Title problems were found in 36 percent of all residential real estate transactions in 2005, up from 25 percent in 2000, due to a booming real estate market and an increase in transactions, according to a title insurance industry survey.
“The most frequent curative action taken last year was obtaining releases and/or obtaining pay-offs for discovered liens, such as prior or existing first or second mortgages, unpaid child and spousal support, outstanding taxes, and other judgments against the property,” said Rande Yeager, president of the American Land Title Association, which conducted the survey.
The survey tracks changes in the title industry, including the number of orders received and percentage of title issues discovered and repaired prior to closing or escrow.
The next most common curative action, according to Yeager, was obtaining releases for assignment on deeds of trust/and or mortgages, followed closely by recording errors of names, addresses, or legal descriptions of the property.
“The booming real estate market over the last several years has increased the number of transactions significantly, which means more title problems are found,” said Yeager. “This clearly demonstrates the importance of a professional title search in all real estate transactions, whether purchasing a new home or refinancing an existing mortgage.”
The title insurance industry has been in the spotlight over the past year with statewide investigations into the illegal practice of kickbacks in Colorado, California and a number of other states. Fidelity National Financial and First American Title Insurance Co. last November agreed to pay a total of $22.7 million to consumers in final settlement agreements with California’s insurance commissioner over alleged rebate activities that violate the Real Estate Settlement Procedures Act and some state laws.
Home buyers and regulators alike have recently questioned the value and cost of title insurance, ALTA said. A Loan Policy of title insurance is required by lenders prior to the issuance of a loan, even on a refinance, to assure that the title is clear. Before a policy is issued, an extensive search is conducted to locate problems so they can be rectified and the transfer of property and/or loan can proceed, the group says.
While title insurers pay fewer claims than most other insurers, ALTA says, their upfront costs are substantially higher.
A copy of the complete survey can be obtained at www.alta.org.
ALTA represents title insurance companies and their agencies nationwide on a variety of industry and legislative issues.