Article of the Month for April 2002
Title Searching Methods Compared
Title Companies vs. Recorder's Office
Question, asked by Sean:
I've seen Ward (and other authors) explain time and time again that there is no substitute for doing the title search yourself.
So it makes me wonder, what are we really buying for $200, when we pay for a "professional" title search?
Is this really just just a clerk at the title company, typing in the property address into a program... and clicking the PRINT button? Or does someone in fact spend a couple of hours RESEARCHING the title?
Is the title company privvy to other databases, or do they just pull everything from county records too?
Sean, what makes a title search thatís done at the county recorderís office potentially more accurate than one done by a title company is the difference in their respective methods of indexing the county-wide title information in their databases.
The recorderís record is indexed separately by all the surnames of the parties listed on all recorded documents, whereas title companies index the records in their databases by the legal descriptions appearing on those documents.
So when a document containing an error in its legal description is recorded it doesnít prevent someone from finding it in the recorderís record which uses a name index to research by. But title companies search and index by legal descriptions and therein lies their problem.
Title companies canít find such botched documents because when they inquire about all the liens against a certain property, their use of the correct legal description for the property, wonít disclose a pertinent document that contains a wrong legal description.
The county recorderís records are the official property records for the county they serve. So any document that can be found at the county recorderís office, by using normal means, in accordance with the grantor/grantee name index, is going to be treated as valid, regardless of the fact that it may contain a wrong legal description. The reason is that it can be found by without any undue effortótherefore it really isnít lost.
You might wonder why title companies prefer to use the legal description as their searching index rather than sticking with the grantor/grantee name index. Itís because they can research the titles of property incredibly fast using the legal description, allowing them to get more work done with a lot less employees.
Title companies also subscribe to services that provide them with property description data, delinquent property taxes, comparable property values, etc.
Hope this helps.
Followup comment, by Dave:
What happens when the legal discription is correct and the name is wrong...
... the title company will find the lien and the recorder won't.
This would lead one to believe that they both have about the same error rate.
Followup by Ward:
Dave, youíre assuming that the error rate for both the recorder and the title companies is the same rate and itís not. The disparity occurs because we humans are more dyslexic with abstract concepts, such as numbers, where we arenít so completely wrong with alphabetical issues, and the recorderís index has more than one name per document to get things right, whereas the title company has only one legal description to depend on. So an error in one name wonít defeat finding a document with another involved name in the recorderís record.
Title companies are dependent on people getting the numerically based, legal title description, exactly right, whereas such exactitude isnít required with the spelling of ALL names that are cross indexed in the recorderís record for each recorded document.
It appears that most misspelled names are still within short phonetic range of their real spelling and thus often found at the recorderís office. However, the extra element going for the recorderís record thatís missing in the the legal description approach of the title companies is that the recorderís name index is a cross index of all the grantee and grantor names spelled out in a recorded document, not just one. Itís very remote that someone would get all the names cross indexed in the recorderís record, pertaining to a transaction, so misspelled that none of them could lead you to the right document.
For example in a simple sale between two individuals you have two names you can look up in the recorderís index rather than just the one legal description that the title companies have to rely upon. And of course, the more people involved in a transaction the more names you have on hand to find the right document.