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Source of Title Blog

My Way Or The Highway
by Robert Franco | 2007/09/11 |

The mortgage crisis, if that is what we are calling it now (I prefer to think of it as a much need correction), has affected many segments of the economy. Obviously those in the lending business are most directly effected, but it has also cause quite a hit to the title insurance and construction industries as well. I read an article that indicated that claims may be particularly hard on title insurance underwriters because their agents may be slow in remitting premiums. That made me think that agents may be slow to pay abstractors as well. A problem that was plaguing abstractors long before the business "slowed down."

There has been a lot of chatter on the Source of Title forums about having clients sign an agreement at the onset of the relationship to help avoid nasty collections problems. I received a call last week asking my opinion about the use of such agreements. It is something that has crossed my mind more than once. I have even considered asking the owners, or an officer, to sign a personal surety just in case the company ceases to exist. This has been the case on several occasions - the company "reorganizes" under new ownership, with a new name, and they claim no responsibility to pay the old debts. Holding the principal liable, personally, would still provide an avenue for collections.

So why haven't I done this?

Source of Title Blog ::


Well, it occurs to me that the ones that would would be willing to sign it are not the ones I really need such an agreement with. While it may be a good way to avoid doing business with those who refuse, and are more likely to default on their payments, I am still concerned about the effect it may have on the good clients. I'm sure to some it would be off-putting; some may even be a bit offended that I would ask.

I try to imagine how I would feel being asked to personally sign a surety on behalf of my company. It didn't take much, since I have been asked in the past. I have been in business for over 14 years and I have always paid my bills. Shouldn't that be enough? We signed up for a charge account with several office supply companies and one asked me to sign a surety because we didn't have over $1 million in gross revenue. I wouldn't quite say I was offended, but I was put-off a bit by the request. We had a few other suppliers who were more than happy do business with us without such an agreement... we simply refused to sign it and gave our business to them. And, we have had a good relationship with those companies ever since.

That is the effect that concerns me. There will always be abstractors out there who are not going to require personal sureties. It is too easy for the clients to take their business elsewhere.

Instead, I prefer to do business the way I always have in the past. I give a new company the benefit of the doubt and bill them NET30. We do watch them closely and if payment is not received, in full, within 45 days (to allow for delays with the postal service) we simply cut them off. If we don't get paid, we eventually turn the account over to a collections firm.

We do always send new clients our "information sheet" which clearly states our fees and billing terms, among other things. What I think I may have to consider is requiring the clients to sign that and return it to us. It may make the collections process easier because the client could not claim that they were unaware of our terms in advance of any dispute.

However, I am weary about turning our simple information sheet into a lengthy complicated contract with lots of legal-ease. I have had potential clients send me long winded "vendor engagement packages" that I never sign. I refuse to let a client set the terms of the relationship which may differ from our practices. I don't want to try to force something so complicated on a potential client. In my opinion, it needs to remain simple. After all, there isn't much more to it than "we will do the requested work, conforming to the locally recognized title standards, for our stated fees which are due within 30 days of receipt of our invoice."

I think the rigid "my way or the highway" approach is too much. I prefer a more personal relationship with my clients. There has to be some give and take in the relationship. Sometimes an order turns for the worst and will take longer to complete. Sometimes, we get busy and have other work ahead of a particular client that must get done. Sometimes we "need" to charge more for complicated searches. Sometimes, we need to be flexible with our fees to accommodate a client's needs. These things don't mesh well with rigid contract terms.

In the end, this is how I see it: We do our best to provide the best possible service and quality for a reasonable fee. Rather than having contract terms dictate the relationship, I think the service should speak for itself. If a client is not happy with what we do, they are free to go elsewhere. Likewise, if we aren't happy with our client's behavior, i.e. constant status checks, late payment, convoluted "special instructions," etc., we are free to drop them as well.

