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1 Chapter 6
CHAPTER 6: Recordation, Abstracts, and Title Insurance
I. Explain the Need for Public Records
A. Define Constructive Notice
B. Define Inquiry Notice
C. Define Actual Notice
D. Discuss Recording Acts in your state
E. Explain the effect of Unrecorded Interests
F. Summarize the theories of "notice"
II. Discuss the Requirements for Recording in
your state
A. Witnesses
B. Acknowledgment
III. Discuss Public Records Organization in your
state
A.Tract Indexes
B. Grantor and Grantee Indexes
C. Example of Title Search
D. The Next Step
IV. Define Chain of Title Forty-nine states have title insurance. Discuss the
history
V. Discuss the Abstract of Title and reason for it.
VI. Discuss the benefits of Title Insurance
A. Define Title Report
B. Explain how Policy Premiums are
calculated
C. Discuss the Lender's Policy
D. Explain Claims for Losses
E. Explain the Growth of Title Insurance
F. Define Marketable Title in your state
G. Explain what a Quiet Title Suit is, and
what it can accomplish
VII. Discuss the Torrens System
A. Torrens Certificate of Title
B. Status of Adoption by your state
VIII. Discuss Marketable Title Acts as they affect
Emphasize the importance of possession
as notice.
If you can, take a field trip to a title company or
county recorder's oce. If not, discuss how a
title search can be done by name at the county
recorder's oce. Give specific examples.
Emphasize the title company's duty to defend,
not pay cash immediately, in unproven claims.
Emphasize the overwhelming expense of
litigation, particularly in real estate, where the
unique nature of the product creates so many
Emphasize the complications of Torrens. It looks
so simple, but works so poorly in actual practice.
A great class assignment involves a visit
to the county court house or research on
Internet.
This chapter focuses on the need for a method of
determining real property ownership, the process by
which current and past ownership are determined from
public records, the availability of insurance against
errors made in determining
Ownership.
Chapter 6 2
Page Ref.
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87 83 Opening Remarks Start the chapter by stressing the need for a systematic system for
protecting the public's interest.
87 84 Constructive Notice Stress: Clearly identify and explain the different types of notice.
Constructive notice is based on acts of others. Public responsible for
searching records.
88 84 Inquiry Notice Stress: Inquiry Notice is based on acts of others. Public
responsible for verifying.
88 84 Actual Notice Stress: Actual Notice is based on personal observation.
88 84 Recording Acts Local Distinction: Learn the history of your state/local recordation
system.
90 86 Requirements for Stress: Acknowledgment (Notarization) is generally required
Recording before a document may be recorded.
92 88 Grantor and Local Distinction: Secure copies of several recent and old
Grantee Indexes Indexes from your local recorder's office.
93 89 Example of Title Search Local Distinction: Secure copies of several recent and old title
searches from a local attorney or title insurance company.
95 91 Abstract of Title Common Misconception: Clearly distinguish chain of title which
is the linkage of owners from abstract of title, the summary of all
recorded documents.
96 92 Title Insurance Summary: The title report is the results of search; the binder is
the commitment to insure; the policy is actual coverage.
97 94 Policy Premium Expanding the Text: Many modern policies contain an inflation
guard, i.e., policy coverage increases "x"% per year for "x" years.
98 94 Lender’s Policy Summary:
Owner's Policy:
1. Coverage equal to sales price
2. Insures owner and his heirs
3. Excepts visible claims
4. Not assignable
Lender's Policy:
1. Coverage equal to loan amount
2. Does not except visible claims
3. Is assignable
Stress: Most lenders require only a lender's policy. Emphasize the
importance of insuring the owner's equity.
3 Chapter 6
Page Ref.
Hard Soft
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98 95 Claims for Losses Common Misconception: Title insurance protection (against past
events not yet discovered) versus other forms of insurance (which
insures against events happening in the future).
99 96 Marketable Title Stress: What is the effect of non-marketable title on value?
101 98 Marketable Title Acts Local Distinction: Has your state enacted such legislation?
101 99 Wrap-Up 1. Name the primary requirement for recordation.
(Acknowledgment)
2. What is the difference between chain of title and abstract of
title? (Chain of Title is the linage of owners versus Abstract of
Title which is a summary of all recorded documents.)
3. A lender's title coverage generally decreases monthly? (True,
it decreases as the loan balance decreases.)
4. An owner's title coverage is generally equal to the sale price?
(True)
5. Non-marketable title affects a property's value? (True)
Class Activity Arrange to have the class visit the local recorder's office. Have
someone explain the recordation process.
Have your students read their personal title policies. Have them
look for information regarding the chain and abstract of title, title
report, and title policy coverage and exceptions.
