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Thursday, August 29, 2013
Last week a legal kerfuffle erupted in a Roanoke courtroom. It has to do with a downtown Roanoke title company, Star City Title Inc., a recent audit of its trust account and some $588,840 that appears unaccounted for.
At the request of some out-of-town title insurance companies, Circuit Court Judge David Carson issued a temporary injunction that froze all of Star City Title’s business while the case is straightened out. Carson also indicated he would ask the Virginia Supreme Court to appoint a judge from outside the area to hear it.
For ethical reasons, no local judge wants to touch the case. That’s because one of Star City Title’s owners is Roy Creasy, a prominent local lawyer and former president of the Roanoke Bar Association. The other owner and president of Star City Title is Janet Crosswhite.
Watching all of this from the sidelines with no small amount of distress is another Janet — Janet Perry. She’s the owner of Star City Title & Settlement, which is on Penn Forest Boulevard in southwest Roanoke County.
Both Star City Title Inc. and Star City Title & Settlement do business in the Roanoke area. Both were founded in 1998 and both are run by women named Janet. Despite those similarities, they’re completely separate entities that have nothing to do with each other.
Janet Perry understandably fears the legal controversy and unfavorable publicity now hovering over Star City Title Inc. will affect her business.
I don’t pretend to understand how title companies operate or exactly what they do. But as I understand it, they’re more or less a paperwork-and-money middleman between real estate buyers, sellers and lenders.
If you’ve ever borrowed money to buy a house, or refinanced your house, you’ve probably used one. Remember sitting in a small office somewhere, for an hour or more, and scrawling your signature on document after document after document?
The person passing you the documents was probably a settlement agent. He or she likely worked for a title company. You were probably sitting in its office.
The bank that loaned you the money on the house wired those funds to the title company. The company deposited that money in its trust account. Then it issued a check to the seller from that account. If the seller had an existing mortgage, part of the money went to pay that off. Title companies earn a fee for handling the paperwork and money.
Title companies also perform title examinations. And they’ll act as the agents who sell title insurance policies to real estate buyers and lenders. Those policies, which are issued by large national insurance companies, protect the buyers from “clouds” that may exist on a title, which otherwise could prove costly later.
In other words, a title company is a disinterested party that ensures all the paperwork is straight, that’s it’s signed and that all the money from the transaction goes to the right place.
“It’s a process. We’re audited,” Perry told me. “They go through our trust account. We are checked and double-checked. We disburse everything according to [state and federal] regulations and we zero it out.”
Janet Perry grew up in Bedford but now she lives here. She’s married, and she and her husband have two teenagers. She’s been handling real estate settlements for more than 30 years.
For a long time she worked for lawyers. But in 1998 she struck out on her own and formed Star City Title & Settlement.
The company has four full-time employees. It performs real estate closings every day. The number varies by the season, the economy and other factors. Its motto is “A Reputation Built on Satisfaction.” A large proportion of its business comes from referrals, and a company’s reputation is key to that.
“It takes years to build that up,” Perry said.
The legal case involving Star City Title is being pushed by two large title insurance companies. Since the news about it broke, Perry requested and got a letter from one of those insurance companies absolving Star City Title & Settlement of any connection with Star City Title Inc. Perry has forwarded that to lenders and Realtors. Still, she fears a cloud over her company because the names are so similar.
The purpose of this column is to help clear that up. Because while someone can buy insurance to protect against a cloud over a title, Perry can’t buy insurance to protect her company from a cloud that’s over another local title company with a strikingly similar name.
“I’m still here and I’m still in good standing,” she said. “They’re two separate companies.”
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