The Branch That Fell from the Family Tree
One of our senior escrow officers takes action on elder abuse in a high liability transaction in which the seller purports to be a family member, but turns out to be nothing but a common criminal.
On June 25, 2006, a real estate investor walked into our Ticor office in Portland, Oregon to open escrow. The investor had purchased and rehabilitated properties utilizing the Ticor offices in the past. He had recently been contacted by a woman willing to sell four houses that were in desperate need of attention. He agreed to purchase all four properties and presented Kimberly Sullivan, a Senior Escrow Officer with the Ticor office, with a purchase and sale agreement for all four houses for one price in a single transaction.
The agreement included a large down payment of $350,000. The seller agreed to carry back the rest, a balance of $250,000. The buyer/investor wanted to close as quickly as possible. This apparently was a great deal and he was afraid of losing the opportunity to purchase these properties if too much time elapsed.
To accommodate our customer, the title department attempted to quickly prepare the preliminary report. A delay occurred when the title department discovered more than sixty city liens and four years of back taxes. The buyer/investor agreed to take title "subject to" the city liens, as long as we quickly closed the transaction. To make matters worse, the preliminary report indicated a male had title to the property, not the woman who signed the purchase agreement and purported to be the owner of the property.
Upon discovering this information, Kimberly questioned the woman who signed the purchase agreement out-of-state. She claimed to be the niece of the man shown on the title and said she had a power of attorney from her uncle and a deed recorded from him to her. She also stated that she was trying to take care of her uncle's affairs before the county foreclosed on the houses for the four years of back taxes. The niece said her uncle was a "crazy" Vietnam vet that lived "in the mountains" and had no means of being contacted.
Meantime, the buyer/investor had already started hiring demolition, remodel and survey crews to divide the land, demolish the "bad" house and start remodeling the "good" ones. He was so excited about this fabulous deal that he wanted to close it fast, at any cost. He did not understand why it was important to have a clear title. He wanted to take it all, "subject to" the city liens. He even stated at one point that he didn't care if we issued title insurance on the transaction, as long as we closed it quickly before his seller walked away from the deal.
Kimberly ordered a copy of the deed that transferred title from the uncle to the niece and saw that it was notarized in Idaho. She had a really bad feeling about the deed and the overall transaction.
She proceeded with the preparation of the seller's document package, getting it ready to send to the niece via overnight delivery for signing, since the niece was in Idaho.
Kimberly asked the niece, "Can your uncle come out of the mountains long enough to sign a new deed?" The niece was instantly irritated and asked why the previous deed he signed wasn't good enough. The niece insisted that Kimberly was "ruining her life."
That evening Kimberly sat in the office staring at the preliminary report and copies of the recorded documents. She examined the deed that transferred title, noticing it was in a "feminine" type of handwriting. Upon closer examination, she realized the grantor's name and signature were spelled wrong!
The next morning Kimberly called the Idaho Secretary of State's office and tracked down the notary in Idaho. Kimberly asked the notary how she verified the signer's identity. The notary said she had taken the niece's ID and notarized the uncle's signature! Kimberly asked her why. The notary responded, "Because she had a power of attorney." The notary worked at a postal service store and didn't know how to notarize a document when signed by an attorney-in-fact. Unbeknownst to her, she notarized a forged signature. The deed that transferred title was phony.
Kimberly pondered the facts and decided to research the uncle's name in the property records system. He owned property just blocks from Kimberly's office; the records stated the property was owner occupied. Kimberly drove to the house and sat outside. Her heart was racing for a long time while she got up the nerve to knock on the door.
The uncle answered the door, invited her in and introduced her to his wife. Kimberly treaded lightly, just wanting him to verify the transaction, and asked if he could sign a new deed since he was local. What deed, he asked? Kimberly started to explain more, not knowing his capacity or anything about him.
As Kimberly recounted the facts of her transaction, the uncle started getting really angry and exclaimed, "She is at it again!" The uncle then told a story about a woman that worked for him years ago who had access to his data and whose husband is in prison for fraudulently selling four other homes of his. He wasn't her "uncle" after all. In no way, shape or form did he authorize, acknowledge or approve of this situation.
The "uncle" called the police and reported the incident. Kimberly in turn sent a message to all local title companies warning them of the happenings in her transaction. A few days later, the niece attempted to open escrow with another title company and with another unwitting buyer.
Due to Kimberly's follow-through with the other title Companies in her local area, no subsequent transactions closed and the "niece" is being prosecuted to the full extent of the law. Kimberly cancelled her transaction and returned the deposited funds to her investor client, who was thankful that she had saved him from a bad deal.
Moral of the Story
Investors have high expectations for fast service and sometimes request that we take shortcuts in closing their transactions. It's important to communicate to investors that you will apply your skill to deals they have entrusted you with and like Kimberly, you will take the necessary steps to investigate a deal that has warning signs of fraud.
Congratulations, Kimberly. Enjoy your $500 reward – you've earned it!