I completely agree.  It seems rediculous to me that the abstractor charges the smallest amount of anyone involved in the closing process (i.e. lender, broker, real estate agent, title company, etc...) and they probably have the greatest liability.  You are right, in the case of something mis-indexed we have no way to provide evidence that it was changed after the fact.  Unfortunately the abstractors are at the end of the food chain and there is no one left to pass the liability on to.

Mistakes can happen to anyone and I think in cases where a good abstractor makes a mistake they shouldn't necessarily be held liable when there is title insurance that was designed to pay the claim. Otherwise, what is the purpose of title insurance?  If the clients want their abstractors to share in the liability - they should split the premium with them.

Now I believe there are cases when abstractors are GROSSLY negligent.  I have seen many that only do a cursory search of the computer and don't bother to run all of the indexes, and I think they should be liable.  But an abstractor that does his due diligence and makes a mistake should not be.  It is just very difficult to know the difference.

Unfortunately, this means that we all should carry E&O policies, and in a perfect world we should be able to charge according to our liability.  The sad reality is that there are many abstractors who don't carry E&O and will do the searches for less - and the rest of us must compete with that.

Good points, thanks for bringing it up.

Robert A. Franco
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