Title Company Consultant Warns Against Using Online Records

After officials in Maryland read the following white paper they issued warnings designed to protect county agencies from errors and omissions on county websites. After you read it, you'll want to check the disclaimer on your own site. . . .

The newly introduced web-site MdLandRec.Net is a valuable and convenient tool for the title professional. It’s particularly useful when a copy of a recorded document is needed quickly. But it cannot be trusted as an exclusive source of information for a title search. It’s as simple as that!

I am a title abstractor who works regularly in Baltimore City and a couple of other counties. It may seem that this white paper is self serving, but there’s more to the story. I am genuinely concerned about those of you who are well intended and believe that accurate information is easily obtained on-line. Greater still are my concerns about the confidence of the consumer and the lasting effect that an unanticipated wave of title claims could have on Maryland’s title industry.

Editor's Note:

After Ed shared this white paper with the state the following warning appeared in county website disclaimers:

The Clerk of the Circuit Court assumes no responsibility for this site. This website should not be used as a sole source for searching title. Researchers must check all indices including those at the courthouse.

It would seem that anyone with a computer and internet access could enter a name and a date into a field to obtain information identical to that provided by a professional abstractor. If this were the case, it would make sense for title company employees to complete title searches, at least current owner searches, from the comfort of their offices. You need to keep a couple of things in mind before deciding to do so. An abstractor has an obligation to contrast and compare the results obtained by researching every available source of relevant information. Also, a title abstract when properly prepared takes longer to complete than is commonly recognized. It requires unique skills and knowledge. An abstractor is an expert at anticipating not only the typographical errors that title companies make on documents, but also the subtle errors commonly made by clerks during the recordation process. Let me share a few examples with you to demonstrate these points.

The following examples are based on Baltimore City name indexes obtained online from MdLandRec.Net and at the land records from JIS. JIS is the acronym for Judicial Information Systems which provides the information available on mainframe computers located in the land records at Maryland’s 22 counties.

Assume that on February 1, 2006 you were working on a current owner search for a property owned by Jeffrey Carroll who took title in the year 2002. MdLandRec.Net provided the following list of recorded documents:

More Examples:

Too view examples of inaccurate indexes displayed on Collin and Denton County Websites (TX) please see the side by side screen captures here.

When name indexes were generated on JIS using the same name and year identical results were shown with one additional entry:

As it turned out, the Deed of Trust shown only on JIS did not affect the property being searched. This fact, however, is meaningless to our discussion. The use of MdLandRec.Net exclusively could have had serious consequences.

In this example, assume that on February 6, 2006 you were examining name indexes for Vidya Krishnan, our current owner, who took title in the year 2003. When the last name Krishnan, without the use of a first name, was entered in MdLandRec.Net you were given the following information:

Except for one additional document, the results shown above were produced with a query of JIS records using only the last name Krishnan and the year 2003. The previously unrevealed document was:

Take note, the name Vidya was incorrectly indexed as Vidy A by the recording clerks. The release recorded at 6744/1143 would have been missed by anyone entering the name Vidya Krishnan into MdLandRec.Net or JIS. The Modification recorded at 6962/26 did affect a Deed of Trust encumbering the property being searched and would have been missed had MdLandRec.Net been the only information source relied upon.

While preparing to teach an abstracting course, I came across an example of inconsistent results using the name indexes on MdLandRec.Net. On February 9, 2006 the following search parameters were entered into MdLandRec.Net: Last Name: Krishnan; First Name: Vidy; Beginning Year: 2003. The letters Vidy were entered as the first name instead of Vidya to demonstrate a data query that would produce the entire list of recorded documents shown in Example #2. The following results were provided:

On February 14, 2006 I again searched the MdLandRec.Net using the parameters described above because my notes had been temporarily misplaced. This time the results appeared as follows:

The potential for a claim is obvious for anyone attempting to search a title without training or a clear understanding of the limitations of MdLandRec.Net.

