Expert: Matt Heisler - 2/26/2011

Question
Hello, we r buying a bank owned home. Closing is set for Monday. About 10 days ago, i asked a question to title company lady that if she is related to this man who his name was in HOA covenants. She ignored me with a twisted answer. I got suspicious and asked again. She did not answer me for a while. I asked again and she said "yes, Robert is my husband but has nothing to do with this transaction". So i asked her again same question and said "well, his name is in HOA covenants, is he HOA member or anything to do with this subdivision or" She ignored me a few more times and gave me phone number for HOA to ask any questions I have. But i kept asking her why her husbands name is in HOA covenants and just a few hours ago she dropped the bomb and said that "yes, my husband is in HOA and HOA member, he is also one of the 3 subdivision builders". Well, after her honest answer after 10 days and after our four e-mails made us suspicious about this title company because we wonder why did not she disclose this relationship in the beginning to us and when we asked, she answered us with twisted answers and she finally answered us after so many times we asked and finally she answered us just the weekend before the closing. We do not feel good with them and would like to close this transaction with different title company but do we have a chance to do it right two days before the closing specially it is weekend? If we dont close with this title company, can they still charge us? Thank you.
PS: We also asked her a question about the survey charge and her answer was "you signed for it, you responsible for it!" which we felt so rude answer. Thank you for the help.

Answer
Hello Hakan:

You're probably not going to like many of my points here, but this is a forum for answers, and not always for feelings.  First off, I don't know what state you are in, but it isn't in Massachusetts, because title companies don't do closings in MA. Second off, I do want you to know that you are not alone, I get many e-mails from folks just like you, who have gone down the river to purchase and have found they are suddenly in rough water.  So I sympathize, I do, but you got in this boat in the first place! With those points covered:

A) It's unlikely that you can switch Title Companies at this time, unless you want to incur additional costs and delay the closing, which you typically can not do for a bank-owned home.  The Title company is responsible for doing various elements of work on the new mortgagors' behalf, and that work is already done at this point.  Walking away from the transaction or setting new conditions at this time may forfeit your deposit.

B) If you check you're purchase contract, you will see that there is no contingency for "Rude Behavior" or "Not feeling good about the title Company".  You have no recourse here based on poor customer service.

C) It is possible that the title company may have lied about something material.  But if they did, I don't see any evidence of it here in your note. Should they have disclosed the relationship?  Maybe yes.  Is It evidence of fraud? No. You would need proof of fraud, you would need an attorney, and you would need to sue them under a fraud statue in your state.  If there's no fraud, I would suggest you take this experience as a learning experience, close, and move on.

D) Since we're going to be looking at this as an experience that "could have been done better" let's talk about how we could have done that.  1) Where is your buyers agent in all this?  If you don't have one, and you feel like you're in over your head, which is what this sounds like, then shame on you.  You're not buying a toaster, your buying a home that costs hundreds of thousands of dollars from a bank,  and if you've been reading the papers later I'm sure you'll agree banks are NOT to be trusted.  2) If you're buying a bank owned home, it is the BUYERS responsibility to make sure that they have found out what they need to know BEFORE writing a purchase contract and entering into a deal.  3) A (good) buyer's agent would have referred you to a Title Company that they have a relationship with, and that the BANK does not.  As far as I know, the buyer has the right to choose the Title Company in every state in the USA where Title Co's do transactions, and you should have gotten an independent one.  4) None of this would be an issue if you were confident in your purchase.  I sense a great deal of hesitation in your note.  Why?  I suspect you're worried that you've been snookered. I'll repeat, buying a house is not buying a toaster.  You can't return it. It can be difficult to walk away from housing transactions and it almost always is expensive to do so.  I'll be the first to say that not every licensed agent out there can help you, many of them are poorly trained and live from deal-to-deal, which is no way to run a consulting business that works on commission.  But if you had interviewed buyer agents, chosen a good one, and learned from their experience, I suspect your note would not have found its way into my box.

Good Luck, I think you're probably OK here, but more caution next time is warranted.