A real estate title company in Severna Park and Ocean City was shut down after as much as $2 million from its escrow account for property settlements allegedly turned up missing, according to court documents and state regulators.
Maryland Insurance Commissioner Ralph S. Tyler ordered yesterday that business licenses for Day Title Inc. and owner Deborah A. Williams be suspended and revoked. The Maryland Insurance Administration issues licenses and regulates title companies, which conduct real estate closings.
Tyler's action follows an order issued last week by an Anne Arundel County Circuit Court judge appointing a receiver to oversee the liquidation of Day Title. The court action was initiated by The Security Title Guarantee Corp. of Baltimore, the title insurance company for Day Title.
Security Title has assumed responsibility for Day Title's undetermined number of unpaid mortgages and other settlement costs.
"We are promptly and aggressively identifying our losses and honoring our obligations as the result of the actions of Day Title," Ted Rogers, president of Security Title, said yesterday.
Security Title accused Day Title and Williams of "gross negligence and mishandling of escrow funds," according to court documents.
The alleged misappropriations involved Day Title's escrow account in Severna Park, according to Security Title.
Day Title, which provided residential and commercial settlements as well as title insurance, held money from real estate purchase and refinancing closings to pay off mortgages, make payments to sellers and other closing-related expenses. Its two offices in Ocean City and Severna Park were closed last week.
The company was first licensed by the state in 1998.
Day Title allegedly transferred money for one particular transaction from its escrow account into an operating account, according to court documents.
In another instance, employees allegedly were paid directly out of the escrow account, which Security Title called improper in court filings.
Williams did not return calls to her cell phone yesterday. And her attorney also did not respond to messages.
Such alleged impropriety is rare because title insurance companies regularly audit their agents to ensure that proper accounting procedures are followed, according to the American Land Title Association, a trade group.
In Maryland, more than 8,000 licensed title companies and attorneys handle real estate closings.
