ALTA Responds to Article Ignoring Title Agents’ Efforts to Clear Title
November 9, 2009
Ken Harney’s recent article, “Putting the good faith back in closing,” hits the mark on every point but one; namely, the value of the work performed by title agents prior to closing to ensure that a free and clear title is transferred to its rightful owner. It is a labor intensive search of the public property, tax, and judicial records by skilled title examiners that provides homebuyers and lenders the security they need to purchase and transfer real estate. Without this important work, fraudsters and fear of the unknown would quickly undermine the most efficient property transfer system in the world.
Forged documents (one of the most common title problems found) in addition to falsified documents, invalid deeds, and incorrect property descriptions are just some of the title issues that must be examined in the course of a title search. Title risks include recording mistakes, deed indexing errors, unpaid mechanics' liens, judgment liens, income tax or property tax liens, undisclosed easements, claims by missing heirs, and claims by ex-spouses. The careful research required to eliminate these risks is performed by a local title agent, which is why agents retain the majority of the title insurance premium consumers pay at closing.
Further, it is the title insurance company’s willingness to stand behind this work – even if the defect originated in faulty public records – that provides lenders the confidence to release funds once the title guarantee is in place. In other countries where there is not title insurance available lenders must wait until a transfer is actually recorded on the public record to release funds. This inevitably takes more time and drives up the overall cost of real estate.
While it is true that the word “commission” is frequently and misleadingly used to describe the important work of title agents, it makes their good work no less important.