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A Forty-Thousand-Dollar Whoopsie

, , , , , | Legal | November 13, 2021

I am a real estate attorney and I handle closings on home sales, estate sales — basically anything related to home sales. I have an acquaintance who also does the same thing, so we occasionally meet up at closings, etc. He related this story to me about ten years ago.

He is handling the estate of a man who passed away and left his house to his twenty-five-year-old son. After paying off the remaining mortgage, property, and estate taxes, the son is left with proceeds of about $40,000. My friend draws up a check and gives it to the son. The son is very polite during the whole process and thanks him for his assistance, which has taken several weeks to process. He leaves the office with the check. About a minute later, he comes back in.

Son: “Hey! I was just wondering, instead of this check, would you be able to do an electronic deposit of the proceeds to my checking account?”

Attorney: “Oh, sure, that’s no problem. Just fill out this form—” *pulls a form out of his drawer and hands it to the man* “—and fill out the banking information and all your details. After I enter it into my system, I can process the payment.”

Son: “Oh, great. How long will this take?”

Attorney: “Not long at all! Once you complete the form, I just type in the information into the system and submit the funds transfer. Then it takes twenty-four to forty-eight hours for the deposit to hit your account. Since today is Wednesday, most likely you’ll have the money by tomorrow, but no later than Friday.”

Son: “Perfect, let’s do that!”

They complete the process, which takes about fifteen or twenty minutes. After they’re done, the son thanks the attorney and goes on his way.

Jump ahead a little over a week, and my attorney friend starts getting a bunch of calls from people he’s written checks with during the past week to ten days.

Caller: “Hey, [Attorney], that check you wrote me bounced!”

Attorney: “What?! Are you serious?”

Caller: “Yes, for certain.”

Attorney: “I can’t understand. There’s plenty of money in my account. It must be a problem at the bank. I’ll call them and let you know what’s going on.”

He got almost a dozen calls just like this.

After calling his bank, he found out what had happened. That man who left with the check for only about a minute used the mobile banking app on his phone and made the deposit that way. Then, he came back in, got the electronic transfer money, and ended up with $80,000 instead of $40,000. He then immediately closed his account as soon as he had the money, got a bank check for the balance, and left for somewhere in Europe the next day. This all but wiped out my friend’s checking account. He had almost a dozen check payments that he had to reissue, which took him several weeks to do.

My attorney friend tried for weeks to get the money back, but they were unable to trace where the guy — or his money — had gone, other than that he’d fled the country to Europe, and how they found that out, he didn’t know. He filed a claim with his bank that the check had been fraudulently deposited, but as of the last time I spoke to him a few years ago, he still hadn’t got his money back; it was still being worked on.

He did change his procedures, though. He tells all clients now what their options are for receiving their money, but once they choose one and leave the building, their choice can’t be changed.

Lesson learned, and by me, too! I’ve never encountered this issue, but I follow the same process and am insanely careful about financial procedures in my office.

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