Court documents indicate a Hendersonville title company has been forced to close its six local offices due to “significantly underfunded” escrow accounts.
According to a complaint filed in Sumner County Chancery Court, Forsythe Title & Escrow Services cannot explain numerous discrepancies in its escrow accounts, and the receiver appointed to investigate its finances suspects professional misconduct.
The company owes between $1.6 million and $2.5 million to Lawyers Title Insurance Corp., and the escrow accounts contained just $1,451 as of Jan. 11.
Forsythe Title worked with national player Lawyers Title Insurance Corp. for 15 years to provide its real estate closing services, but that relationship has since been terminated.
“If you hold money in escrow, you have an obligation to keep that money,” said Lloyd Osgood, vice president of marketing at Lawyers Title. “Money flows in and out on behalf of a lot of customers, and if managed improperly, you can end up with unpaid obligations like this.”
Forsythe Title President Chris Forsythe, born and raised in the Nashville area, has been a Hendersonville alderman, vice president of the Hendersonville Lakeside Rotary Club and a member of the Tennessee Christian Medical Center Foundation board of trustees.
As late as 2005, Forsythe was planning to expand his company, one of the largest independent title companies in the state, and add offices in three more communities.
A woman who answered the phone at Forsythe’s residence said she would not comment on the closures.
“Businesses fail every day,” she said. “This is not news.”
Nashville attorney John McLemore, the court-appointed receiver, will attempt to recover the money and determine how it went missing. He called the investigation a “giant puzzle” and said it probably will take more than a month to complete.
“You’ll never walk into a pile of records like they do on TV and Tom Hanks picks up a file folder, opens it and says, ‘Oh my gosh. It was Professor Plum in the billiard room with the lead pipe,’” he said. “It just doesn’t happen that way.”
McLemore said that a company doing $30 million in real estate closings a month might not notice a shortage immediately. But if activity slows like it has recently, discrepancies will crop up more quickly.
“It will begin to impact them when the music stops, when there’s a downturn in the real estate market, when something stops the regular flow of money,” he said.
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