Legal Question in Real Estate Law in California
Is there a way to compel my escrow company to provide me with revised 593 forms that the CA Franchise Tax Board is requesting due to an error reporting withholding on the escrow company's/officer's part (inconsistent with our instructions to them per our 1099 input form)? (Since it's their job the way I see it.)
Basically my father and I sold a property (in which he had 1% and I 99%), and rather than filing separate 593 forms for each of us (because since we are father and daughter, we are neither married nor registered domestic partners, and thus would not file jointly), they filed only one form with both of our names on it (which I confirmed with the FTB should NEVER happen under any circumstance in which the two individuals file separately). Since we were supposed to have separate forms (and have separate FTB accounts), FTB didn't know what to do with this and split the withholding equally between our accounts, leaving me short and assessed penalty and interest. Fortunately my father has not yet filed so the money's still there somewhere. I've heard nothing from my escrow company in nearly a month and my escrow officer has been unresponsive to follow up emails and phone calls.
I'm optimistic that eventually I'll hear from someone so that I can clear up the matter with the FTB, but want to be prepared with my options (if any) in case I don't. Thanks!
2 Answers from Attorneys
If the escrow company failed to follow your instructions, they are liable for escrow negligence. You cannot directly compel them to issue revised 593 forms to you and the FTB, but you can let them know that if they refuse to do so, you will sue them for all the expenses you incur, starting with the taxes, interest and penalties you have to pay because of their error. I suggest you also stop dealing with the escrow officer and make the situation, including the company's potential liability, known to the office manager, and if it is one of the larger title companies with county managers send a letter to the county manager as well.
Looks like you are in Southerrn Calif., and maybe you used one of the many one-office hole-in-the-wall escrow outfits that proliferated during the boom years, seven or so years ago. Some of these are experiencing "brain drain" as the market contracts and changes. If you have not already done so, I suggest visiting the office in person to request expeditious handling and to try to get a sense as to what's going on, whether the company seems to be prospering or withering, etc.
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