The Gazette 1993

GAZETTE

JAN/FEB 1993

Title Insurance -v- Title Registration in the United States

the public records to determine whether or not a vendor of unregistered land has (a) the right to convey and (b) possesses clear and marketable title. There are three types of recording statutes affecting unregistered land found in the United States today. Firstly, the so called race type statute, where priority is given to the first conveyance recorded of two successive purchasers from a common grantor regardless of notice ("first in time, first in right"). Secondly, the notice type statute where priority is given to a bona fide purchaser who takes without notice of an earlier conveyance of the same interest. Thus the earlier conveyance would prevail if it is recorded prior to the delivery of the subsequent conveyance (constructive notice) but not if it is recorded after subsequent conveyance is recorded. Thirdly, the race-notice type statute, where a subsequent grantee of an interest which has previously been conveyed obtains priority only if he is a bona fide purchaser without notice and his instrument gets recorded first. Most states have statutes of the third type, some have notice type statutes, and a few have the first type. the delivery of the subsequent conveyance whether or not the Land title registration in the United States, known as the "Torrens system," 5 was originally introduced as a voluntary alternative to the recording system in twenty one states beginning at the end of the last century. However, for reasons discussed below, the Torrens system, in all but a few parts of the country, never generated enough lasting excitement to be a viable competitor to the methods of title protection which have arisen for unregistered land under the recording system. II. Registration of Title

by John G. Olden, BCL, Solr. Member, California Bar.

Introduction

Difficult questions relating to the certainty of title and the priority of competing inerests in real property confront conveyancers in the United States as in Ireland and elsewhere. The title concerns of purchasers, mortgagees and others are alleviated to a greater or lesser extent by various statutory schemes and conveyancing practices which have evolved in each jurisdiction over time. One legislative system designed to offer more than a modicum of title protection - the registration of title - has been widely regarded as a superior means to eliminate uncertainty in land titles, to simplify the conveyancing process and to cheapen the cost. However, title registration has been vigorously resisted in the United States since its inception. The preferred and prevailing custom in most areas of the country is to insure the accuracy of title through a policy of title insurance underwritten by a title insurance company. This article looks at the historical development and operation of these two mutually exclusive concepts Stateside, explores the nature of title insurance and «amines the reasons for title registration's general lack of success. Firstly, it is helpful to briefly discuss the recording system 1 which affects unregistered land in the United States. The earliest known evidence of a conveyance in North America is that of a deed written into a record book °f the Plymouth Colony in 1627, a practice which appears to have had Dutch origin. 2 The new settlers, who believed land was essentially an economic commodity, made it a Priority to devise methods to protect good faith purchasers and quickly L The Recording System

John G. Olden enacted recording statutes of limited scope and purpose, the non-English colonists basing theirs on continental European title systems and the English colonists on the Statute of Enrollment. 3 One feature of the early statutes, found in present day recording statutes in the United States, provided for the copying of conveyancing instruments in their entirety into a public record. An important evidentiary effect has resulted from this in that prima facie proof of title may generally be established solely from the public records. As a practical matter, this has removed the need for American land owners to maintain historical documents of title so copiously accumulated by those holding interests in Irish property. recording system is that a purchaser is bound by constructive notice of existing recorded rights and takes title subject to them. While an unrecorded conveyance is enforceable as between its parties, it is generally unenforceable as against a third party who acquires an interest in the subject property without notice. 4 Accordingly, it is essential to search A fundamental element, but certainly not unique, of the