Tuesday, June 24, 2008

Misappropriation of Escrow Funds

June 24, 2008

RAPB Bulletin - June 24, 2008


News On Misappropriation of Funds
from Scott, Harris, Bryan, Barra & Jorgensen, P.A.


Misappropriation of closing funds is the glaring headline right now. The demise of Flagler Title Company may have you wondering what happens to people who have been injured by such actions. Law firms and licensed title agents are authorized to issue title commitments and title policies by title insurers, such as First American Title, Attorneys’ Title, Fidelity Title, etc.. These title insurers typically are liable for the actions of their agents in connection with the issuance of a title commitment or title policy. If no title commitment or policy has been issued, Florida Statutes still provide recourse against the title insurers. Buyers and lenders receive a closing protection letter that states that the title insurer agrees to reimburse them for actual loss arising out of fraud or dishonesty on the part of the title agent. Florida law requires a title agent to maintain an errors and omissions policy in the amount not less that two hundred fifty thousand dollars. Florida law also requires a title agent to maintain a fidelity bond or employee dishonesty coverage in the amount not less that fifty thousand dollars. However, when an act of misappropriation typically occurs, all funds in the escrow account are at risk and the amount of the policy and fidelity bond is typically insufficient to cover the claims. Fortunately for the public, the title insurers agree to reimburse for actual losses arising out of the fraud or dishonesty of the title agent handling your escrow funds.

More information about defalcation is available on the web site of Scott, Harris, Bryan, Barra & Jorgensen, P.A. at: http://www.votervoice.net/webapp/fckeditor/editor/dialog/www.scott-harris.com.



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