Escrow Associates of San Gabriel Valley

2018 President Theme: “Escrow is a Journey”

EASGV was formed in 1954 and was chartered as a regional association of the California Escrow Association in 1957. CEA is a statewide organization of professional escrow practitioners. The vision of the California Escrow Association is to both lead and support the escrow settlement services and real estate and financial industries through our commitment to the professional and personal growth of the escrow practitioner. The California Escrow Association was founded in 1956 and represents thousands of escrow officers and those individuals who support the escrow industry. The organization is dedicated to maintaining the highest standards in escrow through continuing education and legislative advocacy.

AEA Delegate Reports

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AEA Conference, Kansas City, MO
May 17-18, 2018

Michael Haas, Morton Alan Haas & Co. – Michael discussed certain FIRTPA issues and tax updates/processes important to each escrow professional. There is always something to take away from these discussions, including review of important withholding information for those foreign Seller transactions. We are also reminded – when in doubt, “hold” THE MONEY and make sure proper waiver requests are processed and responded to by federal and/or state agencies. 

Dr. Jordan Rappaport, Federal Reserve Bank of Kansas City – Dr. Rappaport discussed the economic outlook of 2018. He helped us realize that more adult children are staying home because the expensive economy has not allowed for them to be homeowners at the time they should be moving out. Where are the grandchildren going to live? Which economic-friendly geographic area is going to provide everything needed for affordable care for grandchildren and grandparents alike? Baby-boomers will be downsizing from “single family” residences to “multi-family” housing types. Once this wave starts, the housing supply may be ready to meet the demand of the adult-children now ready and able to move on their own. 

BLOCKCHAIN: Mark Ladd, VP, Regulatory & Industry Affairs, SimpleFile – This is an evolvement of e-commerce. Gives an opportunity for our industry to expand in ways that other industries did not think to do (i.e. taxi service vs. Uber, Lyft and other car services). Blockchain is a Trustless system (no gatekeeper); governed by computers checking each other; with no clearing by parties in a transaction. It does away with the “people” aspect; however, people have laws, regulations, etc. that keep the public record running honestly.

Types of Blockchains:

➢ Permissionless – allows anyone to contribute data to the ledger with all participants possessing an identical copy of the ledger (no gatekeeper).

➢ Private: only known entities can read; only known entities can write

Authority & Authentication – user authority is performed using public key cryptography (PKI) Provides security, decentralization Eliminates single points of failure Provides complete time of events Similar security is used in existing server farms and data centers

Value of Blockchains:

• Availability

• Openness/transparency

• Auditability

• Alternative to existing centralized asset management

• Transforms asset transfer the way the internet transformed data transfer

Security Properties:

• Impossibility of counterfeit

• Immutability (cannot be changed)’reduction in opportunity for fraud

• Disintermediation no “middle man”

• Transparency and ease of auditing

• Less expensive transaction processing – just initial process to set up is where the expense is

** Sophisticated algorithms will keep checking the math to insure error-free results **

Vital Properties:

• Consensus on the order of events

• Continuous arbitration of blockchain entries; prevents a user from executing the same action more than once

• Registration of every single transaction on one tramper-proof ledger

• Redundancy of the ledger

• All transactions are visible, archived and in effect for all time

Categories of Blockchain Users:

• Asset issuers

• Blockchain notarization (time stamping)

• Regulators

• Smart contracts

• User application developers

• End users

** Certificates issued for verified time-stamped transactions **

Why should we care?

➢ Internationally, multiple proofs of concept related to real estate transactions are in play

➢ Each done by technologists in partnership with a government

➢ It has the potential to severely affect aspects of each industry involved in a real estate transaction

Questions to answer:

• The real estate transfer is not the only action taken on a property.

o Transfer tax

o Mortgages

o Releases

o Everything in between

• Is a transaction a digital document?

• Who adds the transaction to the blockchain?

• How does legislation need to change the law?

• How are fees and monies transferred?

• Can we use non-digital documents?

➢ Blockchain – immutable and distributed data base that is permanent

➢ Transactions are encrypted

➢ Technology that only now is starting to the explored 

DIARY OF A “WHITE COLLAR” CRIMINAL – We listened to Jerome Mayne tell us his real life story of being caught up in conspiracies and fraud – all beginning with just trying to make a better life for him and his family. His book Diary of a White Collar Criminal focuses on the “development and attitudes of corporate professionals and their ethical choices”. Having been a former federal inmate, his stories were powerful, relatable and made you think! I could have listened to him for hours! 

TITLE ODDITIES – CEMETERIES, GHOSTS AND ZOMBIES – What do you get when you purchase a cemetery plot? You don’t get land! You receive an exclusive and perpetual right to be buried in that place (“interment rights”). You get the right to maintain (if a plot of ground) and erect a monument or grave-marker. And, you receive an easement for your heirs and friends to visit said site in perpetuity. Michael Holden, North American Title Company took us through some situations that some of us may never encounter and although a bit macabre, were very interesting. Have you ever thought about what happens when a cemetery has to be moved? What if is moved by natural disaster – what happens to the bodies? Do you have to disclose a death that occurred in the property? Do you have to disclose a property that is haunted? What happens if a property is Stigmatized? There are many stigma facets and learning about each one is an entirely separate lesson. Michael had several interesting claims and cases that he could share that enlightened us on the strange laws surrounding title oddities. 

The stories shared were some of my favorites from this year’s conference. I was humbled and honored to attend as a Delegate for EASGV. 

Respectfully submitted, 

Josette Loaiza, EASGV 2018 President