I found a potential deal, however, I am most likely overly paranoid about this. It will go through escrow with title insurance. Given that I see escrow fraud a lot on the news these days and I don’t actually know the buyer that well and we are not using any agents, what type of due diligence does the escrow company do to verify the funds are going to the actual owner of the property? Or what can I do on my end to ensure someone is not fraudulently partaking in this deal? My first real estate transaction without an agent. Thanks.
The title company will (should) require “good funds” be provided the title company before they will provide the buyer the title. And, they will require that they record the deed before they provide the original of the deed to the to buyer. This ensure the title company has funds in their account before they will allow the buyer to have the deed. “Good Funds” means the buyer must fund their purchase using one of the following methods:
A wire, cashier’s check, or a certified check are considered good funds. A wire is considered good funds because the funds are wired from the buyer’s bank directly to the title company by the Federal Reserve and are immediately available. A cashier’s check are funds also immediately available from the bank.
Most states require title companies to be bonded and licensed. You can check your state laws to get a feel for the requirements or ask the title company if/how they are licensed and bonded.
@karljames Thank you for your response. I actually meant to say seller not buyer. I presume the escrow company will verify all their information such as them being the rightful owner ahead of closing.
If you’re going through a title company and you’re getting a title insurance policy in place, I don’t think you have anything to fear - especially in regards to a seller.
A major piece of title work is to verify that the seller is the only person who can legally sell the property, and if not, they require any additional party that has vested interest in the property to sign off on the transaction… and if they can’t get them to do that, the title company won’t facilitate the closing.
In a current deal I’m working on, the seller has a homeless brother who has a vested interest in the property. The seller says the brother is a drug addict and extremely hard to track down… living on the streets and all.
My title company said if we can’t get the brother to sign off on the deal we won’t be able to get it done!
Pretty crazy I know, but title company’s take this stuff really seriously.