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Course: Property - Title Assurance Spring 2001
School: unknown
Year: 2001
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Chapter 8

Title Assurance

  • in this chapter we deal with the system our country has developed to assure purchasers of land that they have good title to the land purchased.

  • At the heart of the system is the public records office, where all instruments affecting land titles (deeds, mortgages, liens, wills, and so forth) are recorded.

  • Before buying, a purchaser should serach (or, more accurately, pay a professional to search) the public records office to discover the evidence of title recorded in that office.

  • From the evidence of title in the records office, a professional (often a lawyer) will conclude who has the fee simple title to the land, which may be encumbered with a mortgage or a servitude.

  • Relying on the professional’s opinion of title, the purchaser decides whether or not to buy the land.

  • In a few localities, title registration is available. Under title registration, the state registers title and issues a title certificate to the owner, which is reissued to each new purchaser of the property.

  • Public records are not always perfect, and purchasers might want further security. SO private insurance companies sell title insurance to purchasers for a premium. In many localities, particularly in the Far West and large urban areas, title insurance companies maintain their own private record storage systems, which duplicate the public records and store the information in computerized system.


  1. The recording system

  1. Introduction

  • public recording of deeds, mortgages, leases, and other insturments affecting land title began in this country in the plymounth and massachusettes.

  • The recording acts generally do not affect the validity of a deed of other instrument. A deed is valid and good against the grantor upon delivery without recordation. The recording system serves other functions.

  1. it establishes a system of public recordation of land titles

  2. the recording system preserves in a secure place important documents which, in private hands, may be easily lost or misplaced.

  • in order to increase the reliability of the public records, statutes typically require that a deed be acknowledged before a notary public or other public official before it is entitled to recordation.

  • Recording statutes often specify what instruments can be recorded but generally any kind of deed, mortgage, lease, option, or other instrument creating or affecting an interest in land can be recorded.

  • About one third of the states have statutes permitting recordation of affidavits containing statements of fact relating to title.

  • Finally, recording acts have the function of protecting purchasers for value and lien creditors against prior unrecorded interests.

  • The recording acts in general have adopted and broadened the equitable doctrine of bonafide purchaser. Under the recording acts, a subsequent bona fide purchaser is protected against prior unrecorded interests.


  1. The indexes

  • it is impossible for a buyer of land to search out and find all the interests in a particular tract of land without using an index to the thousands, or millions, of documents filed in the recorder’s office.

  • There are two types of indexes currently used in the US

  1. tract index and

  2. grantor-grantee index.

  • both are useful in searching title

  • public tract indexes, indexing documents by a parcel identification number assigned to the particular tract, do not exist in most states.

  • This obstacle remains today where land has not been subdivided and conveyed by subdivision tract numbers, or conveyed by reference to a government survey, or, in recent years, has not acquired a parcel identification number in localities where such numbers are available

  • The most common method of indexing is the grantor-grantee system.

  • Under this system separate indexes are kept for grantors and grantees.

  • In the grantor index all instruments are indexed alphabetically and chronologically under the grantor’s surname.

  • In the grantee index all instruments are indexed under the grantee’s surname.

  • the more consolidation the easier it is to search title because there are fewer volumes to check

  • there may also be separate grantor and grantee indexes for each type of instrument – one index for deeds, one for mortgages, one for wills, one for liens, and so on.

  • The reference in the index to a document sets forth its essentials

  1. the grantor

  2. the grantee,

  3. description of the land

  4. kind of instrument

  5. date of recording

  6. and volume and page numbers where the instrument can be found set forth in full

How To Search Title

  • you will more easily comprehend the issues arising under recording system if you understand how title is searched in the grantor grantee indexes.

  • The best way to learn is by doing, and we recommend that you go to the court house in your county and search the title of your parents.

  • Seraching title bears some resemblance to what the genealogist does in establighing kindred; first trace backwards for ancestors, and then under each ancestor fill in the names and relationships of his or her descendants.

  • Similarly, in searching title you go backward in time to an acceptable source of “root of title,” then search forward from that source.

  • Since you use the grantee index to search backwards and grantor index to search forward, both indexes must be searched.

  • How far back? How far back in the abysm of time a title searcher must search to find a satisfactory root of title caries both with local custom and with the identity of client


Luthi v. Evans










Note: description by government survey

  • on the formation of the union it became federal government policy, initiated by continental congress in 1785, to make no disposition of lands in the public domain until the lands were surveyed and a plat of the survey was filed in General land Office.

  • All of the public land in the US in the areas above described was first surveyed into rectangular tracts by running parallel lines north and south and by crossing them at approximately right angles with other parallel lines so as to form rectangles six miles square.


Orr v. byers




  1. Types of recording acts

  • the earliest type of recording act was what we today call a race statute. Under a race statute, as between successive purchasers of blackacre, the person who wins the race to record prevails. Whether a subsequent purchaser has actual knowledge of the prior purchaser’s claim is irrelevant

  • the second type of recording statute is notice statute. Early in the 19th century some courts held that if a subsequent purchaser had notice of a prior unrecorded instrument, the purchaser could not prevail over the prior grantee, for such would work a fraud on the prior grantee.

