There is a great post on the Ohio Association of Independent Title Agent's (OAITA) blog - Ohio Supreme Court Says No to Equitable Subrogation.  The Ohio Supreme Court last week refused to apply the doctrine of equitable subrogation to save a lender from a "missed" mortgage when it refinanced the borrower's first mortgage.  My personal opinion - that is good news!

I had the opportunity to attend the Ohio Association of Independent Title Agents (OAITA) Conference in Columbus, Ohio on Monday.  It was a great event with nearly 60 in attendance at the Crowne Plaza Hotel in the Arena District. If the independent agents have a future in the title industry, it lies with the OAITA and similar organizations.

An interesting post in the forums raised the issue of the unauthorized practice of law as it relates to title abstracting.  This is a very interesting topic with a long history that starts with the basic question - what is "abstracting?"  The function of an abstractor has changed over the years.  The line between abstracting and the practice of law has been blurred. 

In an industry dominated by short searches it seems rather odd to see an underwriter sue an agent for professional negligence for only searching 40 years, rather than 60.  But that is exactly what is happening in Putnam County, West Virginia.  When an attorney, acting as an agent for First American, missed a corrective deed filed in 1958, First American paid the claim and filed suit against him.

Hardly a week goes by without a news article on the evils of title insurance. They usually allude to the fact that title insurance is over-priced. Some call the fees "mysterious," others cite to the lack of "transparency," and Scott Woolley at Forbes calls title insurance premiums "dubious charges." Lately, they point out that title insurance is a $10 billion dollar industry.  Despite ALTA's CEO Kurt Pfotenhauer's statement that "nobody's getting rich" selling title insurance, the media, and the public, aren't buying it.

There is talk about federal regulation and many states have begun taking a hard look at addressing the issue before it comes to that. Maybe something does need to be done, but what is clear is that nobody seems to understand the nature of title insurance or the problems with the current regulations.

The dynamics of the title industry have changed dramatically over the past decade or so, but errors and omissions insurance has not.  This has caused many abstractors' insurance premiums to rise, often due to claims which are beyond their control.  When you consider the types of claims that are classified as "searching error," it is easy to see how independent abstractors could do everything right and still see an increase in their annual premiums for E&O insurance. 

I recently wrote a blog about the vague search standards set forth in Ohio's title insurance laws (see A Reasonable Examination Of Title). After speaking with a title professional in Arkansas about their more strict requirements, I became curious.  I wanted to know if Ohio was an anomaly.  Could it be that most states have good, solid requirements for the title evidence used to determine the insurability of title?  Not surprisingly, Arkansas turned out to be the anomaly.

Though it's not the primary purpose of the title insurance industry, title companies have always played an important role in the process of collecting judgments.  When an interest in land was conveyed, whether it was a sale or a new mortgage, the title company did a thorough title search and if there were any judgment liens they were required to be paid off before the transaction could proceed.  The main function of this, of course, was to clear the title so a policy could be issued.  However, as a secondary matter, it assured creditors that they would get paid if the debtor tried to dispose of their interest in the encumbered property.

Today, shoddy workmanship and a drastic decline in search standards means that judgment creditors can no longer rely on the system.  That is bad news for creditors.

The title industry is rapidly changing and there are two distinct movements afoot: one dominated by the underwriters and the other is attorney controlled.  There is no shortage of critics on either side of the battle, however, most seem to prefer neither.  That is not realistic - one side will win in the end and the many small independent agents and abstractors are going to get squeezed out of the industry.  It may be time to step up and realize that changes are coming and get behind one or the other... so choose your poison carefully.