The organizational discussions at the inaugural meeting of the Ohio Association of Independent Title Agents ("OAITA") reminded me of the early days of the National Association of Land Title Examiners and Abstractors ("NALTEA").  Some of the most emotional debates in 2004 were over who should be allowed to join.  The main issue for NALTEA was whether to include employee abstractors, or just independent abstractors, and whether the vendor management companies, title agencies and underwriters that employ abstractors should be allowed to become members.

For the OAITA, the membership issue focused around whether to allow independent abstractors - partly because I opened the "can-of-worms."  Prior to attending, I had been asked if abstractors could join.  So, I posed the question at the meeting.  All I can say at this time, is that the issue remains unresolved.  That isn't a bad thing - it is just evidence that the OAITA still has some growing pains to work through. 

There were two distinct factions among those involved in the formation of NALTEA.  One group was adamant that NALTEA should only represent the independent abstractors and that allowing non-independent abstractors to join would possibly allow the association to be "hi-jacked" by big companies that were their clients. Others, including myself, believed that anyone who shared the goals of the association should be allowed to join and show their support.  The fear of being "hi-jacked" could be handled by creating classes of non-voting members and limiting which type of members could serve on the board or hold officer positions.  The latter is the position that was ultimately adopted by NALTEA.

Not surprisingly, those in attendance at the OAITA meeting were very supportive of the goals of the association to "promote the general welfare of the independent title agents."  The only topic that was really debated was the scope of membership. 

There were three main objections to allowing abstractors to join the OAITA.  As a long-time advocate of abstractors, I'd like to address those issues.  But, first, I think it would be fitting to examine the bylaws of the OAITA.

Article Two lists among the objects and purposes of the Association, "to promote the goals of independence in the abstract and title insurance industry." Furthermore, the single class of membership includes anyone "...who is legally qualified to engage in the business of land title evidencing or insuring as an abstractor, who is not affiliated with a bank, mortgage broker, builder or real estate company..."  Arguably, the bylaws are already structured to allow independent abstractors to join.  However, the membership application only indicates options for Independent Agencies, Independent Title Agents, and Employees of Agencies.

Membership is prohibited by underwriters and anyone affiliated with another service provider; presumably, affiliated would mean a common-ownership interest.  Underwriters are "expressly prohibited from gaining membership," or advertising, sponsoring, or otherwise supporting the efforts of the association.

So, what were the three objections raised to including abstractors in the OAITA?

First: Abstractors would likely use their membership merely as a marketing tool.

This concern definitely has merit.  I don't think there is much doubt that are abstractors who would gladly join to expand their marketing efforts and networking contacts.  Nobody joins a professional organization to be solicited - that can be an annoying side-effect.  In fact, that was one of my gripes with ALTA.  After becoming a member I was constantly deluged with solicitations to attend events I couldn't afford, buy training and marketing materials, purchase E&O insurance through TIAC, etc.  Because ALTA's lobbying efforts didn't seem to represent my interests, the only benefits I was getting from the association quickly became only those I was willing to pay extra for. 

This becomes a balancing act - is it worth allowing abstractors to join the OAITA, and run the risk of having members inundated with solicitations, in order to increase membership and support for the goals of the association?  If the OAITA decided not to allow abstractors to join on this basis, I would understand it - and I would still laud their efforts.

Second: Abstractors are still going to work for AfBAs, thus aid and abet the enemyy.

This argument, though mostly likely accurate, is not very convincing.  AfBAs are everywhere.  Many lenders and real estate offices have AfBAs, and, though they direct nearly all of their work to it, some orders escape their grasp.  So would this argument mean that if a Realtor with Howard Hanna, for example, were to direct an order to an independent agent, instead of its AfBA, the independent agent should decline the order because it would be lining the pockets of an affiliated partner?  Of course, not.  In these lean times, we all take what work we can get - short of setting up an AfBA. 

And, there are practical problems with this argument.  Abstractors are not really "in the loop;" and, most of the time they don't even know if their client is an independent agency or an AfBA.  Even if they did, it wouldn't likely make a difference.  Why?  Because abstractors operate on razor thin profit margins.  Refusing to work for a client based on their involvement in an AfBA would be like saying "No thanks.  I don't want to pay my electric bill this month."

Still, it doesn't mean that the abstractors wouldn't wholeheartedly support the goals of the OAITA.  If abstractors understood that the AfBAs were the companies most likely to ask for price reductions, they would much prefer their work come from an independent agent.  Because AfBAs start out with only half of the profit from the venture, they are the clients constantly trying eek more money out of every closing.

Third: Independent abstractors caused the AfBA epidemic.

I think I can understand where this idea comes from, but I must disagree.  Certainly, it can be said that the availability of so many independent abstractors makes it easier for AfBAs to operate.  But, this argument is flawed for two reasons.  First, before I was a title agent, I was an independent abstractor - long before AfBAs came into existence around here.  Most of my abstracting clients were, and I believe still are, independent agents.

Second, if there weren't independent abstractors, the title partner in an AfBA would have staff abstractors that would gladly provide title work to the AfBA.  In fact, the largest AfBA title partner in my home county does the majority of the title work for its AfBAs with staff abstractors.

Independent abstractors are just another tool utilized by both independent agents and AfBAs.  I don't think the availability of independent abstractor spurred the decisions of many affiliated partners to set up AfBAs - they would have found a way, regardless.

Despite these concerns, not everyone was completely opposed to the idea of allowing independent abstractors to join the OIATA.  In fact, there was some discussion about the importance of independent abstractors and good, reliable title work.  One attendee stated that it is hard to find title abstractors in some parts of the state and that he was forced to rely on underwriter-owned abstracting companies.  The drawback to these "abstract-factories" is that you never know whether the search was done according to local title standards, or sent to a thin-title plant in India. 

NOTE:  At this point, I wanted to let everyone know about the Source of Title directory, which lists thousands of independent abstractors nation-wide.  But, I wasn't invited to shamelessly plug Source of Title. 

This discussion proves that the OAITA and independent abstractors share some common ground.  Independent abstractors, and NALTEA, very much support the use of local abstractors and title searches conducted according to marketable title standards.

In my opinion, the OAITA should create an "associate membership" category, not just for abstractors but for anyone interested in supporting the objectives of the association.  This could encompass abstractors, surveyors, appraisers, and even many individuals and businesses that may be engaged in AfBAs because they felt it was the only way to keep their customers.  That doesn't mean they need to have voting status or be able to influence the direction of the association, but what is the harm in allowing them to show their support and strengthen the numbers of the OAITA?

That being said, I would like to stress that this should not become an all-consuming issue of debate.  It really doesn't matter; and, it should not detract the OAITA from their ultimate goal of representing independent agents. 

It is, after all, an association of independent title agents.  If those at the helm believe that they can best serve their members, and the industry, by maintaining a narrowly tailored membership base then they should proceed accordingly.  I don't think it is meant as an insult to those excluded from membership. And, those not permitted to actively participate can still wish them well and quietly cheer them on from the sidelines. 

Robert A. Franco
SOURCE OF TITLE