Title Company actions causes legal issues
December 11, 2009 2:32 PM Subscribe
Is a Title Company held to client confidentiality laws in real estate transactions? As the seller, would I be considered the client, or would the buyer, or both of us? This Title company attempted to negotiate with a lien holder without my permission, causing the sale to fall through. This is in Louisiana.
You are not my lawyer, I have a lawyer and am waiting to hear from him. In the meantime I am sitting on pins and needles.
I am in the process of selling my home by owner. I agreed to the Title Company the buyer requested. Upon searching the title, the company found a mechanic lien against the property for $8,800 This lien was placed on my property in 2007. In other litigation concerning this property in 2008, my attorney told me that this lien was not valid.
Title company contacted Mr Lien holder telling him I was selling the property and asked what was the current payoff of the lien. The Mr Lien holder told the Title Company the payoff was $25,800. The Title Company then started negotiations with Mr Lien holder. The lowest the lien holder would go was $10,500. The Title Company then contacted my buyer and told her that there was a lien on the property, but that were able to negotiate it down to $10,500. The buyer contacted me with concerns about this lien. The Title Company did not inform me of any of this!
I called Ms X with Title Company and told her that I had spoke with my attorney and would be canceling the lien. The prescriptive on the lien had expired in 2008. I would bring the papers from the clerk of court reflecting the cancellation of the lien, and that it would take about one week. I also asked Ms X why didn't she call me first when the lien showed up in the title search, she hemmed and hawed. I told her at that time, do not to speak to Mr Lien Holder about this matter and that if he called, refer him to me. I made sure that she had all of my phone numbers.
About one week later, I dropped off the cancellation of the lien to Ms X with Title Company. I emphasized again to Ms X that if Mr Lien Holder called, he should be referred to me and not to speak to him. At this time the property had a clean title. We were trying to close on Thursday, October 29. On Friday afternoon, October 23, Mr Lien Holder called me on my cell phone. He was screaming at me that I had no right to cancel his lien, the he was going to garnish my wages and that he wanted the piece of paper I gave to Title Company canceling his lien.
Monday, October 26, the Sheriff attempted to serve me for Mr Lien Holder's writ stopping the sale of the property. I did not get this information until Monday evening. Tuesday morning I called Ms X at Title company to find out what was going on. Ms X told me that Title Company had been served Monday with a writ to stop the sale of the house and my name was also on the list of people to be served.
I stopped by Title Company on October 27 and spoke with the manager. I asked her why was Mr Lien holder told that his lien had been canceled. She said that Ms X told her that Mr Lien holder kept calling the office wanting to know when he would get his money. Ms X finally told him that I had canceled his lien, but the act of sale had not gone through yet.
I attended a motion for dismissal of Mr Lien holder's writ on December 8. The judge ruled against me, stating he was going to let Mr Lien holder have his day in court.
My buyer's loan option expires on December 17. There is a almost no possibility of the title being clear by then, so the sale will be lost.
Now for the question...did the Title Company breach my confidentiality by contacting Mr Lien Holder, negotiating on my behalf without my consent and continue to communicate with him after I specified not to, and to inform him on the progress of the sale? The Title Company is owned by an attorney.
You are not my lawyer, I have a lawyer and am waiting to hear from him. In the meantime I am sitting on pins and needles.
I am in the process of selling my home by owner. I agreed to the Title Company the buyer requested. Upon searching the title, the company found a mechanic lien against the property for $8,800 This lien was placed on my property in 2007. In other litigation concerning this property in 2008, my attorney told me that this lien was not valid.
Title company contacted Mr Lien holder telling him I was selling the property and asked what was the current payoff of the lien. The Mr Lien holder told the Title Company the payoff was $25,800. The Title Company then started negotiations with Mr Lien holder. The lowest the lien holder would go was $10,500. The Title Company then contacted my buyer and told her that there was a lien on the property, but that were able to negotiate it down to $10,500. The buyer contacted me with concerns about this lien. The Title Company did not inform me of any of this!
