Bulletin: NL000004

Date:
October 23, 1989
To:
All Issuing Offices
RE:
Save Money by Preventing Earnest Money Losses

Dear Associates:

"Bounced Earnest Money Checks"

Many claims are being made against title agents because they did not properly notify the seller, realtor and buyer parties in a sale, that the earnest money was returned from the bank stamped ?Insufficient Funds.? The transaction then usually falls through, and the seller sues the title agent for the earnest money.

  • You should follow the steps below when you have an earnest money check returned marked insufficient funds.

  • Follow the phone calls with a confirming letter.

  • Document your file by recording the telephone calls and putting a copy of the follow-up letters in your file.

"Refunding Earnest Money"

Another loss involving earnest money is the result of title companies being sued because they refunded earnest money without securing proper authorization.

To be fully protected, you need to follow one of the two procedures outlined below when refunding earnest money:

  1. Secure written authorization from the seller, the buyer, the realtors and anyone else involved in a transaction.

  2. Deposit the money in Court and cite all of the parties in an interpleader action.

Check all procedures involving earnest money to be sure they are safe and are in compliance with provisions of the earnest money contract.

THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.

References

Bulletins Replaced:
None
Related Bulletins:
None
Underwriting Manual:
5.16 Escrow Closings
Exceptions Manual:
None
Forms:
None