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A follow up to Lenn's post

By
Real Estate Agent with Integrity Real Estate

A special thank you to Lenn Harley for writing a stellar post about the offshoring of title searches. Check out Lenn's diagram. I love it! Thanks are also due to all of you who commented and showed concern. Offshored title searches are a particularly complicated matter that have become something of a personal cause for me and a rapidly growing number of others.

I've prepared a slide presentation highlighting the spirit of Lenn's post for Title-opoly and decided to give friends on Active Rain a sneak preview. Following Jeff's advise, I'm experimenting with eyejot and hope to embed a meaningful message in the Title-opoly post.

As a title company owner, I had two first hand experiences with costly litigation stemming from title claims. As an expert witness, I was retained once by a title insurer and another time by the insured's attorney who had filed suit against the title insurer. Homeowners involved in title claims often feel that they haven't been properly represented by title insurers and hire their own attorneys.

Claims council working for title insurers have a duty to protect the interests of corporate shareholders. I don't know of a singe instance where a homeowner was painlessly compensated for losses after notifying their title insurer of a pending claim. The terms of title policies, which are rarely explained or understood, give title insurers a significant number of advantageous rights including the latitude to thoroughly investigate any and all allegations, possible relationships, prior knowledge, etc. It's standard practice for insurers to conduct lengthy investigations to eliminate any possibility that parties to a claim might be in collusion. I once had a client who, as the defendant named in a title related cause and the seller of a Maryland property, was unable to consummate a contract of sale for well over year while a title insurer investigated the joint ownership of a boat in Florida. Sad but true: a pending sale means nothing to claims council who pursue their own agenda.

Title claims equate to litigation, depositions, court dates, piles of legal documents, subrogation of rights, etc. Consumers subjected to title claims couldn't possibly be compensated for the sleepless nights and emotional trauma they're forced to endure, nor do title policies allow for the payment of punitive damages.

I'm often asked why the offshoring of title searches remains an increasingly prevalent practice in light of the elevated claim's ratios reported by title insures. I don't have an answer.

I do know from experience that a thoroughly (locally) searched and examined title rarely results in a claim.

It's a matter of trust when you really think about it. Title companies are expected to act in the best interest of consumers. Offshored title searches raise serious questions about the integrity of companies that use them.

Comments (13)

Sarah Cooper
Real Estate Shows - Hurricane, WV
I'm glad that in my little community, I know the people doing title searches by name, and they're always just a phone call away.
Feb 08, 2008 04:41 AM
Ed Rybczynski
Integrity Real Estate - Havre de Grace, MD
Your Source for Local Real Estate

Sarah

I envy your situation in many ways.  I understand that abstracts are still very much controlled by attorneys in West Virginia.  I really, really miss being an abstractor, but I wouldn't go back to the situation as it was when I left the profession.  There was a time when real estate things were in Baltimore the way they are in your town today.  You should know your abstractor, it makes perfectly good sense.

Thanks for leaving a comment.  I really appreciate it. 