I called Ms X with Title Company and told her that I had spoke with my attorney and would be canceling the lien. The prescriptive on the lien had expired in 2008. I would bring the papers from the clerk of court reflecting the cancellation of the lien, and that it would take about one week. I also asked Ms X why didn't she call me first when the lien showed up in the title search, she hemmed and hawed. I told her at that time, do not to speak to Mr Lien Holder about this matter and that if he called, refer him to me. I made sure that she had all of my phone numbers.
About one week later, I dropped off the cancellation of the lien to Ms X with Title Company. I emphasized again to Ms X that if Mr Lien Holder called, he should be referred to me and not to speak to him. At this time the property had a clean title. We were trying to close on Thursday, October 29. On Friday afternoon, October 23, Mr Lien Holder called me on my cell phone. He was screaming at me that I had no right to cancel his lien, the he was going to garnish my wages and that he wanted the piece of paper I gave to Title Company canceling his lien.
Monday, October 26, the Sheriff attempted to serve me for Mr Lien Holder's writ stopping the sale of the property. I did not get this information until Monday evening. Tuesday morning I called Ms X at Title company to find out what was going on. Ms X told me that Title Company had been served Monday with a writ to stop the sale of the house and my name was also on the list of people to be served.
I stopped by Title Company on October 27 and spoke with the manager. I asked her why was Mr Lien holder told that his lien had been canceled. She said that Ms X told her that Mr Lien holder kept calling the office wanting to know when he would get his money. Ms X finally told him that I had canceled his lien, but the act of sale had not gone through yet.
I attended a motion for dismissal of Mr Lien holder's writ on December 8. The judge ruled against me, stating he was going to let Mr Lien holder have his day in court.
My buyer's loan option expires on December 17. There is a almost no possibility of the title being clear by then, so the sale will be lost.
Now for the question...did the Title Company breach my confidentiality by contacting Mr Lien Holder, negotiating on my behalf without my consent and continue to communicate with him after I specified not to, and to inform him on the progress of the sale? The Title Company is owned by an attorney.
The title company regardless of who they work for gets their information that is publicly available. I'm not sure what confidentiality you feel was breached. No where in this story have you given the title company any confidential information to be held in check.
posted by bitdamaged at 4:12 PM on December 11, 2009
posted by bitdamaged at 4:12 PM on December 11, 2009
Confidentiality, no. But acting as an unauthorized agent on your behalf, perhaps.
Depends on who the title company works for, and I believe they work for the buyer- buyer pays for title insurance, insurance company does due diligence to make sure they are insuring a clean title. So it IS their business who has a lien on the property. And it is in their best interest to not trust you (no offense meant), since you are the one who could be perpetrating a fraud upon them.
But still, I'm not sure it was within the scope of what they are supposed to be doing to be negotiating with someone who thinks you owe them money. It seems like their actions have caused you to, at least, have a heaftier legal bill than you anticipated.
Also, what's the deal with the $8500 versus $25000 versus $10500? Sounds like that vendor is trying to milk the situation.
posted by gjc at 4:49 PM on December 11, 2009
Depends on who the title company works for, and I believe they work for the buyer- buyer pays for title insurance, insurance company does due diligence to make sure they are insuring a clean title. So it IS their business who has a lien on the property. And it is in their best interest to not trust you (no offense meant), since you are the one who could be perpetrating a fraud upon them.
But still, I'm not sure it was within the scope of what they are supposed to be doing to be negotiating with someone who thinks you owe them money. It seems like their actions have caused you to, at least, have a heaftier legal bill than you anticipated.
