Clearing Title to a Home Takes More Than
Pushing a Button
WASHINGTON, May 6, 2024
/PRNewswire/ -- Title insurance companies invest heavily in
upfront title research and curative work that significantly
protects property rights and limits ownership challenges down the
road.
According to a study conducted by ndp | analytics, expert title
professionals spend approximately 22 hours to close a standard
transaction and 45 hours for more difficult transactions. While all
standard transactions require important title clearance efforts
prior to closing, difficult transactions require even more
substantial work to correct more complex title issues prior to
closing. In 2023, title insurance companies estimated 36% of
transactions were in this more difficult category.
The study—which includes responses from a nationally
representative group of 674 title insurance companies and was
conducted in the first quarter of 2024—estimates the time needed to
research title and close a transaction. It also estimates the
extraordinary efforts title professionals take to fix title
issues—typically called curative work—to protect what is often a
homeowner's largest lifetime purchase. While other lines of
insurance are unable to predict or prevent events such as floods
and fires that can impact a home, title professionals can identify
and prevent many of the issues that might interfere with someone's
ownership rights or a lender's mortgage priority.
"The preventative work done by the title industry is why title
insurance has a lower claims rate versus other lines of insurance,"
said Diane Tomb, American Land Title
Association's (ALTA's) chief executive officer.
According to the National Association of Insurance
Commissioners, the title insurance industry's expense ratio
averaged 95% over the past decade, highlighting the costs
associated with upfront title searching and clearance. Industry
data shows that approximately 70
cents of every dollar in revenue are spent on staff and
acquiring and analyzing public real estate records data, with
office expense, compliance and taxes comprising the bulk of the
remainder.
"Importantly, while inflation has caused the price of most
products and services to increase, the cost of title insurance
coverage has decreased nearly 8% since 2004," Tomb said.
"Despite advancements in technology, only 70% of public records
at the county level are digitized and often only the past 10 to 15
years of records are available online, deeming the sole reliance on
these electronic records insufficient," Tomb said. "And while the
use of technology to research title issues has dramatically
increased, it takes more than a click of a button to conduct a
search. The amount of research and corrective action from expert
title professionals needed to provide homeowners and lenders with
assurance about their title remains significant."
Here are some key takeaways from ndp's research:
- 36% of all transactions require extensive, nonroutine title
clearance efforts. Difficult files, which require
substantial curative work, are very common.
- Nearly all title insurance companies conducted curative
actions often or very often; 62% of these companies typically
performed at least four curative actions per transaction.
- Curative work requires more resources than it did five years
ago. The biggest changes were cost, transaction volume and
compliance. In 2023, approximately 64% of title insurance companies
expressed that expenses related to curative work have increased
(24% reported costs are much higher than five years ago and 40%
said somewhat higher). Over half of companies reported increases in
the shares of transactions that require curative actions (55%), the
compliance burden (54%) and the complexity of curative work
(54%).
About ALTA
The American Land Title Association, founded in 1907, is a
national trade association representing more than 6,000 title
insurance companies, title and settlement agents, independent
abstracters, title searchers and real estate attorneys.
CONTACT: Megan
Hernandez
Office: 202-261-0315
Email: mhernandez@alta.org
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SOURCE American Land Title Association