Tales from the Crypt:  Escrow Horror Stories

APPROVED: 3 hours CLE (1.5 General; 1.5 Dual)

APPROVED:  3 hours Ethics CE

PRESENTER: Richard M. Reass, RynohLive

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NOTE:  For member attendees from the same office, second and subsequent registrants may attend at the discounted price of $50 per person. You must be a TLTA member to take advantage of this discount.

This course will demonstrate that those handling escrowed funds must always act as a fiduciary. This responsibility involves much more than just making deposits and cutting checks from an account entitled as an ‘escrow account’. Their responsibility extends to proper oversight of those with access to the funds, verifying that the funds are “good”, and the timing, delivery and follow-up of deposits and disbursements.

The vast majority of those who handle escrow funds are honest and perform their duties with integrity. Unfortunately, there are a significant number of cases where honest title agents and lawyers find their escrow account “out of balance”. Some made innocent mistakes about timing of deposits, “assuming” a funding check is good, or by relying on incorrect information from a realtor or lender. Others failed to adequately supervise those who are working under them. Regardless of the reason, the impact of an escrow problem will definitely result in a headache and may possibly result in penalties, fines, loss of business or even your livelihood.

Specific examples of cases where escrow fraud/loss has occurred will be discussed, including but not limited to, embezzlement, defalcation, check fraud and cyber fraud.

Information will be provided as to: what happened, how it happened, the resulting consequences, the steps that should have been taken to prevent the potential problem, and the policies and procedures that should be put into place to prevent that event from happening again. In addition, we will emphasize the importance of understanding and following ethical procedures and policies and how to deal with the constant pressures by those less well-informed to take actions that would violate those ethical obligations.