Abstractors' Liens

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Abstractors' Liens
by Robert Franco | 2007/07/17 |

With the payment of abstractors' fees being such a problem in this industry, perhaps it is time to lobby for state legislation to create an abstractors' lien. One state has had such a statute on the books since 1949 - New Mexico.

§ 48-4-1. Lien on real estate

Every bonded abstracter or abstract company, doing business in compliance with the provisions contained in Sections 51-1301 and 51-1302, 1941 Comp. Statutes, who shall hereafter compile and furnish any abstract or continuation of abstract, of title to any real estate at the request of the owner thereof, or his authorized agent, shall have a lien on said real estate for the amount due for compiling and furnishing such abstract of title and for all costs incurred in enforcing such lien, including cost of the preparation of claim of lien.

While I do not think it is necessarily a good idea to place a lien on a homeowner that is most likely not even aware that the abstractor was hired to provide a search, let alone that it wasn't paid for, with a little work an abstractors' lien could prove to be worthwhile. Abstractors' liens should be treated like mechanics liens for purposes of priority. The liens should be effective as of the date the search was completed, as would be required to be shown on the filed lien.

The effect of such a lien would be to encumber the property effective prior to the issuance of any title policy, thereby creating a valid claim for the insured homeowner. In order to protect themselves from abstractors' liens, the underwriters would require their agent to make sure the abstractor who actually completed the search was paid. If their agents were using vendor management companies that were not paying their abstractors, they would incur liability under the policy and it would not take long before underwriting bulletins would begin to circulate prohibiting the use of such companies.

As things stand now, the abstractors only right to collect is a contractual obligation between the abstractor and their client. If the client doesn't pay their invoice, abstractors are left with few options. An abstractors' lien would provide the extra leverage that is needed to collect what is due to them. And, it would of course also allow the abstractors to collect their costs in enforcing the lien. Presently, the cost of collection is born by the abstractor and abstractors don't have the resources to effectively collect from non-paying clients, or the proposition is thought to be not worth the expense.

I imagine that many organizations would oppose such legislation, but if the companies were paying their abstractors there would really be no harm in passing it. And, after all, that is all we are trying to accomplish - to make sure that the abstractors are paid for their work.

Robert A. Franco
SOURCE OF TITLE
rfranco@sourceoftitle.com

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Categories: Abstractors, Billing Issues

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	I am an avid reader of Robert's blo...
	I am an avid reader of Robert's blog, and I know exactly what some of you guys are going through. I work for Wexford & James out of Des moines IA, and we have been working with many abstract companies about these same issues. Wexford & James is a contingent based commercial collection firm and has been assiting many of your professional colleagues all over the U.S., with their collection requirements. Our responsibilities and services include collecting past due debt & litigation management. We are very familiar with many of the title companies/brokers that are stiffing a lot of the abstractors. If you would like some information on how we can assit your company, please, email me or give me a call. We're here to help! Josh Lukins WEXFORD & JAMES, LLC 877-547-6848 x 116 jlukins@wexfordjames.com W&J Collects The Money You Have Earned, But Not Been Paid.
	by Joshua Lukins \| 2007/07/18 \| log in or register to post a reply

Source of Title Blog

Robert A. Franco The focus of this blog will be on sharing my thoughts and concerns related to the small title agents and abstractors. The industry has changed dramatically over the past ten years and I believe that we are just seeing the beginning. As the evolution continues, what will become of the many small independent title professionals who have long been the cornerstone of the industry?

Robert A. Franco
SOURCE OF TITLE

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