This is a repost of an article written by Richmond-based insurance attorney Janice Carpi and originally published by GRS Group in December 2011.
Because a title policy is retrospective in nature, it is necessary for the title company to know the history of the land to be insured by the title policy. This history contains information regarding who owned the land previously, any mortgages or deeds of trust that have been put on the property, and any easement, assessments, liens, or other matters that have been placed on the property. But how does the title company go about finding out this information?
Every piece of real estate, no matter where it is located, has a history. In the United States, that history starts with the original colonial powers that came here to conquer and settle this vast new world. The east coast has a history of English colonization, while the west coast was conquered and settled by the Spanish. Louisiana has its own unique history of French colonization. Each colonial power imposed on its new world territories its own laws, and along with its laws, its version of how land was transferred from the colonial power to individual owners. For the most part, the original land grants were from the monarch to noble settlers (Maryland, Texas), religious groups (Pennsylvania), trading companies ( Jamestown, Virginia), or the Catholic Church (California). When these original grantees were ready to sell their original land grants, they used the method of conveyancing that was popular under the laws of the respective colonial powers.
England has a long history of recording conveyances under deeds from grantor/grantee, which are then recorded in local land offices in large record books. The recorder would first copy the entire contents of the deed word for word, as it was originally written, into a land record book for the county where the land was located. Then, the recorder would enter into a separate index book the name of the grantor, the name of the grantee, a description of the land being conveyed, the date of the conveyance, and the book and page number where the deed was written into the land record books. Each conveyance, from the original colonial grantee, to his grantee, to the next, to the next and so on, is recorded chronologically in the record books, and indexed by grantor and grantee in the index books. To research the history of ownership of a particular parcel of land, you would start with the index book, to find the deed into your grantee, and then work backwards through the index books to find the deed into your grantee’s grantor, and so on; back for years until either you reach the original conveyance from the state or monarch. This is called a “chain of title”, and in that chain of title will be recorded not only deeds, but also any mortgages, easements or other matters affecting the title to the property that have been created by any of the prior grantors.
Almost every state in the United States adopted the grantor/grantee method of recording conveyances of title, and for years title searches were done by tracking conveyances in index books, then going to the referenced record book and page to read the contents of the deed to see who conveyed the land, a description of the land, and whether there were any conditions or limitations on the quality of the conveyance. Then, the searcher would continue working back through the chain of title to make sure there were no defects in the conveyances. In recent years, much of this information has been computerized, and it is very rare for someone to have to actually search through old record books, but the system remains essentially the same. Many computers have the ability to search by land tract or reference number, without using a grantor/grantee system, but legally, the grantor/grantee chain of title is the most accepted system.
Historically, when someone wanted to buy real estate, it was common for the purchaser to hire a lawyer to look into the title and draft the deed. The lawyer would often hire someone to perform a search of the land records, compile a list of all the documents found in the chain of title, and briefly describe (or “abstract”) the contents of each document. The abstract of title is not a guarantee that everything affecting the title to the land is contained in the abstract, nor does it guarantee that every document contained in it is valid. It was up to the lawyer to examine the abstract, obtain full copies of a document if it was necessary to read the entire document, and render an opinion as to whether the status of the title, as revealed by the abstract, was good.
One of the problems with this system, however, is that a title search and exam won’t reveal certain types of title problems or defects, such as a forged deed or a deed executed by someone who had no authority to sign. Through no fault of the lawyer or title searcher, there may have also been other matters or liens that affect the title that are not revealed by the land records. In these types of situations, there was often no monetary recourse for a purchaser who might lose his property or investment because his grantor did not have good title to convey. Title insurance was created to insure a purchaser against just such a case, insuring against actual loss suffered by the purchaser/insured arising from a title defect that was not revealed by a title search and review by an attorney, or from a negligent search or exam.
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