer that we would be sending an invoice for $300 for title cancellation and he went crazy. Why had we done all of this work when he hadn't decided fully to buy the property. I suggested he should have that conversation with the professionals who handled his transaction as they ordered the title work on his behalf with full authority pursuant to the terms of the sales agreement he had signed.

The loan officer called and wanted to know why we were charging a fee, and I gave him all of the info I have just given to you. We had the pleasure of dolling out $295 to process the file, did a heck of a lot of work in the 7 to 10 day period following receipt of the order so that they would have their title commitment in time to meet their needs. We were only asking for $300.

The loan officer said he would be paying the invoice and I said that's fine.

There are a few difficult issues here but the big one really is setting expectations. The buyer had conflicting expectations. On the one hand the buyer had a fast timeline expectation and that's why the loan officer called upon us because he knew we could perform. On the other hand, the buyer had reservations about the structure and had a property inspection contingency. What the professionals in his transaction failed to do was to explain that in order to stay on target with his fast timeline expectation, it would be necessary to more forward and order services from a title agent while awaiting results of a home inspection. I feel certain that the buyer understood completely that he needed to pay the home inspector. He simply did not understand that he would also have to pay for title work - even though he had signed an agreement to do so.

If the consumer had placed the title order himself directly with our office, I would have had the chance to set the expectations in reality. I do it all the time and it works. We get loads of calls from consumers whose lender or real estate agent suggested they call us to place the order. That's the smart way to do it. It recognizes the relationship between the buyer of services and the provider of services.

So, I'm tossing this post up here for the benefit of real estate agents and loan officers and consumers. Please understand that the ordering of title is the purchase of services. You wouldn't go to a restaurant and order a meal, then cancel it after it was already prepared and placed on the table before you, would you?

Did you know that income tax liens attach to "after acquired" property?

Yes, that's right. So unless you can pay cash for a piece of real estate, expect to have a problem getting a mortgage.

I am examining title today for the purchase of a property that went through foreclosure. I saw FTL on the cover notes and at first glance assumed it was a Federal Tax Lien against the former owner. Too bad, it's not. It's filed against the buyer and there is also a PA state income tax lien. Hope they can pay cash for the house - probably not - because this deal is dead. The income tax liens take priority over the mortgage and so even if the lender chose to grant credit approval, they wouldn't accept third position in title.

Looks like the $272 I've advanced for lien letters and abstract plus our time and effort will not result in a closing. We'll bill for services rendered and call it a day. That's a shame.

the affiliated title agency took the deal - almost without insurance

In PA title agents aren't permitted to perform services without the issuance of title insurance. This case was interesting because the lender - a local bank doesn't require title insurance. When we get an order from them - which is rare - we always call before processing to confirm that the buyer has requested our services and that they are purchasing title insurance.

What I found most fascinating is not so much the cancellation but that the real estate agent and her affiliated title agency - a large regional operation - pulled the deal at first by saying the buyer was NOT getting title insurance. I called the real estate agent and raised the subject of our licensing authority and after a pregnant pause, she switched gears and said they were issuing title insurance but they were switching the transaction anyway. I then received a call from the president of their title agency - who should know better, he's been in the biz for a long time - who wanted me to NOT bill for services rendered so their theft of services would be all that more smooth. Well, you know he didn't put it that way but that's what he was driving at. Anyway, in support of title agents everywhere who need the words with which to defend your work product. Here's the letter I sent to the consumer today:

RE: title cancellation

Dear Mr. redacted:

I have received your note in response to our invoice, which says:

“I do not know what this bill is for, at no time did I request your services, sign for your services or receive anything that/from looked like you performed any services on my behalf.”

I do not wish to incur any additional unnecessary costs and so I am not sending the entirety of our file with this letter, but be advised that our work product and raw supportive data are substantial and will be entered as evidence should we be forced to take the matter to the district justice.

These are the facts:

• June 5, 2008 You entered into a sales agreement to purchase real estate and agreed to pay for title search and cancellation, if any. [See 6-D-4 and 19-B]
• July 1, 2008 On the strength of the sales agreement and direction from you, redacted Bank sent a letter to our office ordering title service on your behalf. [I personally called the bank and spoke with redacted before processing the order. As the bank does not require title insurance, I wanted to confirm that you were purchasing title insurance so that we would comply with our license authority. She confirmed that you instructed the bank to send the title order to our office and that you wanted title insurance.]
• July 2, 2008 We processed the title order and mailed a letter to your home notifying you of the order in process. This letter was not returned by the post office and so therefore can be presumed to have arrived.
• July 7, 2008 The bank continued to process the order with our office and faxed the sales agreement for our file.
• July 8, 2008 Your real estate agent called our office to say you were not going to use our services and that you were not purchasing title insurance. She asked that we cancel the order. We attempted to cancel the title work, however, it was too late, the abstract was complete and the report was en route to our office via mail. I called your agent to let her know and in the course of the conversation she switched gears and then told me that you were buying title insurance and that she was directing the title order to her affiliated business. I then received a call from the president of their agency and in the course of that conversation informed him that the work had already been done and that we would be invoicing for cancellation.
• ·July 9, 2008 We sent an invoice to your home.
• ·July 14, 2008 Before retiring the file, I decided to mail you a copy of the title commitment so you would have a copy of the work product for your file.

We paid out of pocket $155.00 to cover the cost of abstract and lien certificates advanced to process your file before receiving the notice of cancellation. Recovery of those expenses and payment for services rendered in connection with your title order are the basis for the invoice. I am writing this letter with an extensive explanation because I know how much effort is involved in taking the case to the district justice and I hope to avoid that step. It only adds cost to your bottom line and makes no sense. I do hope this clarifies the issues for you and I hope we don’t end up in court; however, I am prepared to take that step should you ignore our demand for payment.

Should you have a question or concern, please feel free to contact me.

Siincerely,

Diane Cipa

General Manager

CC: redacted, Vice President Retail Lending