Understanding the title insurance industry and what a title professional does for your property

The title insurance industry is often mentioned in the media when the mortgage crises, 'robo' signing in foreclosures actions, or deed and mortgage scams are discussed. However, many people do not fully understand what it is that the title industry does. To quote the American Land Title Association "Like a light switch that reliably delivers electricity, the land title transfer system in America works so well that most consumers never take the opportunity to learn how or why it works or the personal and societal benefits derived from this highly effective and efficient system of assurance." A title professional is trained in the art of examining the public records, reviewing the abstract of title (which is the compilation of documents pertaining to the property and the parties in the chain of title) and determining the very things that lead to the issuance of a title insurance policy such as: Who is the owner of the property; what liens encumber the property; what restrictions limit the use or alienability of the property; and what appurtenances benefit the property. However, one of our most important roles often occurs subsequent to this process; in determining curative measures to resolve title issues disclosed in the title search and thereafter assisting in resolving the issues. Upon careful analysis of the abstract and the relevant laws, the title professional will prepare the title report, certify title, raise the appropriate exceptions to title and will aid you in clearing said exceptions. This is done to enable the issuance of a title policy and to assure that the purchaser will acquire marketable title and that the lender will have a valid and enforceable lien on the property. The title professional is often at the center of the transaction, working with all involved parties get the transaction closed. The title company or agent attends the closing, reviews the documents to be recorded and ensures the originals are recorded in the appropriate county office. The title professional must not merely be versed in the real property law. The title professional has, in many instances, a broad knowledge and understanding of the bankruptcy code as it applies to the mortgages and transfers of real property and liens on the property of a bankrupt owner or prior owner; the Internal Revenue Code as it applies to the various tax liens that affect title; the CPLR and the RPAPL as they apply to foreclosure cases or partition actions through which title has devolved; the debtor and creditor law as it applies to fraudulent conveyances; the mental hygiene law as it applies to the appointment and powers of a guardian appointed under Article 81; the lien law as it applies to building loans and mechanics liens; the not-for-profit law corp., religious corp. law, education law, and the business corp. law, to name a few, as they apply to the sale or mortgaging of real property; the EPTL, as it applies to deaths in the chain of title and trusts and/or trustees in the chain of title, as well as, numerous other state laws that affect the insurability of title. Beyond preparation of the title report and issuing a policy, a seasoned title professional should provide guidance on a multitude of matters affecting title. Some examples are: A) Advise you to include in your mortgage an easement for ingress and egress over that portion of borrower's property that was landlocked by their remaining property. B) Alert you to the improper acknowledgment on the mortgage or deed you wanted to insure. C) Confirm that judgments were properly disposed of even though the seller had filed a bankruptcy petition and had been discharged. D) Determine that the real estate tax exemption which currently benefits the premises should have terminated years ago, upon the death of a prior owner. Based on the foregoing, I hope the reader can see the value of the title industry. The title industry ensures that real estate is transferred in a quick, efficient and legal manner. Purchasers of real estate can be confident about purchasing property because the title industry insures them against fraud and defects in the public records. In summary, the title insurance policy protects real estate owners and lenders against any property loss or damage they might experience because of liens, encumbrances or defects in the title to the property. Jean Partridge is chief counsel and managing member at Benchmark Title Agency, LLC, White Plains, N.Y.