Also, what's the deal with the $8500 versus $25000 versus $10500? Sounds like that vendor is trying to milk the situation.
posted by gjc at 4:49 PM on December 11, 2009
The title company disclosing this information is not the source of your problems -- the property being encumbered by the mechanic's lien is what's holding up the sale. You post leads me to believe you were hiding something from the buyer in the run-up to the sale, which, were I a buyer, would really make me question my decision to buy the property. "I want to tell my house, and make sure the title is clear eventually, but don't tell anybody that it's not clear yet, please, Title Company." The title company did what a title company does and gave all interested parties -- you, the buyer, the lienholder -- a chance to resolve the problem before you're sitting at the closing. The mechanic's lienholder could still file his lawsuit after the sale, against the home how owned by your buyer, which would be a clusterf**k for everyone involved. You didn't even say that the release was filed, just handed to the title company -- therefore it wasn't a clear title, because the title company is not the county recorder -- and there's a distinct possibility the county recorder/register of deeds/public trustee would reject your cancellation of lien anyway, since the lienholder wasn't a party on the discharge. Wait until the title is officially and utterly clear, which will be after the lienholder's lawsuit is resolved, and then sell your house; the events that transpired were bound to happen anyway, and you're much better off having it happen before the sale went through, no matter how crappy it feels now.
posted by AzraelBrown at 4:52 PM on December 11, 2009 [1 favorite]
posted by AzraelBrown at 4:52 PM on December 11, 2009 [1 favorite]
Response by poster: dfriedman, I understand what a lien is, Mr Lien holder had 1 year from the date of filing his mechanic lien to enforce his lien, he neglected to do that. That was how I was able to cancel his lien, maybe laws are different in your state.
bitdamaged, the confidential information given to Mr Lien holder was the pending sale of the property. When the Title Company notified Mr Lien holder that a sale was pending, that was not public knowledge. Hence the asking of this question.
Before everyone dumps on me for cheating this poor man, I'll give you some background that I didn't think was relevant to my question.
I signed a contract with a company to rebuild my home after Hurricane Katrina. The contract stated that the company would hire, supervise and pay all tradesmen direct along with suppliers. After receiving the second draw of 3 on the project, the contractor left town with the all of the money (approx $200,000) he did not pay most of the suppliers. Nor did he finish building the house. The local DA declined the case, he turned away many cases like mine. Many people were ripped off by workers and contractors after Hurricane Katrina. I have been paying a mortgage, insurance and taxes on a home that was a shell only, while paying rent for a place to live for the last 4 years.
I pursued the contractor through civil court and was awarded a judgment for $330,000. I was never able to collect on this judgment because the contractor claimed bankruptcy.
I had numerous liens placed against my property, the suppliers and tradesmen that had receipts or contracts were paid by me. Mr Lien holder did not have a contract or work order or any written documentation that he even worked on my house. He claimed that he had a "gentleman's agreement" with the contractor. Would you give this person $10,500 just because he said that is what he was suppose to be paid? The writ that his attorney filed to stop the sale of the house states that I personally hired him and he has an open account with me. A bald faced lie! Yet, he has never sent me a bill or invoice for his services.
I am not making any profit on the sale of this property, all of the funds are paying off the few remaining lien holders and the mortgage company. I am in the hole over $400,000 to date with no end in sight without the sale of this half finished house.
posted by JujuB at 5:00 PM on December 11, 2009
bitdamaged, the confidential information given to Mr Lien holder was the pending sale of the property. When the Title Company notified Mr Lien holder that a sale was pending, that was not public knowledge. Hence the asking of this question.
Before everyone dumps on me for cheating this poor man, I'll give you some background that I didn't think was relevant to my question.
I signed a contract with a company to rebuild my home after Hurricane Katrina. The contract stated that the company would hire, supervise and pay all tradesmen direct along with suppliers. After receiving the second draw of 3 on the project, the contractor left town with the all of the money (approx $200,000) he did not pay most of the suppliers. Nor did he finish building the house. The local DA declined the case, he turned away many cases like mine. Many people were ripped off by workers and contractors after Hurricane Katrina. I have been paying a mortgage, insurance and taxes on a home that was a shell only, while paying rent for a place to live for the last 4 years.
I pursued the contractor through civil court and was awarded a judgment for $330,000. I was never able to collect on this judgment because the contractor claimed bankruptcy.
