The Start of Title Insurance: How Title Insurance Came About

Ownership of land has always been important and protecting this was not always easy. That is why title insurance is so important but it wasn´t always around. So how exactly did title insurance get started and why? Read on to find out.

How Title Insurance Started

Since real estate has always been a very valuable part of our economy and personal wealth, the transfer of it has been a major concern. Due to this, laws and regulations were established at an early time. Yet, it wasn´t until later on, that people realized the need and importance of protecting buyers and lenders from the possible loss of their investment.

Real Estate Transactions Before Title Insurance and After

Back then, when there was a property transaction to be completed the services of a conveyancer were required.  Similarly to how it is today, both parties would go to a conveyancer who would go through the public records and find out if the title was in good standing so he could then complete the transaction and establish the rights to the title using his research and property abstracts to do so.  This is in part what title insurance companies do today, except they also offer the additional protection needed to protect the buyer and lender against issues that can come up later due to a problem in the title that was not detected. At Advanced Title Company they can help you protect your investment and take care of all your title insurance doubts and needs. Contact them today at (970) 255-7677 and learn more about title insurance and how to protect your investment.

Without Title Insurance, Buying Property Was a Very Risky Investment

Since title insurance did not exist back then, the conveyancer would find out who the title belonged to and if there were any liens or encumbrances attached to it. He was in charge of establishing the rights to the title based on the search and property abstracts. Before conveying the property to the new owner the title would be cleared and the transaction would be completed. However, if unresolved problems came up, the affected buyer or party would have to first prove legal negligence from the conveyor in order to have him held responsible. Due to lack of resources, this could be incredibly hard to do even if things went really wrong.

The Case of Watson Vs. Muirhead

One of the most predominant examples of this was the case of  Watson v. Muirhead which marked the importance and need for protection from inconsistencies and title problems. This case was regarding the purchase of a property where the conveyancer had found a lien on a property he then consulted an attorney regarding such lien and the attorney informed him that the lien was not valid. In good faith, the conveyancer completed the transaction but later on the property was sold at a Sheriff´s sale in order to cover the lien which had been in fact lawful. Therefore, the new sale was also lawful and the previous owner lost the investment and property. The conveyor was not held responsible because he had not acted with negligence he had in fact verified with an attorney to ensure the lien was not valid but had received incorrect information. So, even though his information was incorrect he had done his job correctly and the buyer was the one that suffered the consequences when the property was resold in the Sheriff´s sale.

The First Title Insurance Company Was Created

This case created awareness and a more urgent demand for buyer and lender protection against title problems. A group of conveyancers gathered to work together in finding a way to protect buyers in such cases and finally in 1876 in Philadelphia they created the first title insurance company, The Real Estate Title Insurance and Trust Company. They stated their mission was to protect  “the purchasers of real estate and mortgages against losses from defective title, liens, and encumbrances.¨ Not long after this, more and more insurance companies were established in different states in order to improve the home buying process, making the transaction of properties faster and less risky.

Resources on Title Insurance in Mesa County Today

To read more on some of the important aspects of home buying, including the need for title insurance you can visit Lindsey Friedman´s Home Realty website for tips and home buying advice. You can also learn more about title insurance and the state regulation and commonly asked questions in this government page. To have your doubts and questions answered by an expert or to adquiring title insurance you can contact Advanced Title Company directly at (970) 255-7677.