DID YOU KNOW THAT TITLE INSURANCE WAS AN AMERICAN INVENTION? Its need arose historically due to a system of title searching that left buyers without adequate protection when purchasing real property. A little over a century ago, title was transferred based solely upon the opinion of a conveyancer who searched the public records and based upon that search revealed an opinion of the quality of title being conveyed. Although the conveyancer generally was not an attorney, he or she nonetheless was considered an expert in the field of conveyancing. Buyers at the time felt reasonably protected with the system.
Then, in 1868, the celebrated case of Watson vs. Muirhead (57 Pa.161) was filed in Pennsylvania. In that case, Muirhead, a conveyancer, searched a title for Watson the prospective buyer. Although that search revealed certain judgments against the owner, Muirhead decided they did not affect the title and Watson completed the purchase. The judgment creditors subsequently sued for recovery and won. Watson was without the property and sued Muirhead for his losses. The Pennsylvania Supreme Court ruled that although Muirhead’s opinion of title may have been flawed it did not constitute negligence and ruled in favor of Muirhead. Watson, an innocent purchaser for value was denied his claims, his property and any further recourse.
It became obvious that the existing system of conveyancing was no longer adequate and that buyers needed additional protection when making what oftentimes is their largest purchase of a lifetime. As a result, Pennsylvania adopted an act, “To provide for the incorporation and regulation of title insurance companies.” The first Title Insurance Company was born in Philadelphia on March 28, 1876 and was known as The Real Estate Title Insurance & Trust Co. of Philadelphia, “The Oldest Title Company in the World”. This new type of conveyancing provided insurance against mistakes, negligence, and even against matters that didn’t appear in the public records such as fraud, incompetency, forged documents, improperly settled estates, etc., etc., etc.
Since then title insurance has grown to what it is now: an integral part in almost every conveyance in all of the 50 United States and more recently around the world. A buyer’s one-time fee brings peace of mind for a lifetime and all of us in the title industry are proud to be a part of that outcome.
By: John C. Kemmerer