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GAZETTE

JAN/FEB 1993 '

"It is important to remember

that title insurance does not

guarantee the title of a particular

piece of real property and

likewise cannot be equated with

evidence of title."

Title insurance companies generally

do not assume known risks. Risks

are eliminated by diligently searching

the title which is in the interests of

both the insurer as well as the

insured. One observer notes that it is

difficult, particularly in some urban

areas, to obtain an abstract of title

or to conduct a reasonably reliable

and up to date search of the public

records, and, while it is understood

that a title policy cannot be deemed

to be evidence of title, it might

sometimes be the "best evidence"

that can be obtained.

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e) The unauthorised practice of law

controversy.

There is an ongoing

legal debate as to whether a title

insurer, in conducting a title search,

examining title documents or even

issuing a title policy, engages in the

unauthorised practice of law. Title

insurance companies insist that, as

insurers, they are entitled to examine

the risk which they are assuming.

Even if this results in the exercise of

legal judgement, title insurers

contend that they are merely

representing themselves and self-

representation ought to be permitted.

Many courts have decided in favour

of title insurers when this issue has

been brought to their attention by

concluding that the activities in

question are allowed if they are

incidental to the business of title

insurance companies. However,

courts in some states have more

routinely restricted the conduct of

title insurers often by finding that

the suspect activities are tantamount

to the giving of legal advice.

There has also been judicial scrutiny

of the ancillary services offered by

title insurance companies. Many title

insurers offer escrow and closing

services^and will often prepare

closing documents, activities which

are not related to a customer's

decision to obtain title insurance.

Most lawyers would have little

difficulty concluding that the

drafting of conveyancing documents

constitutes the practice of law.

However, some courts, while making

a distinction between simple and

complex documents, have permitted

title insurance companies to engage

in this practice as incidental to the

business of the companies. Courts in

other states have decried this practice

and so the debate continues.

One commentator sees the attempt

to restrict such services " to be

nothing more than efforts to

preserve a field of law practice for

the benefit of the bar."

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But the bar

has not made a sufficiently valiant

effort to preserve the traditional

position of lawyers as conveyancers.

According to another commentator,

for the bar to succeed in this regard

there must be an overhaul of the

present system: "The whole case for

a lawyer monopoly of conveyancing

must be built on radical reform of

the land law and the methods by

which titles are proved. Juxtaposed

to this is the fact that the title

companies have a vested interest in

the deficiencies of the existing

system."

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IV. Cracks in the System

The recording system for unregistered

land in the United States, like its

near equivalent, the Registry of

Deeds, is by no means perfect. For

instance, many interests affect title to

land without being recorded in the

public records. Prescriptive easements

and adverse possession, for example,

can gain priority without recording

by operation of law. Moreover,

forgery, fraud or lack of capacity are

not reflected in the public records. In

addition, it can be difficult or

impossible to discover instruments

which may affect a particular piece

of property even after a careful and

meticulous search in all relevant

locations. The problems inherent in

the recording system are actually

compounded, it is argued, by the title

insurance industry which exploits the

weaknesses in the system and

encourages a "continued lack of

title security, inefficiency, and

unnecessary consumer costs."

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Proponents of title insurance, on the

other hand, argue that the risk

coverage features are superior in

quality and quantity to Torrens

certificates protecting registered land

and that even title registration does

not eliminate the need for a title

search.

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Meanwhile, where available, the

Torrens system of land title

registration has been severely

undermined in several ways. The

conclusiveness of registration

certificates has been limited by statute

as well as by court decision. Appeals

challenging registration decrees may be

made within statutory periods after

initial registration and many judicial

and statutory exceptions (including

claims and interests based on federal

law, short term leases, public

easements and real property tax liens

and assessments) have been carved out

which affect registered title without

registration.

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Further, the expense,

time and effort of initial registration

coupled with the fact that there is no

immediate benefit or financial

motivation for an owner to voluntarily

register property, has resulted in

widespread public disinterest.

The efforts of those vehemently

opposed to title registration,

including the bar and not least the

title insurance industry, has

significantly contributed to the

decline in land registration in the

United States. Extensive political and

public lobbying by title insurance

companies in support of the

recording system and against reform

or expansion of title registration

systems has had a dramatic adverse

impact on the latter. While the title

insurers have been very adept at self-

promotion, attaining high public

visibility and confidence as a result,

there has been very little

governmental promotion, even at the

local Registrar level, of title

registration as a viable alternative. In

states with Torrens legislation, it has

not been uncommon for purchasers

to be unaware of the availability and

operation of title registration. Where

purchasers are aware, their choice is

often nullified by their lender's

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