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Source of Title Blog

The Examination Period For A Full Search
by Robert Franco | 2009/05/29 |

As the host of Source of Title, I often receive questions via email.  I do my best to answer them and, every once in a while, there is one that is particularly interesting and worth sharing.  I received the following question today:

Would you be able to refer me to the reference clarifying whether a full search in California needs to go back 40-years or 60-years?

Often times, abstractors are contracted to provide a 40 year search, or a 60 year search, or perhaps some other quite arbitrary period of examination.  In such a case, the abstractor knows what the client expects.  However, other times, the client will just ask for a "full search."  Exactly how far back should the abstractor search to fulfill the request?

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This particular question asked about California. Since I am in Ohio and not familiar with California law, I provided, by way of example, what resources I would consult here to determine the applicable examination period.

The first thing to mention is that there is no reference that will state "a full search should go back X-number of years."  If I ever saw something that stated the examination period with such specificity, I would never trust it again and it would go straight into my trash receptacle.

That being said, I would consider the following to determine the how far back a full search should go: 1) the state's marketable title act; 2) the state bar association's title standards; 3) local custom; and 4) the underwriter's requirements for insuring the title.

Marketable title acts can be confusing and misleading.  Basically, marketable title acts extinguish certain interests that are not preserved by filing notice in the appropriate public records within a certain number of years.  Generally, the number of years ranges from 20 to 40 years (it is 40 years in Ohio) from the "root of title."

The Ohio Marketable Title Act provides that "any person claiming an interest in land may preserve and keep effective the interest by filing for record [a notice] during the forty-year period immediately following the effective date of the root of title of the person whose record title would otherwise be marketable."  However, the most important thing to understand, and perhaps the reason why marketable title acts can cause such confusion, is that certain rights are not barred or extinguished.  Among those interests which are unaffected by the Ohio Marketable Title Act are certain leases, railroad and public utility easements, coal rights, interests held by the government, and even some mortgages.

Mortgages, in Ohio, are good for 21 years plus the life of the loan.  Thus, a 30-year mortgage taken out 50 years ago could still be valid.  I don't believe that lenders were offering 30-year mortgages in 1958, and if there were any, I doubt that they would still have open balances.  However, with 40 year mortgages being talked about today, this issue could arise in the future.

For this reason, the Ohio Title Standards, promulgated by the Ohio State Bar Association, state that "a period of examination made pursuant to the Ohio Marketable Title Act shall be sufficient."  This is further clarified in a comment.

There is nothing in the Ohio Marketable Title Act that entitles a title examiner to rely upon a simple forty year search period.  He or she must be aware of the several exemptions in the Act that are not barred by the mere passage of 40 years.

Now, I know what you are thinking... "That is about as clear as mud.  So how far back should an examiner search the title?"  Well... there is a simple answer:  It depends.

We also consider the local custom as it may apply to the particular purpose of our search.  For example, if we are searching for the purpose of issuing an owner's policy, it may be necessary to include utility easements (which are not extinguished by the Act.).  Thus, we would consider when the area was developed and search back far enough to find them, even if that is beyond 40 years.  The same would be true of a search for an attorney who is planning to issue a title opinion.

The underwriters' requirements also play a role in our decision.  If the client is going to issue a loan policy, they will most likely be including blanket exceptions for "easements and restrictions."  They may be fine with a 40 year search, even if that might mean utility easements may not be shown.  Typically, the client is most concerned with liens and encumbrances that would adversely affect the lender in the event of foreclosure.  Lien priority is certainly the most important aspect in this regard.

Thus, an experienced title examiner should know and understand what their clients do with their title searches.  It is important for abstractors to have a good relationship with their clients and get to know what their requirements are - and those of their underwriters. 

As I have said before, there is much more to title abstracting than simply copying deed and mortgage information from the public records.  Even a seemingly-simple decision like how far back to search, can become complicated.  There are several factors to consider that require an experienced abstractor to know the applicable real estate laws, local customs, underwriting guidelines, and even have a certain familiarity with the local geographic history (like when the utilities and railroads were actively filing their easements). 

Abstractors should be vigilant to remain aware of all of these issues and changes in the law and practices of the industry.  Though most abstractors are not licensed and have no continuing education requirements, that does not mean that they should not always be striving to learn more. 

Robert A. Franco
SOURCE OF TITLE




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Categories: Abstractors

1361 words | 32210 views | 3 comments | log in or register to post a comment


Local , Experienced abstractors should be used exclusively

Excellent note Robert- this emphasizes the importance of local, experienced abstractors be employed to do the title searches - NEVER one from some other local or without the expertise of the local clerk's office. It was the advent of the "short" policy that brought about alot of the unknowns we now experience with back work - relying on someone else's search is always a gamble, unless one knows the other abstractor. I know I was a little dismayed when the short search became the standard- I was doing "full" searches and when I would turn them in, was told, "Oh, we don't need the schedule "B" info for the policies we do now"- I was wondering to my self, "why am I doing all this work, when they just ignore it???" I kept doing titles the same way I had always done them- they could dump or throw out what ever they wanted- I had to be prepared to answer that "question" if it ever came up anyway.
In Virginia we do 60 year searches or to the next General warranty deed if the 60 yr is a special warranty deed.
One has to wonder the requirements of the "off shore" searches- no wonder there are so many claims- no one knows what they are doing or getting in the deal, especially the customer-you would think the settlement companies would be more protective of the people they are working for and taking money from to perform a service of such importance.
Steve Meinecke
Franklin, Tn

 

 
by STEVE MEINECKE | 2009/06/01 | log in or register to post a reply

A Short Search with a Low Qualtity Policy Should Cost Less

I completely agree with Steve. A full search is in the best interest of the consumer and a local abstractor is in the best [psition to give a complete search.

I have trouble with title policies that omit easements and restrictions and only look back a deed or two.. If a "short search" is being done, and a "half policy" ( i.e. incomplete because it was too much trouble to look for complete info) then the consumer should only be paying for half a policy.

 

 
by Jeanine Johnson | 2009/06/02 | log in or register to post a reply

"Short" search.

During the 90's and forward in California, almost every title search was what you folks would call a "short" search.

Given the competition and subsequent market demand for 3-day, and sometimes less, turnarounds on preliminary title reports, the industry standard in southern California was to go forward from a full value deed with concurrent policy on the purchase money loan.  Most of the time that meant throwing in a policy and only searching items posted after that policy date.

Most refi transactions required a "streamline" policy which contained blanket codes for all easements, CCR's and agreements.  A fast check on judgments and bankruptcies filled out the schedule B items.

At the larger firms, First American, Fidelity and LandAmerica a searcher was expected to whip out at minimum 25 of these searches a day.

There were no corners that were not cut - hahaha.

 

 

 

 

 

 

 
by Robin Banks | 2013/01/07 | log in or register to post a reply
Source of Title Blog

Robert A. FrancoThe focus of this blog will be on sharing my thoughts and concerns related to the small title agents and abstractors. The industry has changed dramatically over the past ten years and I believe that we are just seeing the beginning. As the evolution continues, what will become of the many small independent title professionals who have long been the cornerstone of the industry?

Robert A. Franco
SOURCE OF TITLE

 

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