Large California Title Company Closes its Doors - Alliance Title Grew Rapidly During the Boom
|December 17, 2007|
By Matt Carter
A title company headquartered in California's Silicon Valley that once employed more than 2,000 employees at 200 branches has closed its doors without warning.
Alliance Title Co., which is licensed to do business in 34 of 58 California counties, grew quickly during the boom -- in part by hiring experienced agents away from other title companies.
The company closed its doors effective 5 p.m. Thursday, according to a message at a branch office. The company's Web site has been disabled and messages left with employees at the company headquarters in Campbell were not returned.
According to the California Department of Insurance, closings and escrow accounts being handled by Alliance are being transferred to a sister company, Financial Title Co., in areas where that company has offices. First American Title is picking up files in other markets.
Consumers have the right to allow the transfer of files, or switch to another company, said Molly DeFrank, a spokeswoman for Insurance Commissioner Steve Poizner.
Financial Title's president, Ivy Anderson, said she could not speak for Alliance Title and declined to answer questions about how the transfer of files would take place.
Larry A. Matos, a founding broker of Century 21 M&M Associates, which has about 700 associates in six counties in California's Central Valley, said his company did about 30 percent of its title and escrow business with Alliance.
"It's obviously a sign of the times and it's a big blow to our industry," Matos said. Alliance Title "dominated" the market in the Central Valley "so it's very disruptive to our business, moving title companies and (escrow) monies."
Matos said Alliance Title rented two offices from his company, and had stopped payment on rent checks. Despite that, he said, he has spoken to Alliance Title's county manager and is confident money held in trust by Alliance -- including buyers' deposits and commission checks for brokers -- is not in jeopardy and that the transfer of files to other title agencies will take place smoothly.
Matos said there were no warning signs that Alliance Title was in trouble. But he said many title companies have been coping with a declining volume of business -- especially local companies that are losing out on many transactions on bank-owned properties.
"I'd say 40 percent of our transactions are bank-owned, and they often have preferred title companies that are outside of the area," Matos said. "So on a lot of local transactions, (local firms) aren't handling those escrows."
Century 21 M&M broker-agent Pamela Easton, a third-generation real estate professional, said she has been told Alliance Title will handle closings scheduled for the next four to five days. After that, she said, local closings will be handled by First American.
Alliance Title "grew awfully fast" during the boom years, Easton said, hiring many long-term escrow officers away from other companies.
"They had a lot of great people," Matos agreed. "That's probably what's more striking than anything else -- they have some of the best people in the industry, and I know they will be absorbed by other title companies in our market.
In the past, Alliance Title, Financial Title and parent company Mercury Companies Inc. have been sued over their recruitment of employees from rival companies.
In a June 22, 2004, lawsuit, Gateway Title Co. Inc., Commonwealth Land Title Co. Inc. and LandAmerica Financial Group Inc. claimed the recruitment of more than 300 Gateway employees in California by Mercury and its subsidiaries amounted to unfair competitive business practices. A jury awarded Gateway $8.3 million, but a judgment was not entered pending resolution of cross complaints by the defendants, according to a regulatory filing by LandAmerica.
Three other title companies that have since become affiliated companies of LandAmerica filed a similar lawsuit on Jan. 14, 2005, over the recruitment of 80 employees. That case was eventually settled through mediation, with Mercury agreeing in July to pay LandAmerica $12.5 million, the filing said.
A spokeswoman for Mercury Companies did not immediately return a call from Inman News.
According to Financial Title's Web site, the Mercury Companies was founded in Colorado in 1946, and grew to include 18 title and escrow companies with 500 offices employing 3,500 title and escrow professionals.
Folsom-based Financial Title was founded in 1995, the Web site said, "when the Mercury Companies expanded into the California market with the purchase of several successful title companies in the San Francisco Bay Area and Fresno. Since then we have experienced tremendous success, expanding into additional markets and adding new and talented associates through California and Nevada."
Financial Title is licensed to do business in all 58 California counties and opened offices in the Las Vegas market in January 2006. The company is also licensed in Arizona and Oregon.
Although Alliance Title's Web site was down Friday, the company's "about us" page captured by Google cache on Nov. 26 claims the company grew from five to nearly 200 branches in just nine years, and expanded from 25 employees to more than 2,000.
Copyright 2007 Inman News