"King of the Hill"
The concept of private or individual ownership that we know today has not always
existed.
Kings in the Middle Ages proclaimed ownership to all the lands they conquered.
Unlike personal possessions that can become obsolete, wear out, and lose their
value, land is immobile and, by comparison, indestructible. It is for these
reasons that land and the control of land became a symbol of power. Conquests of
certain lands resulted in the establishment of harbors from which even the seas
could be ruled.
The feudal lords operated only by permission of the king. The king's chosen
subjects would occupy land by a right of license from the king. However, these
lands were always subject to the king's first rights as well as the king's taxes
on the land and what the land produced.
It is what the land could produce in an agrarian society that established land
as a symbol of wealth. Land truly was wealth because it took land to be able to
produce items of value for barter and exchange.
Over time, the people who were first granted only the right to use the land
decided they wanted to maintain ownership, so they developed methods for
obtaining conveyances from the monarch that eventually allowed the property to
be inherited rather than revert back to the monarchy.
Ownership is a "bundle of sticks"
Through the centuries, the traditions of real property developed. Most
of the traditions we follow in the United States descended from the English
system of court decisions generally referred to as the "Common Law." The "Common
Law" principals concerning property basically viewed ownership as an assortment
of interests or rights that applied to different aspects of the land. One way to
view the "Common Law" principals of ownership under which we operate today is
like a "bundle of sticks." A land owner typically owns all of the rights-the
whole "bundle of sticks"-and may choose to give away or share one or more rights
with others. For example, a property owner may give a leasehold interest to
another, and then that person "owns" the right to occupy the property for a
period of time, even though the owner keeps the remaining rights (or "sticks")
of ownership. Other "sticks" might include the right to mine precious metals, an
easement right to use a portion of the property, or perhaps a life estate.
Together, this "bundle of sticks" makes up what we today call "ownership."
The United States originally fell under several different sovereign rules,
including England, France, Spain, and Mexico. The American Revolution
established the United States of America as the sovereign and owner of all lands
not already granted to someone else. Most of these lands have since been granted
to individuals under government patents and subsequent conveyances by deeds.
Before title insurance...
Prior to the advent of title insurance, the conveyance of property did
not include any form of guarantee or insurance. A purchaser had virtually no
guarantees that the property he was buying was even owned by the person who was
selling it! Even though attorneys would render their opinion of title based upon
a title "abstract," there were no assurances protecting the buyer from
fraudulent conveyances or undisclosed encumbrances on a property. An "abstract"
merely reports the recorded history of a property; it does not judge the
correctness of any item listed.
In 1868, Watson, an innocent purchaser, suffered financial damage because of
certain encumbrances on the title to his property. He sued Muirhead, the
grantor, alleging negligence for failing to disclose those encumbrances when he
sold the property. This landmark case (Watson v. Muirhead, 57 Penn. 161)
demonstrated the need for better protections of real estate purchasers when the
court ruled that Muirhead had acted reasonably and within legal "standards of
care" and held that Watson had no recourse.
As a result of this case, the Pennsylvania legislature enacted a law allowing
and providing for the incorporation of title insurance companies. The first
title insurance company was organized and opened in 1876 in Philadelphia. There
was large consumer demand for greater security, as well as expedience in real
estate transactions, and so the title insurance industry grew rapidly and spread
to other major cities.
Title Insurance...a new concept
Unlike casualty insurance (auto or fire or health insurance, for
example) which protects against future events, title insurance protects against
losses arising from unknown or undisclosed defects in the past chain of title.
Unlike casualty insurance premiums, which are paid in continual installments
(hence a lapse in payment may mean a lapse or cancellation in coverage), a title
insurance premium is a one-time flat fee regulated by the Division of Insurance
and paid at the time of closing. For this one-time premium, an owner's title
insurance policy remains in effect as long as the insured or the insured's heirs
retain an interest in the property or have any obligations to warrant the
property when they sell it.
A policy of title insurance is like a pre-paid legal agreement. The title
insurance company will provide legal defense against any challenges to an
insured's title (depending, of course, upon the type of policy coverage) and
will reimburse the insured financially for any losses as a result of hidden
defects in ownership rights.
Hundreds of ways to lose your property...
A forgery 50 years ago....a deed executed under duress....bigamy that went
unknown....an error by a clerk in the county recorder's office....an undisclosed
heir that resurfaces ten years later and demands his right to a property....a
misapplied tax payment: These are but a few of the hidden title defects that
could cause you to lose your property. And even if you don't lose your property
altogether, certain title problems can make it impossible for you to sell or
even give it away.
You don't want a problem that occurred long before you bought your property to
deprive you of the right to use or dispose of it. And you don't want to pay the
potentially ruinous cost of defending your property rights in court. A title
insurance policy from Land Title is your best protection against potential
defects that could remain hidden despite the most thorough search of public
records.
Here are some of the more common possible title defects that title insurance
covers:
· Forged deeds, releases, or wills;
· False impersonation of the true owner of the property;
· Undisclosed or missing heirs;
· Instruments executed under invalid or expired powers of attorney;
· Misinterpretations of wills, or discovery of a later will after probate of
first will;
· Deeds by minors, by persons of unsound mind, or by persons supposedly single
but in fact married;
· Liens for unpaid estate, inheritance, income, or gift taxes;
· Mistakes in recording of legal documents, or deeds recorded but improperly
indexed and therefore not found through a title search;
· Disputed release of prior mortgage or lien, as given under mistake or
misunderstanding; or ineffective release of prior mortgage, as fraudulently
obtained by predecessor in title;
· Undisclosed divorce of one who conveys as a sole heir of a deceased former
spouse;
· Deed to or from a "corporation" before incorporation or after loss of
corporate charter; and
· Claims resulting from the use of "alias" or fictitious names by a predecessor
in title.
---This information was reprinted from Land Title Guarantee Company (www.LTGC.com)