Feb 08, 2008 04:47 AM
Sarah Cooper
Real Estate Shows - Hurricane, WV
And here's a refill on your coffee.  :)
Feb 08, 2008 04:50 AM
Greg Knowles Santa Barbara Ca.
Fidelity National Title Group-Santa Barbara - Santa Barbara, CA
Thanks Ed, I only have one comment to ad. I heard a very high ranking title executive tell a group that they want claims. His reasoning was that this will bring the industry in to the news and help create a value for what we do. Sounds crazy I know, because I believe like you that a consumer doesn't ever want the hassle of being involved in a claim. As you stated they usually aren't pretty.
Feb 08, 2008 05:23 AM
Anonymous
tim killcoyne
You know, its not just that some company in India got the bright idea to look at internet-available records to do their work. There are numerous companies that buy records here and then move copies offshore, building plants elsewhere. The piece that gets missed is that there are always abstracting "tricks" you learn when you work in the courthouse. You go from the Clerk to the Assessor to the Probate Court to the Planning and Zoning dept to flesh out your search. Cant do that when all that exists offshore is a copy of the Clerks records. I consulted for a company that had an interesting idea. They wanted to take maps of the county land, broken down to the Assessor's parcels and then line up all potential docs (real estate, treasurer, zoning etc) so you could just click on a picture and bring up an entire search. Required creating an OCR program that would recognize a legal description from a Grantor and an extraordinary GIS system. They actually got pretty close. But the 15-20% of docs that couldnt be read by their program went offshore to be eyeballed and posted. 15-20% of Denver Metro docs over the course of say 20 years in a huge number, and they ran out of money. I tell you this to give you a better idea of what is happening offshore. Its not people reading available online records, its companies moving copies of public records to the Philippines, India, Panama, the Dominican Republic etc. But the cost to do this has to come way down to be effective. If you only look at some documents, and only from one source, you wont have a good picture, nor will you be able to see the kinks in the chains of title. However, you will be able to do a goodly percentage of "Lot-Block" type searches and make cookie cutter requirements to pass title (remember, its not just offshoring abstracts, a number of companies are actually having the EXAMINATION and writeup done over there).
Feb 08, 2008 07:52 AM
#5
Ed Rybczynski
Integrity Real Estate - Havre de Grace, MD
Your Source for Local Real Estate

Tim

My worst fears are born of the overseas examination of titles.  I've read that there's an abundance of attorneys in India, in particular, that were educated in the US.    In my mind, there's a classically progressive march that oligopolies take towards market domination.   It doesn't bode well for the domestic real estate industry to have the bulk of ownership data in the hands of only three players.  It doesn't help that the substantive processing is taking place overseas.

I  predict that a new model will emerge where real estate consumers in this country place calls to service centers in India, etc where the bulk of processing will take place.

Ask yourself: why are First American and Fidelity National gobbling up lead generation companies and listing video companies?  These ancillary services are of no value to title insurers in light of the current RESPA enforcement climate which is certain to stick.  Title insurers are acquiring these companies to eliminate competition because they plan on entering the sales brokerage business.  I think the writing is on the wall and the offshoring connection is a key element of the equation.  

I hope all is well. Please send Andy my best if you speak to him.

Feb 08, 2008 08:24 AM
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Ed.  Seems to be working O.K. in Firefox.  I'll send Bob a note.

My system is optimized for IE7.

Feb 08, 2008 08:59 AM
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland
This is a text. This is a test. Seems to be working now. The stars must have aligned.
Feb 08, 2008 09:32 AM
Ed Rybczynski
Integrity Real Estate - Havre de Grace, MD
Your Source for Local Real Estate

Lenn

I hear you loud and clear. 

Feb 08, 2008 09:34 AM
Missy Caulk
Missy Caulk TEAM - Ann Arbor, MI
Savvy Realtor - Ann Arbor Real Estate
Looks good Ed, go for it!
Feb 08, 2008 09:35 AM
Ed Rybczynski
Integrity Real Estate - Havre de Grace, MD
Your Source for Local Real Estate
Thanks Missy.   I'm still experimenting with eyejot, but so far I love product.  I saw you wrote about it on your blog.  Have you used the product yet?
Feb 08, 2008 09:39 AM
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Ed.  Still working fine in Firefox.

However, I don't have the SlideShare plug in with Firefox so I'm not getting the slide show, which I get in IE7.

Back to IE7.  The reason I use it is because it's more compatible with MRIS for me and I'm in and out of there all day long.

 

Lenn 

Feb 08, 2008 10:56 PM
Bill Roberts
Brooks and Dunphy Real Estate - Oceanside, CA
"Baby Boomer" Retirement Planner
Ed, In all my years in real estate the only title claims that I have seen involved forged documents. A "local" search would not have uncovered that anyway. Bill Roberts
Feb 11, 2008 03:58 AM