  • In addition to protecting only subsequent purchasers without notice, a notice statute differs from a race statute in another respect.

  • A race statute protects a subsequent purchaser only if the subsequent purchaser records first.

  • A notice statute protects a subsequent purchaser against prior unrecorded instruments even though the subsequent purchaser fails to record.

  • The virtue of a notice statute is its fairness as between two conflicting claimants, but inasmuch as the question of whether the subsequent purchaser has notice depends on facts not on record, notice statutes are less efficient than race statutes.

  • The third type of recording statute is a race-notice statute. Under a race notice statute a subsequent purchaser is protected against prior unrecorded instruments only if the subsequent purchaser

  1. is without notice of the prior instrument ad

  2. records before the prior instrument is recorded.

  • the race notice statute incorporates features of both a notice statute and a race statute

  • the virtues of a race-notice statute, compared to a race or notice statute are debatable. It has been suggested that a race-notice statute tends to eliminate lawsuits turning on extrinsic evidence about which deed was delivered first.

  • Under a race-notice statute, the allegation that B’d deed was delivered after A’s or A’s after B’s is irrelevant if one of the deeds has been recorded; the first to record wins. It has also been suggested that a race-notice statute is preferable because, by punishing non recording, it provides motivation to record, making the public records complete.


  • the actual copying by the recorder of a document into the records does not necessarily mean that the document is “recorded” within the terms of the recording act. If it is not authorized, it may not be “recorded” so as to give constructive notice. Almost without exception, statutes require that, in order for an instrument to enter the records, it must be acknowledged before a notary public or other official. In addition, some state require that a transfer tax must be paid before a deed is recorded. If the record does not show that the tax has been paid, a deed actually of record may be deemed not to be legally recorded.



Messersmith v. Smith











  1. Chain of title problems

  • the phrase chain of title refers generally to the recorded sequence of transactions by which title has passed from a sovereign to the present claimant.

  • The period of time for which records must be searched and the documents which must be examined within that time period.

  • The meaning of chain of title varies from jurisdiction to jurisdiction; it includes the series of recorded documents that, in the particular jurisdiction, give constructive notice to a subsequent purchaser.

  • Sometimes in legal literature the phrase Chain of title is used to refer to documents found in a standard titlte search and not to include documents that might be found in an extended search.


Board of Education of Minneapolis v. Hughes











Guillette v. Daly Dry Wall, Inc.











  1. Person protected by the recording system

  • the recording statute in each state must be read carefully to see who comes within the protection of the statute. Observe that the Florica statute protects against unrecorded conveyances or mortgages, “creditors or subsequent purchasers for a valuable consideration,” and the California statute protects “any subsequent purchaser or mortgage” and “any judgment affecting the title”


  • this in turn may require the court to determine what is a valuable consideration for purposes of obtaining the protection of the recording act.

  • An examination of the cases leads to the conclusion that there is some disagreement as to how much a grantee must pay to be deemed a purchaser.

  • If a deed recites that it is for “$1 and other good and valuable consideration” this raises a presumption that the grantee is a purchaser for a valuable consideration, and places the burden of going forward to establish the falsity of the recital of consideration on the party attacking the deed.


Daniels v. Anderson











Lewis v. Superior Court











Alexander v. Andrews










  • Creditors.a number of recording statute protect “creditors” against unrecorded deeds and mortgages. Courts have interpreted these statues to protect only creditors who have established a lien, such as by attachment or judgment, and not all creditors.

  • In many states, a creditor is not protected until the creditor prosecutes a lawsuit to judgment and forecloses a lien or holds an execution sale.

  • In many states, a creditor is not protected until the creditor prosecutes a lawsuit to judgment and forecloses a lien or holds an execution sale.

  • Quitclaim deeds. In a few jurisdictions, a purchaser by quitclaim deed cannont claim the position of a bona fide purchaser without notice.

  • It may even be held that a quitclaim deed in the chain of title puts all subsequent purchasers on inquiry notice.

  • A quitclaim deed is treated the same as a warranty deed for purpose of giving notice.


  1. Inquiry notice

  • there are three kinds of notice a person may have with respect to a prior claim

  • actual

  • record

  • inquiry

    • the latter two are forms of constructive notice – notice that the law decliare you have regardless of your actual knowledge.


    Harper b. Paradise










    • commercial leases often run on for many pages, and the lessor and lessee may not want the amount of rent payable to be made a public record.

    • Should a recorded memorandum of lease put a subsequent purchaser to inquiry notice of the content of the lease??


    Waldorff Insurance and Bonding Inc. v. Elgin National Bank











    1. Marketable title acts

    • marketable title acts, enacted in a large number of states, have as their purpose limiting title searches to a reasonable period, typically the last 30 to 40 years.

    • The essential idea is quite simple: When one person has a record title to land for a designated period of time, inconsistent claims of interests are extinguised.

    • Some of the acts take the form of a statute of limitations barring a claim not recorded within the designated period.

    • Others declare that the record owner with a clear title going back for the designated period has marketable record title that is free and clear of adverse claims.

