Tuesday, September 17, 2002
Home closings may see changes
By Patrick Crowley email@example.com
The Cincinnati Enquirer
FORT MITCHELL - Kentucky property closings would be more tightly regulated under a series of recommendations from the homebuilding industry drafted following the Erpenbeck Co. financial scandal.
The recommendations, which are headed to state Rep. Jon Draud, R-Crestview Hills, include:
Licensing title agents.
Requiring that subcontractors be paid before a closing can be completed.
Establishing specific regulations for the disbursement of money at closings.
A task force formed by the Home Builders Association of Northern Kentucky has been working this summer with Mr. Draud on possible changes to state laws regarding property closings.
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Some states already have similar provisions in place for their building, banking and real estate/title industries, but Kentucky does not.
Mr. Draud has said he will take the recommendations and draft legislation that will be introduced when the Kentucky General Assembly meets in January.
The Industry Issues Task Force was formed in response to the Erpenbeck Co. scandal in which employees of the Edgewood homebuilding firm are accused of taking millions in cash and checks paid at property closings and depositing the funds into Erpenbeck Co. accounts at Peoples Bank of Northern Kentucky.
Because the $15 million in checks and cash were supposed to go to lenders holding the construction loans on Erpenbeck-built houses, first mortgage liens on more than 200 area houses have not been released.
Northern Kentucky and Cincinnati banks holding the liens have formed a consortium to consider how to apportion the responsibility of making good on the bad debts accrued by the company.
The FBI and other federal agencies are investigating. In addition, dozens of area subcontractors are owed money by the Erpenbeck Co. Many have filed lawsuits seeking payment.
The genesis of the whole effort was because of the Erpenbeck situation, said lawyer Joe Cleves, who represents the homebuilders association. We wanted to tighten and clarify the procedures and responsibilities so the community is never put in this position again.
The 17-member Industry Issues Task Force, headed by Huntington Bank executive Dan Pack, released its recommendations Monday afternoon.
The report conveys solid recommendations that will improve the closing process and provide a greater level of protection to consumers of homes in the future, said Kevin Krumpelman, president of the Home Builders Association of Northern Kentucky.
The specific recommendations include:
Requiring all title agents to be licensed.
Requiring that title agents be designated as the legally accountable person at property closings and have the responsibility of dispersing all checks and money paid out at property closings.
Requiring title agents to notify the Kentucky attorney general if a lien is not released within 90 days after the property closes.
Requiring title agents to inform property buyers at closings that they can purchase title insurance.
Requiring contractors to hold money owed to subcontractors and suppliers in trust, and that if the funds are not paid then the contractor could face criminal charges.
Requiring contractors to provide written confirmation at closings that subcontractors and suppliers have been paid.
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