“This is the first time in my 25-plus years that I can remember a property firm closing down in Massachusetts,” Attorney Richard Vetstein shared with Boston 25 News. And although SUCCESS owner Steve Webster sent a message to Boston 25 News stating he was "working hard every minute of every day to make things right," it leaves a lot of questions unanswered. And Vetstein said that due to the uncertainty around buyers' escrow funds, this has the potential to be "a disastrous situation for everybody."
Will some home buyers be left in the lurch?
When a buyer makes an offer on a home, it's common to put down a deposit that's held in escrow until the transaction is completed — a process that could take months between contract negotiations, home inspections, and mortgage closings. Escrow funds are designed to protect sellers and prevent buyers from simply getting cold feet and backing out of deals they've committed to.
At this point, it's unclear what SUCCESS's sudden closure means for clients whose escrow funds were being held by the firm. So far, no one has been accused of a crime. But according to Vetstein, "This money is supposed to be just sitting there." And he warned that if the escrow funds the firm was holding are now gone, "It’s a crime. And it’s a serious one."
To be clear, missing escrow funds are a problem for both buyers and sellers. When a buyer puts funds into escrow, the funds are usually applied to their down payments. Missing funds could put buyers in a position where they have to come up with that extra money on their own.
Meanwhile, it's common for escrow funds to be released to sellers at the close of a real estate transaction. So if there's a sale in progress but that money is gone, sellers risk being shorted, too.
How to protect yourself
When a real estate brokerage closes, its active listings typically need to be transferred to a new brokerage. In some cases, your broker might find a new firm to take over its listings.
If you've engaged with a real estate brokerage to purchase your home — or if you've hired a firm as a buyer's agent but you're not in the midst of an active contract — then you can generally move on and find another firm to represent you. It's when you're mid-contract and funds have been put into escrow that things get dicier.
