Escrow, Title Refunds Owed, State Says
California’s title insurance and escrow companies have illegally withheld at least $13.6 million from home buyers and sellers, small businesses and others, state Controller Kathleen Connell said Wednesday.
Connell was announcing preliminary findings of audits of hundreds of escrow and title insurance companies in California--and vowed to see that people get the money they are owed.
“Our audits confirmed our initial suspicions that title and escrow companies engaged in unlawful practices which cost home and business owners millions of dollars in escrow proceeds,” Connell said. “It is my intention to recover every cent illegally withheld.”
Connell said that overcharging and failing to offer refunds has been a common practice in the escrow and title industry. Money often was withheld from people for services such as engineering reports that were never performed, she said.
She suggested that people who deal with escrow companies double-check estimates of expenses against the final costs and make sure that no money is in the accounts at the end of the transactions.
Connell released a list of about 100 Californians who are in line to receive refunds ranging from $16 to $11,952, plus interest.
Among them are Michael Gieg, a 35-year-old electronics salesman in Irvine, and his ex-wife, Caroline. The Giegs are owed $372 from a transaction handled by Resort Escrow Corp. in San Diego.
“I wonder how this happened,” Gieg said in a phone interview, recalling the home purchase seven years ago.
Gieg, who since has remarried, said the money will be well spent. “We’ve got a kid on the way, and we’re refinishing a house,” he said. “I’m sure the money is going to go for the cause.”
Connell said she has identified 60,000 individuals and businesses so far who are owed money. But by law, Connell cannot contact potential recipients. Individuals must contact the state controller to obtain the money.
Connell urged people who have dealt with escrow and title companies in recent decades to call her office during business hours, (800) 992-4647, or visit her Web site at https://www.sco.ca.gov.
With Insurance Commissioner Chuck Quackenbush, Connell is a plaintiff in a class-action lawsuit against the title insurance and escrow industry. The suit, filed earlier this year by Atty. Gen. Bill Lockyer, is in its early stages.
But with the suit filed, Connell gained broad jurisdiction to send auditors to every one of California’s 114 title companies and 471 escrow companies.
She said her auditors believe that 26 title companies and one escrow company investigated so far owe their clients $7.1 million.
More than $2 million of that money has been repaid to the state, which is holding it until owners contact her office, Connell said. Additionally, other escrow and title companies have done internal audits and voluntarily repaid another $6.5 million.
