Title company paid contractor $12K up front. Contractor left town

[Matthew Terry]

Hello BP Mates,

I'm hoping for some insight\advice on my situation:

I closed on an SFH in April and there was about $12K in repairs that were negotiated. This money went into escrow, but for some reason, the title company decided to pay the contractor 100% upfront instead of paying in phases when work was done and inspected. It is now August and I'm just finding out that the contractor dissolved their LLC and disappeared, having done none of the work.

There was a negotiation done without my knowledge or participation between my property manager, title company, and a different contractor. The contractor said they can do the same work for $9K, and the title company agreed to send me a check for half. I'm left with paying the other 50% to get the closing repairs done. I was told the title company used to pay in installments, but they changed that because of issues stemming from COVID. I was not made aware of this change.

A few questions:

Do title companies normally pay contractors upfront?

This title company was recommended by my property manager and they are one of the largest around and have good reviews so I didn't think twice about using them. Did I miss an important part of the due diligence process by not asking how they pay contractors for closing repairs?

Has anyone experienced this? What actions did you take?