Monday, October 26, 2009

The Operating Escrow Account (Eschewing Obfuscation)


Robyn Ryan is my new hero. When given the opportunity to perpetrate a schadenfreude, she did not waste it.



The event was a TREC meeting.



The setting for this bit of poetic justice was the morning of October 2, 2009, in a small ampitheatre-turned-hearing-room in Kingsport Tennessee.



The cast of characters involved were various and sundry TREC (Tennessee Real Estate Commission) commissioners, a judge, some clerks, some observers, the aforementioned Robyn Ryan, and ~ wait for it ~ Bob Leedy!



For those of you who've been personally degraded by Robert A. (Bob) Leedy in the past, and have been waiting with endless patience for Mr. Big Broker Bob to get his comeuppance, Ms. Robyn Lynne Ryan will be your hero, too.



Robyn is an attorney. Bob worked as a broker, and was seemingly buying trucks by writing checks from his escrow account. The two went head-to-head in a match of wits at the morning-long hearing. Bob was so out-gunned, it almost made you feel sorry for him. That is, until he would act like an ass.



Ms. Ryan hasn't been long at that post (assistant general counsel, Tennessee Real Estate Commission at the Department of Commerce and Insurance), but she knew exactly how to dash cold water on Mr. Leedy's hot, long-standing, nerve-grinding, attitude!






Listen closely at 1:48:54 when Robyn asks Bob "What is an Operating Escrow?"

Bob replied that he didn't know exactly what an Operating Escrow was, except that it was really his money and "my CPA said it was legal".

She gave Bob a chance by then asking "is your CPA a real estate agent?"


Now, Ms. Robyn gets a mushy fist-bump from me for this because, as everyone knows, most CPAs do NOT have a clue about how to manage an escrow account. They get stuck on looking for the 'profit', and have total meltdowns when told there is none. Neither do CPAs understand the co-mingling thingy. Of course, Bob answered her last question by saying "i don't know."



Bob tried very hard to explain that it made perfect sense to him that even though tenants' rents and deposits were held in that account, it was really his account because it was in his name with his social security number. He referred to it several times during the course of the hearing as his "Operating Escrow".



I was rewarded with a 'funny' when Ms. Robyn read aloud to the Commission from a letter Mr. Leedy had sent them in 2007. He had been charged (with improper dealings), found guilty and fined in 2006. I know you won't believe this, but apparently TREC had trouble collecting...



In an act of snark when forced to pay, he told the Commission (and i'm paraphrasing here) 'he'd heard the State was pulling back on TREC's budget, and they obviously needed his $1000 to pay the light bill'. Even though i could only see the back of his head in the video, it was evident he regretted committing his charming, rapier wit to paper, that long-ago day.



After everyone had their say, the Commission took about 3 seconds to decide to revoke Mr. Leedy's long-held Broker's license and impose a hefty fine.



Mr. Bob had hardly finished his closing argument (did i mention, in his hubris, Bob represented himself) before the motion was made, seconded, and a unanimous vote carried to protect the public from Bob Leedy.



Thank you, Ms. Ryan, for your decorum and aplomb during the hearing. And, for shutting down Bob Leedy every time he went on a wiggley-room tangent (ohhh yesss, Dear Reader, Bob annoyingly ignored Discovery rules and then acted all wounded when Robyn set him straight). And, Ms. Ryan, could you maybe take at another little oxymoron going on in our great state?




Operating Escrow is an Oxymoron.






PS: I'll update this post with a link to the TREC minutes when they are posted.

Backing in to how your money was lost


Let's hear this story backwards:

Defendant admitted that the advance deposits that Plaintiff kept on all sixteen units, and not just on the ten units Defendant said he had accepted, went toward the purchase price. Some people had paid advance deposits on the six units that Defendant claims he did not accept and Defendant admitted those people never received a refund.

Source of snip: IN THE COURT OF APPEALS OF TENNESSEE AT KNOXVILLE
Assigned on Briefs December 7, 2006

Defendent and Plaintiff: ROBERT W. BIBLE, D/B/A CHALET VILLAGE CHALETS v. TED MULLIKIN, ET AL. (Mountain Rentals in Gatlinburg)

The Problem: Ted didn't pay Bob all his money. Your slap in the face is on page 6.

Ted and Bob didn't even have the benefit of the new provision in the VLS rules ~ yet, they still treated the escrow account as petty cash. If the guests in those six units didn't get to come and stay, and perhaps no one told them, and they didn't get a refund, then - well, i guess they just got screwed all around.

This all began in 2000 ~ and i know that if you are one of those guests unwittingly embroiled in all this b.s. that you have NEVER forgotten about it.

Allow me to at least offer you an embarrassingly belated apology.