A break in the chain of title can be a very frustrating experience for an examiner.  I would say that it is something that we have all encountered at one time or another, but with the popularity of current owner searches, I doubt that is the case.  There are many abstractors that only do current owners.  Sometimes, that just isn't enough... and we finished a search yesterday that proves it.

We have a full interest in 1982 - title vested in Nina Doe. The next deed is a Certificate for Transfer in 1985 from Leo Doe, deceased, to Sarah Doe and it claims to pass the "entire" interest.  There is no record of Nina Doe ever transferring title to anyone and there is no probate case of record.  In Leo Doe's probate case there is a Certificate of Title Examination, prepared by an attorney who has since passed away, that states that Sarah Doe had a two-thirds interest and Rosemary Doe had a one-third interest in this property. Unfortunately, it doesn't say where those interests came from and there is nothing of record.

A month before that Certificate for Transfer was executed, Sarah Doe executed a Warranty Deed to Keith Doe which was filed immediately after the Certificate for Transfer.  The Warranty Deed appears to be for a full interest, but from the recorded documents it appears that she did not own the full interest. 

Keith and Rosemary Doe were married, and they later deeded out by Quit-Claim Deed to Bruce Doe.  So, if we rely on the Certificate of Title Examination in the probate case, even though no documents can be found of record to support it, Keith and Rosemary held title to the full interest when they deeded the property to Bruce.  However, there is nothing that ever conveyed Nina's interest to Leo, Sarah, or Rosemary. 

Because the deed from Sarah to Keith was a Warranty Deed that appears to transfer a full interest, mortgages have been taken out on the property without raising any suspicions. That is possible because loan policies no longer require any more than a current owner search.  If a more thorough search had been done, it would have been clear that there was a missing transaction in this chain of title. 

Now one of the lenders is foreclosing - thus they asked for a full search which uncovered the problem.  Hopefully, the law firm will be able to track down the parties that need to be served to take care of this in the foreclosure. I have seen some firms that will do a foreclosure on a short-search, which would have potentially left this relatively recent break in the chain undiscovered.

Short searches can be dangerous.  A Warranty Deed doesn't necessarily mean a full interest has been conveyed - a grantor can only transfer the interest that he owns.  If he never acquired the full interest, these kind of problems are easily missed on a current owner search.  Often times, clients will insist that a current owner search go back to a Warranty Deed out of the family.  This chain has six deeds between family members and I assume that since there are mortgages on this property and nobody has ever taken any steps to clear this title, that those current owners searches stopped on the Warranty Deed from Sarah to Keith - even though that was an intra-family transfer. 

Sometimes a current owner isn't enough.  In my opinion, clients need to use well trained, experienced and knowledgeable abstractors and they need to be willing to trust them to do what needs to be done on a search to ensure that it is sufficient to insure the title.  That may mean that sometimes they will get more than a mere current owner, and be billed accordingly.  In my opinion, a professional abstractor would not have stopped on that Warranty Deed and this problem would have been discovered before the mortgage was taken out.  That is the time to find and correct title problems - they shouldn't be first discovered in foreclosure.

Robert A. Franco
SOURCE OF TITLE
rfranco@sourceoftitle.com