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News / Northwest

King County recorder misdirected millions in funds, audit finds

By David Gutman, The Seattle Times
Published: May 19, 2024, 5:06am

SEATTLE — The King County Recorder’s Office, the agency that collects taxes on home sales, oversees marriage licenses and records real estate sales, mortgages and deeds, misallocated nearly $7 million over six years, while overcharging customers by a total of about $1 million, a new audit found.

The recorder’s office handles nearly 300,000 documents a year, keeping a public record of marriages, name changes, home sales and transfers of property. It collects more than $1 billion a year in real estate excise tax — a tax on home and land sales — that it passes on to state and local governments. And it brings in more than $17 million in fees annually for the county’s general fund.

But the new audit, from the King County auditor, found the office has not ensured reliable financial reporting and is plagued by “unclear roles and responsibilities, information silos, and outdated procedures that limited accountability.”

The errors, the audit found, mostly had to do with prepaid accounts, which make up about two-thirds of payments collected by the recorder’s office. From 2018 through 2023, the office applied nearly $7 million to the wrong customers’ prepaid accounts and overbilled other customers by more than $1 million.

“The County’s handling of taxpayer money needs to be above reproach,” King County Auditor Kymber Waltmunson said in a statement. “We look forward to seeing enhancements in the Recorder’s Office to reduce the risk of uncollected revenue, undetected fraud, noncompliance with laws and rules, and inaccurate financial reporting.”

The audit found systematic faults like not having sufficient review processes of customer-provided data and not matching customer data against its own data.

The recorder’s office took action to correct its mistakes, the audit said, including fixing the misallocations and removing duplicate bills. The office also agreed with each of the 17 recommendations made by the auditor for specific quality-control measures and to outline clearer roles and responsibilities for financial oversight.

The auditor’s report reviewed a sample of three high-volume, prepaid customers at the recorder’s office, the type of business recording hundreds of documents or property sales each year. Out of nearly 4,300 account deposits, over the six-year period, the recorder’s office entered the wrong name on five deposits.

Those errors, though small percentagewise, had significant effects. They incorrectly reduced one customer’s account by $6.8 million, while incorrectly increasing the accounts of two others by $4.5 million and $2.3 million.

The biggest customer overbilled by the recorder’s office, the audit found, was King County District Court, which was overbilled by nearly $500,000. Other customers, such as law firms and cities, were overbilled by as much as $130,000 or as little as $11.

Dwight Dively, King County’s chief operating officer, wrote in response to the audit that the county was committed to implementing each of the 17 recommendations by April 2025.

The recorder’s office, Dively wrote, “is committed to ensuring statutorily required, timely recording of multimillion-dollar real estate transactions continues.”