February 14, 2009...9:46 pm

Want an automated title search?

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Sorry, there is no such thing.

A property title search cannot be truly automated, because of the definition of what a title search is. Searching a property title is an analytical process of reading and comprehending documents, and their relationship to each other. Trying to create a system that does automatic title searches would be like automating architectural design.

It is certainly possible to use technology to make the parts of the process simpler, such as access to documents, or index searching. However, the process of interpreting the documents cannot be done by a computer. Each deed, mortgage and lien document is unique, and means different things in the context of that specific property. That is not even taking into account that some records relevant to a title search are not in the land records.

The nature of property records is that they are a collection of contract documents, not electronic data. Lengthy legal descriptions, vesting variations, and contingencies in documents can only be understood by a human reading the pages. An electronic report can be very useful to provide basic information such as sales price numbers, and mortgage amounts, but cannot replace an abstracted title report if line, encumbrance, and easement status of a property is needed. Even mortgage information is ambiguous when collected electronically. If a property has been refinanced several times during its ownership, there will be many mortgage documents and many release documents. How will a machine be able to match up the mortgages with releases, and correctly ascertain which mortgages have been released, and which are still open, and what is the current mortgage priority?

There are automatic reports available, which might list liens and mortgages, but those should not be confused with an actual title search. Even if those types of reports are used by some in real estate for title insurance, it does not make the report a true title search. It just means that the title insurer is willing to accept additional unknown risk and may be factoring that in to their expected claims expense.

That is not necessarily a bad thing, as long as it does not place additional burden on the insured. Having a claim, even if it is paid by the insurer can create inconvenience for the property owner, to say the least.

This is not written from the point of view of a buggy-whip manufacturer that is clinging to the idea of horse-drawn carriages. If a truly automated title search was possible, it would be a huge benefit to our company in particular. We would not need to expend the tens of thousands of man-hours manually searching title records and abstracting search reports, and the expenses of my company would be drastically reduced.

However, it is unfair to allow consumers to rely on the misconception that a title search is likeĀ  Google search; just punch in the address and the results pop up on the screen. That concept leads to relying on incomplete searches, which can put a property interest in jeopardy.

A demonstration of how impossible automatic title searching is comes in the form of a company called Zenodata. In 2003, it was formed with the business plan of creating a system to perform automatic title searching. It raised $12.3 million in funding for research and development. In July of 2004, it received another $10.4 million in a second round of funding for its operations. Including investments from private investors, angels, and friends and family, it had raised a total of $27.1 million through that date.

With $27 million in development costs, the company claimed that it was able to do searches in just 2 Florida counties. (Keep in mind, easybuttonthat Florida records are among the most electronically accessible records in the county, so that the property data is already available, meaning that the $27 million was only needed to figure out how to interpret the records.) According to their press release, the product would have been “the first completely electronic land record database in the United States.” The system was described as being able to allow users to conduct “one-button” automated title searches. This would have been well received by mortgage companies and title companies, to say the least.

In the spring of 2005, the company was scheduled to exhibit and give seminars at a large ALTA tech conference. At the very last minute, the company was a no-show, and closed for business around the same time. A fully funded tech company with 350 employees and almost $30 million could not figure out how to make title searching automatic. That could indicate that the process of title abstracting is more of an art than a technology.

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