I had numerous liens placed against my property, the suppliers and tradesmen that had receipts or contracts were paid by me. Mr Lien holder did not have a contract or work order or any written documentation that he even worked on my house. He claimed that he had a "gentleman's agreement" with the contractor. Would you give this person $10,500 just because he said that is what he was suppose to be paid? The writ that his attorney filed to stop the sale of the house states that I personally hired him and he has an open account with me. A bald faced lie! Yet, he has never sent me a bill or invoice for his services.
I am not making any profit on the sale of this property, all of the funds are paying off the few remaining lien holders and the mortgage company. I am in the hole over $400,000 to date with no end in sight without the sale of this half finished house.
posted by JujuB at 5:00 PM on December 11, 2009
Response by poster: "I want to tell my house, and make sure the title is clear eventually, but don't tell anybody that it's not clear yet, please, Title Company."
The buyer was aware of the history of the house, the sale was put on hold until I was able to provide a stamped and filed certificate from the clerks office canceling the lien due to prescriptive.
The mechanic's lienholder could still file his lawsuit after the sale, against the home how owned by your buyer, which would be a clusterf**k for everyone involved. You didn't even say that the release was filed, just handed to the title company -- therefore it wasn't a clear title, because the title company is not the county recorder -- and there's a distinct possibility the county recorder/register of deeds/public trustee would reject your cancellation of lien anyway, since the lienholder wasn't a party on the discharge.
The release was filed and the cancellation issued and recorded by the clerk of court, that was why it took a week. I hand delivered a stamped original of the filed and recorded cancellation of the lien to the title company and the buyer. The title was clear until Mr Lien holder filed a writ to stop the sale under the pretense of now having an open account with me.
The lien holder was no longer a party to this action since it was his inaction that allowed the lien to be canceled.
posted by JujuB at 5:22 PM on December 11, 2009
The buyer was aware of the history of the house, the sale was put on hold until I was able to provide a stamped and filed certificate from the clerks office canceling the lien due to prescriptive.
The mechanic's lienholder could still file his lawsuit after the sale, against the home how owned by your buyer, which would be a clusterf**k for everyone involved. You didn't even say that the release was filed, just handed to the title company -- therefore it wasn't a clear title, because the title company is not the county recorder -- and there's a distinct possibility the county recorder/register of deeds/public trustee would reject your cancellation of lien anyway, since the lienholder wasn't a party on the discharge.
The release was filed and the cancellation issued and recorded by the clerk of court, that was why it took a week. I hand delivered a stamped original of the filed and recorded cancellation of the lien to the title company and the buyer. The title was clear until Mr Lien holder filed a writ to stop the sale under the pretense of now having an open account with me.
The lien holder was no longer a party to this action since it was his inaction that allowed the lien to be canceled.
posted by JujuB at 5:22 PM on December 11, 2009
Response by poster: The property does not have a lien against it anymore. Mr Lien holder's writ is stopping me from selling the house because he is claiming he has an open account with me and by selling the house, I put it out of his reach, I really don't remember the exact wording. He had to place a $8,800 bond with the court to even file the writ to stop the sale of the house. My attorney explained that this was to protect me from damages if he lost his case.
The court is willing to hold $10,500 from me pending the outcome of the trial, as long as both parties agree. They will not agree to this.
posted by JujuB at 5:40 PM on December 11, 2009
The court is willing to hold $10,500 from me pending the outcome of the trial, as long as both parties agree. They will not agree to this.
posted by JujuB at 5:40 PM on December 11, 2009
The Title Company did what title companies do: it attempted to clear title so that the sale could go through. In your particular case, the title company should have talked to you. They didn't; stuff like that happens sometimes. Chalk it up to human error.
The Title Company, however, had no confidential information which it could have disclosed. The sale of your house is not confidential, not even the amount of the sale is confidential.
posted by LOLAttorney2009 at 5:52 PM on December 11, 2009
The Title Company, however, had no confidential information which it could have disclosed. The sale of your house is not confidential, not even the amount of the sale is confidential.
posted by LOLAttorney2009 at 5:52 PM on December 11, 2009
This thread is closed to new comments.
posted by dfriedman at 3:39 PM on December 11, 2009