As we have seen, searching a title is not a simple matter of entering names and dates into the query of a database. Even current owner searches, often thought to be quick and easy, can challenge the judgment and knowledge of the most seasoned abstractor. Your customers deserve the comfort of research that was compiled adequately and appropriately. Their peace of mind and your career depend on it. Require that abstractors perform title searches by examining every index available to them on-line and at the land records. Review all copies of name indexes included with your abstracts to confirm that the search parameters conform to your established standards. The printed indexes often give clues concerning the scope of an abstract. If an abstractor is reluctant to include copies of indexes, you need to find out why. There is a great deal of misinformation in the industry concerning the consistency, validity, and accuracy of the title information available on-line. Remember, it’s important that you obtain a copy of the current E&O policy for every abstractor that you use.

You may decide that the benefits of using MdLandRec.Net to search titles yourself outweigh the risks. If that’s the case, I suggest the following:

Truth be known, mistakes made by title companies are expensive in many ways and very difficult to correct. A single negligence claim is a serious matter and can abruptly end an otherwise successful career. The title industry evolved around an unspoken rule that the customer was intrinsically honest and would cooperate after closing if a mistake was made. Can you safely assume that your borrower in a refinance transaction will always tell the truth about second mortgages, etc.? Are you confident that every borrower will voluntarily cooperate when asked to correct a mistake? It’s no longer a good idea to rely on generalized assumption about any customer.

I firmly believe that every title professional should know how to abstract. It wouldn’t be practical for you to spend your days at the local land records working on every order. However, insight into this critical aspect of your work-product will vastly enhance your career. Some of the more obvious reasons are:

Time spent improving your understanding of title examination and abstracting is time spent productively. Each skill clearly enhances the other.

Truth be known, you’re expected to be title experts! At least that’s the perception of the consumer, your underwriter and the state legislature. The abstract sets the stage for a successful closing and home ownership without risk of title litigation. In the past, it was said that a title company was only as good as its last closing. Today, it might be said that you’re only as good as your last closing; your last title review; your last title policy; your last settlement sheet; your last payoff; your last recording package; your last escrow reconciliation; etc. The role of the title company in a real estate transaction is similar to the role of a transmission in a car. You’re only aware of a cars transmission when it’s not working correctly. Likewise, a title company rarely, if ever, receives attention unless a mistake is publicized. Why include the possible consequences of a title searched using only MdLandRec.Net to an ever growing list of liabilities?

Managers often feel a need to react when technology advances rapidly. There is constant fear of missed opportunity. The introduction of MdLandRec.Net confirms that we live and work in evolving times. Volumes of documents pertaining to Maryland land ownership are now readily available. The interface between user and data appears inviting and friendly. Does the new web-site proffer a glimpse of the future of abstracting in Maryland? Probably not, at least for now! Consider if you will the unusual nature of the title insurance industry. Your decisions, right or wrong, impact the homeowner and a great deal of someone else’s money. Draw your own conclusions about the responsible use of MdLandRec.Net. Take all possible consequences into consideration. At the end of the day, it’s you, and you alone, who remains accountable when something goes wrong. Truth be known, patient observation, without immediate action, is probably the best method of self preservation during periods of rapid innovation.

For a complete copy of the name indexes described in this article please send a request to EdR@RybConsulting.Com. I am always interested to hear from you with questions or comments.

Ed is a highly regarded public speaker who travels nationally to give presentations to groups of title agents, corporate executives, mortgage brokers and others.

Rybczynski Consulting is dedicated to helping the title industry reduce fraud related losses through a commitment to professional development. The firm is guided by a firm belief that the brand, reputation and financial performance of every title company can be enhanced by the implementation of pro-active strategies designed to reduce the risk of losses due to class action lawsuits, criminal investigations and title claims.

You can learn more about Ed Rybczynski and Rybczynski Consulting by visiting his website and blog.