Escrow Company Disappeared with Earnest Money
January 28, 2017 10:43 AM   Subscribe

I friend of mine thinks she may have been defrauded on a house she was trying to buy. The "seller's" real estate broker went radio silent. Her agent went to check and it seems they closed up shop. Escrow company seems to be in the wind too and many other people online are complaining of the same behavior.

She'll file all of the required reports with the police and attorney general, but is there anything else she can or should be doing? She's in California in LA county. Thought about a lawyer but they're likely to cost more than she's out in earnest money. Are there any things that are on a clock where doing it sooner would be better than waiting?
posted by willnot to Law & Government (11 answers total) 1 user marked this as a favorite
 
There is probably some kind of licensing or regulator for both escrow and the real estate broker, I would file complaints with both in addition.
posted by TheAdamist at 10:50 AM on January 28, 2017 [1 favorite]


If it's not enough to hire a lawyer for, small claims court maybe? Not that I'd have great confidence in actually collecting a judgement.
posted by TheAdamist at 10:51 AM on January 28, 2017


Probably worth getting a legal opinion as to the liability of the seller for their agent's actions. Also, she should be aware that if there was an actual offer and acceptance there may still be a binding contract with a question as to whose money it was that appears to have been stolen.
posted by uncaken at 11:24 AM on January 28, 2017


Her agent needs to get in touch with the actual seller if there are contracts. Before that, confirm that the person who signed as seller is actually the owner of the house.
posted by AugustWest at 11:27 AM on January 28, 2017 [1 favorite]


I'm imagining that it is possible the seller, the broker, and the escrow company (and maybe your friend's agent) are all fictitious - because at least the sellers agent and the escrow company were a scam.

- Call the CA Real Estate licensing dept (ca.gov) and find out if the sellers agent was licensed. It's possible another person set up shop as an existing licensed broker/agent. First step is to verify licensing. Ask about the buyer's agent/broker, too. You're friend can't be too careful.

- File with the police. Possibly team up with other scam victims.

Your friend should find an independent lawyer to advise them. Possibilities include...

- The buyer's agent is responsible for reimbursing the defrauded client. DO NOT LET THE AGENT/BROKER KNOW THEY ARE UNDER SCRUTINY.

- The buyer's agent/broker is not in on the scam, but the client can collect through the buyer's agent/broker's business insurance since they are licensed and this may be some sort of malpractice. An example would be if the sellers agent and escrow company were not licensed or legitimate, something a licensed agent/broker should have reasonably known or verified before directing a client to sign documents or doing business.

- This is a known group of scammers and a lawyer can aid the client in reporting this crime to the local, state, and federal authorities

If I think of anything more, I'll pop back. This seems like some sort of organized long con to me. I imagine this group has done this before. August West is correct, the property in question might not even be for sale or owned by the named seller. I'm not convinced your friend's agent isn't in on it. If they are not in on it, but it is a type of long con, then the agent may be responsible for not vetting the sale thoroughly enough.
posted by jbenben at 12:19 PM on January 28, 2017 [1 favorite]


Friend's agent is genuine and friend found the house on an MLS site and took it to friend's agent.

The seller's agent appears to be licensed, but also appears to work for a different brokerage, so there is some question as to whether the person representing themselves as the agent was the actual licensed agent.

This was a short sale with an offer accepted by the seller, but not yet approved by the bank.
posted by willnot at 12:44 PM on January 28, 2017


I'm not sure what you're update adds? At this point your friend needs to double check every person/entity associated with this situation and ideally get a lawyer or similar advocate to help them report what happened and turn over documentation.

The more footwork your friend does, the better the outcome. How much money was stolen? Are the police or district attorney's office involved? Has your friend been in touch with other victims?
posted by jbenben at 1:24 PM on January 28, 2017


An attorney may well be interested in a case with numerous claimants, on a contingency.
posted by megatherium at 1:45 PM on January 28, 2017


Speak to the bank? Maybe it's not too late to stop payment on the escrow funds?
posted by eatcake at 2:59 PM on January 28, 2017 [1 favorite]


The sellers broker is liable for their agent I believe.
posted by fshgrl at 3:12 PM on January 28, 2017


The CA court system has an excellent guide to the small claims process online here. After reading through that, and depending on how much money she's out, it might be worth paying for a consultation with an attorney (though likely won't be worth paying for representation). She should keep in mind that winning a judgment against the escrow company is not the same as actually being able to collect the money she is owed.
posted by insectosaurus at 7:42 AM on January 29, 2017


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