California Regulators Seize Two Title Insurance Companies.

California Insurance Commissioner Chuck Quackenbush has taken over Universal Title Co. and Sacramento Title Co. for alleged violations of state laws. He has also placed department examiners on site at Pacific Coast Title of Marin.

Universal Title is accused of mishandling customers' escrow funds and using them for business-related expenses. "Department examiners found Universal to be dipping into the escrow accounts to pay their bills," said Mark Lowder, deputy commissioner of enforcement, in a statement. The escrow shortages are estimated at $1.8 million, according to the California Department of Insurance.

Whether criminal charges will be filed against anyone isn't yet known. The department said it would refer all perceived criminal violations to the appropriate district attorney's office.

Sacramento Title, an affiliate of Universal Title, was seized because its records indicated it was financially unstable and insolvent, the department's statement said. In addition to taking over the company's operations, the department froze its bank accounts. "The bottom line is that the management of these companies have placed them into an insolvent condition," Lowder said.

Officials at Universal Title could not be reached for comment.

In addition to providing coverage for losses if a land title is not free and clear of defects unknown when a title insurance policy was written, title insurers provide escrow services that allow buyers and sellers to interact with one another through a third party. All parties involved give their instructions to the escrow holder, who is responsible for assuring that no funds or property will change hands until all instructions have been completed.

Regulators seized Universal Title offices at Big Bear, Barstow, Victorville, Twentynine Palms, Sun Valley, Palmdale, Van Nuys, Westlake Village, Carson, Los Angeles, Marina Del Rey, Covina and Downey. Universal Title had 1999 revenue of about $11 million, the insurance department said.

Sacramento Title offices seized included Sacramento, Fair Oaks and Galt. The company's 1999 revenue was about $3 million. Pacific Coast Title of Marin, with 1999 revenue of about $4 million, has offices in San Rafael, Novato and Mill Valley.

In June 1999, Quackenbush and other regulators filed a class-action lawsuit against about 200 escrow and title insurance companies in California. The suit alleged the companies had illegally held dormant and unclaimed escrow funds, retained fees charged to home buyers for services not rendered and retained interest on deposited escrow funds that should have been returned to customers.