Tag Archives: Lien

FYI – The History of Title Insurance

15 Jun

Prior to the invention of title insurance, buyers in real estate transactions bore sole responsibility for ensuring the validity of the land title held by the seller. If the title were later deemed invalid or found to be fraudulent, the buyer lost his investment.

In 1868, the case of Watson vs Muirhead was heard by the Pennsylvania Supreme Court. Plaintiff Watson had lost his investment in a real estate transaction as the result of a prior lien on the property. Defendant Muirhead, the conveyancer, had discovered the lien prior to the sale but told Watson the title was clear after his lawyer had (erroneously) determined that the lien was not valid.

The courts ruled that Muirhead (and others in similar situations) was not liable for mistakes based on professional opinions. As a result, in 1874, the Pennsylvania legislature passed an act allowing for the incorporation of title insurance companies.

Joshua Morris, a conveyancer in Philadelphia, and several colleagues met on 28 March 1876 to incorporate the first title insurance company. The new firm, Real Estate Title Company and Insurance of Pennsylvania, would “insure the purchasers of real estate and mortgages against losses from defective titles, liens and encumbrances,” and that “through these facilities, transfer of real estate and real estate securities can be made more speedily and with greater security than heretofore.”

Morris’ aunt purchased the first policy, valued at $1,500, to cover a home on North 43rd Street in Philadelphia.

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The History of Title Insurance in the United States

6 Dec
Painting in the Supreme Court chamber in the P...

Image via Wikipedia

adapted from Wikipedia

Prior to the invention of title insurance, buyers in real estate transactions bore sole responsibility for ensuring the validity of the land title held by the seller. If the title were later deemed invalid or found to be fraudulent, the buyer lost his investment.

In 1868, the case of Watson v. Muirhead was heard by the Pennsylvania Supreme Court. Plaintiff Muirhead had lost his investment in a real estate transaction as the result of a prior lien on the property. Defendant Watson, the conveyancer, had discovered the lien prior to the sale but told Muirhead the title was clear after his lawyer had (erroneously) determined that the lien was not valid.

The courts ruled that Watson (and others in similar situations) was not liable for mistakes based on professional opinions. As a result, in 1874, the Pennsylvania legislature passed an act allowing for the incorporation of title insurance companies.

Joshua Morris, a conveyancer in Philadelphia, and several colleagues met on 28 March 1876 to incorporate the first title insurance company. The new firm, Real Estate Title Insurance Company of Philadelphia, would “insure the purchasers of real estate and mortgages against losses from defective titles, liens and encumbrances,” and that “through these facilities, transfer of real estate and real estate securities can be made more speedily and with greater security than heretofore.”

Morris’ aunt purchased the first policy, valued at $1,500, to cover a home on North 43rd Street in Philadelphia.

Title insurance exists in the U.S. in great part because of a comparative deficiency in the U.S. land records laws. Most of the industrialized world uses land registration systems for the transfer of land titles or interests in them. Under these systems, the government makes the determination of title ownership and encumbrances on the title based on the registration of the instruments transferring or otherwise affecting the title in the applicable government office.

Greatly simplified, in the recording system, each time a land title transaction takes place, the transfer instrument is recorded with a local government recorder located in the jurisdiction (usually the county) where the land lies. The instrument is then indexed by the names of the grantor (transferor) and the grantee (transferee) and photographed so it can be found and examined by anyone who wants to see it.

Tradition Title Agency’s job is to conduct searches of the recorders’ offices records and to make the determinations of who owns the title and to what interests it is subject.  An insurance policy is then issued.

Our website makes ordering title simple – follow the link to our online application.

http://traditionta.com/title-application/title_application.aspx

Of course, you can call our team for information at 631-328-4410.