New Fraud Scheme - Bogus Corporate Annual Reports!

New Fraud Scheme – Bogus Corporate Annual Reports! Sneak Peak at New Commitment Form. FR/BAR Contract Revisions.

Dear Members,

If you are handling a transaction in which a Florida corporation, limited liability company, or other entity is a borrower, take care when reviewing the corporate status on file with the Florida Secretary of State. We have had several situations recently in which a bad person filed an amended annual report to list themselves (or their partner in crime) as the president or other corporate officer. They then enter into a loan transaction (usually a refinance), sign loan documents on behalf of the borrower or seller, and make off with the sales/loan proceeds. In the cases we are dealing with, the property was owned free and clear.

Not sure how the criminal deals with getting the proceeds into their dirty hands but the overall point is that they managed to change the records in Tallahassee. Our Member relied on those records to verify that they had the right person signing as the officer of the corporation. Now it seems that you need to research when the most recent records were filed and, if recent AND the filing changes the corporate officers, you should do extra due diligence to ensure that the currently listed individual is above-board.

New Commitment Form
The American Land Title Association approved a new standard commitment form last August. The Florida version has now been approved by the Office of Insurance Regulation and we are in the process of incorporating the new form into the Fund’s system, e.g., DoubleTime, ePolicy Manager, Branch products, etc. Be on the alert for complete information and training about this new form.

Any updates or resources regarding the new 2016 ALTA commitment can be found in the Information Center on thefund.com. We'll be updating this area as we receive more information about the changes.

In the meantime, here are a few bits of information:
The commitment is not complete and effective unless it includes a SIGNED jacket. So no longer is a seller’s obligation to deliver the commitment by a certain date under the contract met by just delivering the schedules. You have to include a signed jacket.The commitment is an offer to provide a policy under certain terms and conditions. It’s a contract between the proposed insured and the underwriter. Therefore, essential terms must be identified. Oh, I don’t know... maybe the NAME of the buyer and the AMOUNT of insurance. No more “TBD.” Lots more to come.

New Standard And “As-Is” Contract Forms
There are new versions of the standard and “as-is” “FR-BAR” contracts approved by The Florida Bar and Florida Realtors. I am a little late getting this information out to you and for that I apologize. Sometimes it is hard to see the forest for the trees! Over the past many months, there has been debate and discussion about the changes at various meetings of the Real Property, Probate and Trust Law Section of The Florida Bar. We have made presentations around the state at various Real Estate Council meetings; but I neglected to include any information about this in my blog. The updated contracts should be available through whatever means you have historically obtained them. You can also access PDF writable versions of the “regular” and the “as-is” versions on the Residential Real Estate Industry Liaison Committee page on the RPPTL website. (You have to be a member of the Section to get this access.) We will cover the changes at Fund Assembly in May. Hope to see you there! 

Let me know how we can help you.

Best Regards,

MELISSA JAY MURPHY
Senior Vice President and General Counsel