    • Thus, except for the interests excepted from the statute, title searches may be safely limited to the number of years specified in the statute.


    Walter E Barnett, Marketable Title Acts - Panacea or Pandemonium?

    • marketable title acts are intended to operate in conjunction with, rahter than as a substitute for, the recording acts.

    • The acts provide that if a person has an unbroken chain of title from the present back to his “root of title,” then he has the sort of title in favor of which their extinguishment feature will operate.

    • His “root of title” is the most recent transaction in his chain of title that has been of record at least 40 years.

    • The act seek to avoid the constitutional problems of an outright extinguishment of property interests by providing, in one of the specified exceptions, that the holders of old interests and claims may preserve them by recording a notice of claim.

    • The acts do not require a person seeking their benefits to be a bona fide purchaser. In fact, although the acts refer to “the time when marketability is being determined,” no “purchase” or other transaction affecting the land need occur to trigger the extinguishment of old defects and interests.


    • Regularly filing a notice of claim is his surest protection.


    Heifer c. Bradford


    1. Registration of Title


    Myres s. McDougal & John W. Brabner-smith, Land Title Transfer: a regression

    • cheap, expeditious, and secure methods must be designed, if they are not already available, to replace the present complicated and dilatory methods which, while costly to the individual and burdensome to the public afford no adequate security of title. Streamlined need cannot long endure horse and buggy obstacles to the liquidity of land. It is an ancient query, but its relevance grows: why should not a lot or a farm be as easily acquired and as securely held as a shop or a share of stock or an automobile?

    • It is in the wild disorder and the incompleteness of the public records

    • Every time the land is sold or mortgaged or subdivided – no matter into how small parts – it all has to be done over again: or else private title plants, better ordered than the public records, must be constructed and maintained at great expense.

    • Next, the incompleteness of the records. Here again the perils are legion. In simple truth the notion that we have anywhere in this county (apart from the Torrens statues) any such thing as “record title” is sheer delusions

    • Among the most frequently recurring items are: adverse possession and prescriptions: forgeries and other frauds; matters of heirity, and other disabilities; authority of corporate officers; invalidity of acknowledgements; identity of persons; invalidity of mortgage foreclosures and of judgements and decrees; want of legal delivery of instruments; violations of the usury laws; un-probated will, praetermitted heirs, and posthumous children; falisity of affidavits; revocation of powers of attorney by liens; extent of restrictive covenants; non-recordation of prior government patent; and facts about boundaries. Such are some of the hazards external to the records which may disturb the peace of the faithful searcher for an indefeasible title.

    • Where the interests making up a “title” are unusually complicated, memorials on the register page could refer an examiner to the field documents creating such interests. For convenience a copy of the register page, called a certificate of title, would be given to the owner. On subsequent voluntary transfers of the land, for double protection against fraud, surrender of this certificate would be required in addition to the vendor’s deed.

    • With the public records at long last in acceptable order, our bold reformer could then proceed to kill caveat emptor, protect the bona fide purchaser, and so create a new security of title.

    • Under such a system, there could scarcely be need of an insurance fund to protect purchasers. Yet occasionally an odd claimant of an interest less than the free might fail to get his interest properly registered because of oversight or error by a public official.

    • NOTES on the Torrens System –











    1. Title Insurance

    • title insurance developed because of the inadequacies and inefficiencies of the public records in protecting private titles.

    • Title insurance is brought by one premium paid at the time the policy is issed.

    • The premium is based on the amount of insurance purchased, which ordinarily, in a home owner’s policy, is the amount of the purchase price of the property and, in a lender’s policy, the amount of the loan.

    • Title insurance has not fixed terms and continues for as long as the insured maintains an interest in the property.

    • Title insurance creates liability to the insured only and does not run with the land to subsequent purchasers.

    • Title insurance is the opinion of the insurer concerning the validity of title, backed by an agreement to make that opinion good if it should prove to be mistaken and loss results as a consequence.

    • Most title insurance companies today use uniform policy forms based upon forms developed by the American Land Title Association. ALTA has two basic forms of title insurance policies, a mortgagee’s policy and an owner’s policy.

    • The mortgagee’s policy insures the mortgage lender and not the homeowner. The homeowner who desires title insurance must take out a separate owner’s policy

    • Title insurance guarantees that the insurance company has searched the public records and insures against any defects in the public records, unless such defects are specifically excepted from coverage in the policy.

    • The standard policy excludes losses arising from government regulations. . . also excludes claims of persons in possession not shown by the public records, as well as unrecorded easements, implied easements, and easements arising by prescription.

    • Standard policies also exclude defects that would be revealed by a survey or inspection.

    • Extended coverage, adding various kinds of protection, can be purchased for an increased premium.

    • It varies principally in that it insures that the mortgage lien is valid, enforeable,, and a first and prior lien against all other liens, including mechanics’ liens.

    • Almost all institutional lenders require title insurance (at the borrower’s expense). Because all secondary-market purchasers of mortgages also reequires lender’s title insurance, there has been an explosive growth of title insurance in the last 30 years.


    Walker Rogge, Inc. v. Chelsea Title & Guaranty Co.







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