Title Co. Removed Rents and deposits on seller request.

[Carly M.]

Hello!

I just purchased a property and after closing the title company said they removed the rents for the upcoming month of November (Closed on Nov. 5) at the seller's request. The seller, whom I know, said their 1031 person said to do it. But when I asked the title company if they had to notify us, the buyer, they said they "Assumed" we were going to work it out because we knew each other. When I pushed further she blew me off, which kind of put up a red flag. 

Here's my question: Can the title company just take out prorated rents and deposits and not tell the buyer?  And can they just "assume" things are going to get taken care of? 

They did in the long run. But I want to know for future transactions. 

[Clint Votruba]

When you, the Buyer, purchase a house/multi unit property that has tenants, 

YES you want (a) a credit for the security deposits that the Seller collected from the tenants at lease signing and (b) a credit for part of October rents paid, you took title October 15th, you want a credit for the balance of the month.  

YES the Seller calls in those credits to the title company to show on the Alta Statement 

BECAUSE

YES the Buyer will sign the Alta Statement ONLY IF those credits are on the Alta Statement

THEREFORE

NO the damn stupid title company whose job is to act as an IMPARTIAL THIRD PARTY cannot "assume" that you would work it out at a later date.

It's outrageous that they removed the credit, I'd be freaking furious that she "blue me off."

My problem with all this is that the title company has not admitted wrongdoing here and therefore, will probably do it again. Why?  Because you're a layman consumer and frankly, they are not afraid of you.  As an attorney, I could screw them 6 six different ways for acting in this UNETHICAL/MAYBE ILLEGAL MANNER.

In the future?   Oh the Seller said the Earnest Money credit should be lowered to $5K from $10K so we did it. I assumed the Seller told you that they were taking the $ 500 warranty payment off the Seller's side.  I assumed you'd be ok with the closing cost credit being reduced by $ 2K because Seller said it was ok.  Good lord.

I'd wager this title company has done this before and therefore, in the future, add a condition to each Offer to Purchase that you will not buy if the Seller orders title through the XYZ Title Company.

Today, because I'm not very nice, I'd email the title company a response which includes (a) an admission that the title company wrongly removed the credits without your permission and (b) an apology with a guarantee that they will not to it again in the future.

NEVER HAPPENS in Illinois because Buyers are represented by Attorneys and we would never tolerate a title company that takes orders unilaterally from the Sellers.

Once the Buyer has signed the Alta Statement based on the figures attached to that signature, the title company simply cannot remove credits, which require that you to bring in more money to closing, without your permission.

Good luck.