The Gazette 1993

GAZETTE

JAN/FEB 1993 '

insistence on title insurance. At

present, there are only four states

with any noteworthy title registration

activity - Hawaii, Illinois (Cook

county only), Massachusetts and

Minnesota - and half of those

states which originally had Torrens

statutes have actually repealed their

legislation.

Conclusion

The title insurance industry has

established a firm and consolidated

foothold in the United States and

title insurers have sought to offer

their services in Canada, Europe and

elsewhere. It is clear that the

insistence on title insurance by

institutional lenders has fostered the

growth and success of the industry.

Lawyers, who have by no means

been entirely excluded from the

conveyancing process where title

insurance is prevalent (instead of title

searching they negotiate title

insurance coverage on behalf of their

clients), generally, with some

exceptions, have not opposed the

industry's progress and development.

But there are others who forcefully

argue that title insurance just masks

the problems of the recording system

and that title registration is

ultimately in the best interests of the

Public. However, there is also general

recognition among this group and

some observers that radical

modification of the existing statutory

framework of the Torrens system

would be an essential first step in

establishing wider acceptance. This is

seen to include: the use of

administrative as opposed to judicial

hearings at the time of initial

registration; reduction in the cost of

initial registration by modest

increases in registration charges for

subsequent transfers; limiting the

types of exceptions and

mcumbrances exempted from

registration; embracing the concept

o f

possessory title so that after a

statutory period uncontested titles

become indefeasible and absolute;

nd compulsory registration upon

voluntary transfer.

Statutory reform notwithstanding,

additional issues would also need to

he addressed if title registration is to

have any hope of future success.

Whether the focus is initially

statewide, regional or across the

country, proponents of Torrens

would not only need an effective

strategy to create greater public

awareness of the perceived benefits

of title registration, they would also

need to convince the lenders that a

system of title registration is better

for them than title insurance and at

the same time persuade the politicos

that change is desirable. To find

allies among the legal community

and, perhaps, those powerful

corporations which acquire and

dispose of real property on a regular

basis would be a beneficial

ingredient in any crusade for title

registration. However, there is

currently no reason to believe that

title insurance will not be the first

choice of the American public for

the foreseeable future and with that,

according to the critics of the

recording system, the potential risks

of title impairment associated with

unregistered land will remain.

Endnotes

1. Each state in the United States has

established its own statutory scheme

of maintaining the records to land in

its jurisdiction, usually at the county

level. The method of organising the

records of unregistered land is

generally known as the

recording

system,

where recorded instruments

provide evidence of title (not unlike

the Registry of Deeds) as opposed to

title registration, where ownership of

the title itself is registered.

1 Patton on Land Titles,

p.10, West

' Publishing Co. (2nd ed., 1957).

3 Ibid at pp. 9-11;

6A Powell on Real

Property,

para. 90411], Mattew

Bender (Rev. 1992). On the Statute of

Enrollment (1535), see Megarry &

Wade,

The Law of Real Property,

p.1170 (4th ed., 1984).

4. See Powell,

supra

note 3, at para.

90413].

5 Named after Irish-born Sir Robert

Richard Torrens, premier of South

Australia, who introduced the system

to Australia patterned on the title

certification of ships. He was also

the author of the Record of Title

(Ireland) Act, 1865, Ireland's first

title registration statute. See Wylie,

Irish Land Law,

ch. 21.

6. Powell,

supra

note 3, at para. 90917].

7 Goldner,

The Torrens System of Title

' Registration: A New Proposal for

Effective Implementation,

29 UCLA

L. Rev., 661, 689 (1982).

Watson

-v-

Muirhead,

57 Pa. 161

(1868).

9. Burke,

Law of Title Insurance,

p.3,

Little, Brown & Co. (1986). While

there is evidence that the first title

company was formed in 1853, the

first title company to be chartered

was in Philadelphia in 1876. See

Johnstone,

Title Insurance,

66 Yale

L. J., 492, note 1 (1957).

10. Burke,

supra

note 9, at p. 3.

11. Ibid at p. 4. Title insurance was also

preferred because the title insurance

companies assumed the responsibility

for negotiating and litigating claims

and had the financial wherewithal to

pay them. Johnstone,

supra

note 9, at

pp.502-3.

12.

1990 Fact Book,

American Land Title

Association, p. 10. In 1989 the title

insurance industry actually posted a

pre-tax operating loss prior to

investment income of $154 million.

Ibid.

13. Rooney,

Attorneys Guide to Title

Insurance,

ch.2, p.7, Illinois Institute

for Continuing Legal Education,

(1984).

14. See Johnstone,

supra

note 9, at

p.507. The largest title insurer in the

United States today, Chicago Title,

was formed as the successor to an

abstract company which possessed

copies of the land records of Cook

county, Illinois, the originals of

which were destroyed, along with the

county courthouse holding them, in

the Chicago fire of 1871. Burke,

supra

note 9 at p. 8.

15. A title insurance company is "in the

unique position of being able,

through its own work, to eliminate

many claims." Burke,

supra

note 9,

at p.22.

16. Ibid at p.29.

17. Miller & Starr,

3 California Real

Estate,

p.6, Bancroft-Whitney (2nd

ed. 1989).

18. Johnstone,

supra

note 9, at p. 516. It

also diffuses the title insurance

industry's emphasis on the security

offered by title policies. Rooney,

supra

note 13, at ch.2, p. 23.

19. Rooney,

supra

note 13 at ch. 2, p. 10.

20. Christensen,

The Unauthorized

Practice of Law: Do Good Fences

Really Make Good Neighbors - Or

Even Good Sense?,

1980 Am. Bar.

Fdn, R. J., 207.

21. Payne,

Title Insurance and the

Unauthorized Practice Of Law

Controversy,

53 Minn. L. Rev., 423,

473 (1969).

22. Goldner,

supra

note 7, at p. 661.

23. Shick & Plotkin,

Torrens in the

United States: A Legal and Economic

History and Analysis of American

Land Registration Systems,

pp.8-9,

D.C. Health and Company (1978).

24. Ibid at p.58. See also Powell,

supra

note 3, para. 90813].

25. Shick & Plotkin,

supra

note 23, at p.

58.

26. See Johnstone,

supra

note 9, at

pp. 514-5. See also Goldner,

supra

note 7, at pp.690-709.

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