Searchers, Abstractors, And Examiners
Does anyone know the difference between a "searcher," an "abstractor," and an "examiner?" These terms are used so interchangeably today that you have to wonder if anyone can even make a distinction between them - well, I can. My definitions may be different than others, and some may not agree with me. But for what its worth, let me explain my take on it.
by Robert Franco
| 2007/12/24 |
Searcher: Searchers were used in the equity market for property reports. Rarely was title insurance issued on the work product of a searcher. They can find a copy of the deed, get tax information and find any open mortgages and liens. Barring anything complicated, they may even be able to report a proper title vesting. Vendor management companies built large networks of unskilled searchers that could quickly churn out basic current owner searches.
I have known many "searchers" that I would never trust to search a title for title insurance purposes. They don't possess the depth of knowledge necessary to identify many potential problems that can be crucial when insuring title.
Abstractor: Abstractors were used to provide all of the information necessary for a title agent to review to make determinations of insurability. They report all of the same things a searcher would, but they also look deeper and understand more complex issues surrounding title. They were able to spot appurtenant easements, erroneous court proceedings, future interests, reversionary interests, problems affecting access, etc. Abstractors would report all of these things, and provide copies of those that the insurer should review before making a determination of insurability.
Abstractors know how to create a proper chain of title and search all of the various interests out to report a complete and accurate title vesting. They are able to show any missing interests that may need to be corrected prior to issuing title insurance.
Examiners: Examiners possess all of the skills of an abstractor, plus many of those of a title agent. They are familiar enough with not only the title but also the insurance side of the equation to be able to state the requirements for insuring the title. A good examiner can prepare a title search suitable to go straight to a typist to prepare a title commitment. The agent can then review the commitment and the examiners search notes for accuracy and sign off on it.
So why is this even important anymore if the industry has completely lost sight of the differences? Simply because we have too many searchers that consider them selves to be abstractors - or even examiners. They don't realize their own limitations and most of the time, neither do their clients. Clients expect to be able to pay abstractors and examiners the same as they have always paid their searchers, and they expect the same miraculous turn-around times as well. After all, a search is a search, right? ...WRONG.
A searcher should never be used for a title search that will be used to issue title insurance. There is much more to issuing a title policy than finding deeds and mortgages. Searchers simply do not have the expertise to recognize the complicated title issues that must be identified prior to insuring title. Give me a smart chimp and couple of free weekends and I could probably teach him to be a searcher... but he will never be able to be an abstractor or examiner.
What is the effect we have seen from losing sight of the difference between these categories?
Source of Title Blog ::
- Declining prices: If the client doesn't know the difference, they expect an abstractor to provide their searches for the same prices they pay their searchers.
- Automation and Off-shoring: If it is perceived that there is no difference between a searcher and an abstractor, then it is assumed that they are all providing deed and mortgage information. That can readily be obtained online, whether automated or compiled manually in India (they might even be using smart chimps, who knows).
- Lack of Respect: Because so many searchers consider themselves to be abstractors, and the industry cannot distinguish between them, the entire profession is grouped under the same umbrella. Despite the additional skill and knowledge of the abstractors and examiners, they are judged to have the same value of the unskilled searchers.
- Higher Claims: Searchers are often used interchangeably as abstractors and examiners in the title insurance industry and their lack of knowledge causes more claims. It isn't necessarily the short search alone causing the higher claims, it is that searchers are used rather than abstractors and examiners. Often times, a current owner may be sufficient for title insurance purposes. Though I don't agree with the practice, if the current owners were prepared by more skilled abstractors or examiners, some of the claims that result could be avoided.
- Rising E&O Rates: E&O companies do not distinguish between searchers and abstractors either. Thus, they insure the work done by searches and their claims affect the rates of the professional abstractors and examiners. Even if the searcher, abstractor or examiner doesn't have E&O coverage, there may still be a claim on the title agent's or VMC's E&O policy. So long as the work is being done by the inexperienced searchers, we all pay the price of higher E&O rates.
- Lack of Regulation: I have often argued that what this industry really needs is regulation of those preparing the evidence used to issue title insurance policies. However, without any generally accepted definition of "abstractor," as the term is used generally to refer anyone who prepares title searches, how can they be regulated? Regulation should exist to ensure that only skilled professional abstractors and examiners are used to provide title evidence used for insuring titles. The first step is dividing up the categories of those providing title searches to distinguish between the qualified and unqualified.
Of course, all of this is irrelevant if the industry doesn't care. And, it appears that many do not. I don't know how many times we have reported title problems that our clients do not correct. If they are going to insure over defects regardless, then there is really no point in spending more money and waiting longer for a reliable abstractor to provide a quality product.
I have shared a few stories before of title agents that don't know the difference between a lien and an easement. I had a client inform me that our search was "deficient" because we reported an easement with no amount. When I told her that it was an easement, there was no amount, she replied "Well then how am I supposed to get a pay-off?" She then proceeded to tell me that I had to revise my report and remove the easement because "they didn't ask for them." We did not.
Once, when we reported a husband and wife in title as tenants in common, we received a mortgage to file that had "DECEASED" typed on the husband's signature line. When I called to inform them that his interest would need to probated, they told me to file it anyway. We returned it to them with a note explaining the problem and they sent it directly to the recorder's office to file anyway.
If underwriters continue to sign agents that really have no business being in the title industry, quality title searches really don't matter. It is really no wonder so much of the title work is being done online and off-shore. You can easily obtain a legal description and mortgage and lien information online. If they aren't going to pay any attention to the contents of the search, why waste the money?
What this industry really needs is more agents who understand title insurance, who care about the quality of title work they receive, who listen to their abstractors, and... a way for them to differentiate between a searcher and an abstractor or examiner. Until that happens - until we have some quality assurance from end to end - the industry will continue to spiral into decay. Title insurance will continue to lose its value and we will see more claims, higher E&O, and more punishment in the press.
Robert A. Franco
SOURCE OF TITLE
Categories: Abstractors, E&O Insurance, Title Industry, Title Problems