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."
20
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."
21
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."
22
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.
23
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.
24
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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