As a title insurance agent and escrow agent, we are regulated by the Insurance Commissioner of the State of Florida to accept funds only in the form of U.S. Cash or Cashier’s Check or Bank Certified Check.
There are many reasons that these are the only acceptable forms of payment involving real estate transactions. We are often asked why a title insurance company cannot accept credit card payments. Most transactions involve institutional financing. Lenders do not allow credit card payments because those are considered “borrowed funds”.
Title insurance companies have the responsibility of collecting and disbursing funds from an escrow account. All funds must be cleared in order to disburse. On a sale and purchase, the seller’s net proceeds are disbursed at closing, mortgage payoffs are made, and recording fees for the deed and or mortgage, which are a few of the disbursements. We do not want to risk recording a deed transferring title into a new owner unless we know we have cleared funds.
I performed a real estate closing transaction with a sales price of $500,000.00, which was an all cash purchase. The buyer brought a Cashier’s Check to closing. As procedure, I prepared the bank deposit and made it promptly so I could continue on with disbursements. The following day, I received a phone call from my bank which totally shocked me. I was told the buyer had STOPPED PAYMENT on the Cashier’s Check given to me at closing! I never knew this was even possible! The bank explained the funds came out of the buyer’s account, and were his funds, which gave him the right to do the stop payment. I immediately contacted the buyer and seller’s attorneys to apprise them of this huge problem. Neither attorney had ever encountered this before either.
It turned out the seller had left a few personal items in the garage intending to pick them up after closing. The buyer contended the property was his after closing, and was upset that all the seller possessions had not been removed, hence the reason he stopped payment on his Cashier’s Check. I advised the seller that I would have to put a stop payment on the seller proceeds check given out at closing, as well as a stop payment on the mortgage payoff which was already sent out, and the county recordation check. I called the courthouse to advise them NOT to record any documents pertinent to this transaction, and that we were stopping payment on the recording check.
As the title insurance company, I ended up bearing the expense of the bank fees for stopping payment on the checks for the closing, which was now null and void.
A week later, the buyer and seller reached an agreement to RE-close the transaction. This was done gratis as no one was willing to pay for a 2nd closing, even though everything had to be done over again.
This time, I made the buyer accompany me to my bank to deposit the Cashier’s Check, and give a statement that he would not be stopping payment on same. We also had him call his bank in our presence to confirm this while we were at my bank, and had the two bank representatives speak to each other.
This turned out to be a real learning experience for everyone involved, and not something I ever want to go through again.
http://www.internettitleservices.com/
A colleague of mine, Barbara Burke has a web site I’d like to share with you. Barbara does informational seminars and speaking engagements.
http://www.realestatelawseries.com
Past articles you don’t want to miss!
http://www.examiner.com/x-38523-Orlando-Title-Insurance-Examiner~y2010m2d25-What-does-title-insurance-cover
http://www.examiner.com/x-38523-Orlando-Title-Insurance-Examiner~y2010m3d10-Title-insurance-is-the-smart-choice
http://www.examiner.com/x-38523-Orlando-Title-Insurance-Examiner~y2010m2d11-Who-Needs-Title-Insurance
Similar Posts:
- Role of a Conveyancing Solicitor in Selling Home
- WaMu shareholders seek new investigation
- Bankruptcy judge rules against WaMu shareholders
- Beginner’s Guide to Buying and Selling on Ebay, a two night course that could change your life
- Federal bill to limit seller-financed real estate deals
Tags: Cash, Cash Close