SIC 6541

This category covers establishments primarily engaged in searching real estate titles. This industry does not include title insurance companies, which are classified in SIC 6361: Title Insurance.

NAICS Code(s)

541191 (Title Abstract and Settlement Offices)

Title examiners, also known as title abstractors, are responsible for researching, analyzing, and evaluating the legal ownership or title to real property. Whenever real estate is bought, sold, or financed, a search of title records is required to ascertain all persons who may claim legal ownership in the property. A title search may also be required to fulfill the terms of a will in distributing property, to subdivide land into smaller parcels, or to obtain a building permit. Persons who acquire land generally want to purchase property that is free from competing claims of ownership, delinquent taxes, and other legal headaches that can devalue the investment. Even buyers who purchase land despite such potential problems generally want to be made aware of any defects in the chain of title when making a bid. Title examiners review the chain of title for a number of defects, including liens on the property, easements, rights of way, water and mineral rights, and other encumbrances. Title examiners are typically employed by title insurance companies, land development companies, and state and local governments.

The common practice of recording real estate transactions with an official recorder or registrar began in colonial Massachusetts and quickly spread across the country. Every state now keeps some form of public record that identifies formally-documented property rights. In some states county governments are charged with the duty of maintaining official property records, while in other states municipal governments have been given the responsibility. But almost every locality categorizes and indexes the information in a slightly different fashion. Title abstracts are prepared to reflect these public records, often by the examiner himself. Title examiners then usually search the chain of title from the most recent owners to the oldest. When there is a gap in the public records, examiners must do additional investigative work to complete the chain of title.

Additional investigation may include a search through miscellaneous public filings that could cloud title to land, including records relating to marriage, divorce, birth, adoption, and other legal proceedings. Plat drawings, metes and bounds descriptions, land books, and zoning ordinances may also help title examiners in completing a chain of title and removing possible defects. After the search has been completed and all documents reviewed, title examiners prepare a title report that describes the property's legal title and lists any existing encumbrances, competing rights, or conflicting claims. Title examiners occasionally assist in preparing a legal description for property as well.

The total number of title examiners and searchers was approximately 28,000 in the mid 1990s. The employment outlook for title examiners is expected to experience little change through the year 2005. The number of real estate sales and increasingly complex real estate transactions is also expected to fuel an increased demand for practitioners. Training is typically acquired on the job, and lasts between one and two months. Despite this seemingly short apprenticeship, the industry has been under pressure to improve standardization.

The American Land Title Association (ALTA) is the primary professional organization in the industry, with more than 2,400 members, sales of approximately $3.7 million, and a net worth of $6.2 million in 1997. ALTA members include title insurance agencies, title examiners, and attorneys. Based in Washington, D.C., ALTA and its members are also involved in numerous other aspects of the residential real estate business. They provide credit reports, escrow services, flood certifications, and relocation services.

All four of the nation's leading title insurance companies have created title examination divisions: First American Title Insurance Co., Land America Financial Group, Chicago Title Corp., and Fidelity National Title each reported profitable title examination operations in the late 1990s, which contributed to the strength of the industry as a whole as it entered the new millennium. These title companies were also searching for other ways to expand their businesses, developing profit centers for a better bottom line, adding appraisal services, and increasing automation.

But not all expansion in the industry has been encouraged by the government. Certain proposed mergers and acquisitions have raised federal antitrust concerns. In 1996, Commonwealth Land Title Insurance Company proposed to consolidate its title plant operations in the District of Columbia with those of First American Title Insurance, its only competitor in the market. The next year Commonwealth terminated existing contracts with customers and required them to sign interim deals under which they would pay higher prices for title services. In 1998, the Federal Trade Commission (FTC) issued an order in response to the proposed joint venture. The FTC compelled Commonwealth to rescind all the interim deals, make refunds to customers who were overcharged, and provide services to customers based on the prices, terms, and conditions available before November 1997. Commonwealth was also required to relocate its operations and maintain them as a fully functional title plant in competition with First American.

Further Reading

Adams, Susan. "Backlash." Forbes, 25 March 1996.

Cohn, Steven. "NC State Bar May Set New Limits for Independents." Legal Assistant Today, January/February 1996.

Federal Trade Commission News Release. "Washington, DC-Based Title Plant Agrees to Settle FTC Charges," 26 August 1998.

Jennings, Marianne M. "The Evolving Nature of Title Insurance as a Contract: Removing the Notions of Panacea." Real Estate Law Journal, Winter 1997.

——. "Title Insurers Embrace Change for a Better Future." National Real Estate Investor, December 1996.

——. "Will Economy, Politics Spell Better in 1996?" National Real Estate Investor, May 1996.

Selinger, Marc. "Joint Venture of Title Plants Dissolved to Satisfy FTC". Washington Times, 27 August 1998.

U.S. Bureau of the Census Web Site. . December 1999.

U.S. Department of Commerce Web Site. . December 1999.

U.S. Department of Labor Web Site. . December 1999.

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