So, is there a balance in there somewhere? I think there may be. Perhpas a simple statement on our information sheet that confirms its receipt and consent to our fees and payment terms would be a welcome addition. Of course, it would have to be flexible enough to allow for a mutually beneficial relationship not too rigidly defined in contract terms.

Robert A. Franco
SOURCE OF TITLE
rfranco@sourceoftitle.com




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Categories: Abstractors, Billing Issues

1334 words | 2349 views | 3 comments | log in or register to post a comment


Ahhh, the good old days, when all y...
Ahhh, the good old days, when all you needed was a handshake and your word...The Gentlemen's Agreement. We don't require our clients to sign our fee sheet with the wording that we use at the bottom, but they do acknowledge that they have received it, therefore if they order from us then they agree to the pricing and the payment schedule. You wouldn't go buy anything and not check the price and the service prior to purchasing it. Believe it or not there are still Gentleman (and ladies) in this world where their word still means something. Kudos to them and thank you for living up to those ideals. 
by Jay Duncan | 2007/09/11 | log in or register to post a reply

Unfortunately, we don't have that l...
Unfortunately, we don't have that luxury anymore, Jaybird. It's a shame that a few "bad apples" have to ruin things for the rest of our good clients who do business the old-fashioned way.

As for keeping things simple, the only thing "rigid" about my standard agreement is, "my prices are not subject to negotiation" and "if you order the work, you will pay for it". We prefer to address such issues as turn times on a case-by-case basis. If a search turns in to more than what was ordered, we make a courtesy call to the client to inform them of the additional cost and time necessary to complete the work

Regards,
Scott Perry
 
by Scott Perry | 2007/09/12 | log in or register to post a reply

I agree. KISS principle. Keep it ...
I agree. KISS principle. Keep it Simple Stupid. Don't cut your fees. I don't have a contract with my clients, which I have stated previously is mostly attorneys. You all know attorneys are held to a higher standard than just any "Joe Blow" on the street. If they don't pay their bills, they can be disbarred. So listen to this! If you think the abstracting business is cut-throat! By the way, I did jump an abstractor in a court house not long ago for going after my clients. I never say anyting ugly to anyone in a court house, but this guy had gone after more than four of my friends trying to steal their clients and succeeded. When he went after mine, I jumped him, and told him when I was through with him he would be working at Walmart, so go put in his application. And to top in all off, all of the other abstractors he stole clients from, were men. So who has the most balls. So anyway, back to my story of today. I talked to a friend of mine today, who is an excellent abstractor, and he asked me who this company was that sent him two titles. This company has been using me for nine years for three counties in upstate South Carolina. To top it off, they had contacted not ten minutes prior to this conversation asking me to pull a document in another county, of course, for free. I told my friend that this was the same company that I had problems with last year about not paying on time. He did one search for them, which I would not have done anyway. He said he was going to send the other search back and state that he thought I was their abstractor. I immediately called this company and asked them why in the world they called me to do something for them for free, when they were sending my work to another abstractor. I told them I was pissed. So not only do you have to watch your back with other abstractors, but you have to watch your back with clients. It is all about the almighty dollar. They contacted this friend of mine because he charges less than I do, and because he does not charge mileage. Thankfully, this abstractor is a friend of mine, and he does not wait to get paid. We are tough in South Carolina. So, needless to say, I will never do anything for this client again for free, and they will not come first on my list of things to do. I also told them that in the nine years I have worked for them, they have never called me with a problem. So the morale of the story is, "You get what you pay for".  
by Janis Talbot | 2007/09/14 | log in or register to post a reply
Source of Title Blog

Robert A. FrancoThe focus of this blog will be on sharing my thoughts and concerns related to the small title agents and abstractors. The industry has changed dramatically over the past ten years and I believe that we are just seeing the beginning. As the evolution continues, what will become of the many small independent title professionals who have long been the cornerstone of the industry?

Robert A. Franco
SOURCE OF TITLE

 

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