Alliance Title closing stuns employees, real estate firms

By J.N. SBRANTI
jnsbranti@modbee.com

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Alliance Title Co. went out of business, laid off all its employees and closed its doors Thursday. At least 30 employees in Stanislaus County, plus hundreds more elsewhere in the state, lost their jobs with less than one day's notice.

Alliance has been among Stanislaus County's busiest escrow and title companies the last four years, and it had about 500 real estate transactions pending.

"We're going to make sure there's a smooth transition. We're moving (the bulk of them) to First American Title," assured Terry Harwell, division president for Alliance in Stanislaus County. "There will not be a delay in any closings (of real estate transactions)."

Harwell said he was shocked to hear his four offices -- three in Modesto and one in Turlock -- were being closed and that he and everyone else was being let go.

"We're the market-share leader in Stanislaus County, so it didn't seem viable that they would close us down," Harwell said. "We were on pace to break even this month."

But rumors started swirling Tuesday evening that something was wrong. Harwell said his employees weren't able to log into the company's computerized payroll system, which triggered suspicion that layoffs were in the works.

Corporate officials at Alliance's headquarters in Campbell didn't explain what was happening until a telephone conference call late Wednesday, Harwell said. His offices scrambled Thursday to move accounts and box up belongings.

"We have a lot of highly qualified escrow officers ... and half of them already have found new jobs," said Harwell, noting that top-producing escrow officers typically have loyal clients who stick with them no matter where they work. That makes them an asset to other title companies.

'A really big deal'

Alliance's other staff members, Harwell included, may not find new employers so easily. That's because most title companies are shrinking, not expanding, their payrolls. Layoffs are widespread throughout the industry.

In 2005, at the peak of the real estate buying and refinancing boom, Alliance had more than 200 offices and about 2,500 employees in California, Harwell said. That included 10 branches and about 165 employees in Stanislaus County.

"Two years ago, we made a ton of money," said Harwell, noting that Alliance raked in $370 million that year.

Then the housing market began crashing, and Alliance started slashing staff. Harwell closed six Stanislaus County offices and eliminated more than 100 jobs this year. He also closed six branches in Merced and Fresno counties. About 14 employees in a Lathrop title service center were let go Thursday.

Alliance also had offices in Manteca, Lodi and Stockton.

"This is a really big deal," said Mike Zagaris, president of Modesto-based PMZ Real Estate. "Alliance had about 30 percent of the (title insurance) market share in Stanislaus County. ... We and other real estate companies have scores and scores of escrows pending with them."

Zagaris said he's confident escrow funds -- such as the deposits buyers put down when purchasing homes -- will be safe. But he fears real estate transactions will be disrupted.

He also said he is troubled by Alliance stopping payment on checks for office rental leases in Stanislaus County, which he said happened to at least three landlords this week.

"It's one thing to close down, it's another thing to not pay your bills and stiff your landlords," Zagaris said.

Harwell said he, too, was surprised the checks bounced, and he doubts Alliance will make good on those debts. "I wouldn't hold my breath if I was a landlord."