In most parts of the country, true abstracting hasn't been done in a long time.  I have never done a true abstract.  Though we often refer to a title search as an abstract today, it is not quite the same thing. A true abstract of title reflects a complete history of the parcel searched.  It would show all of the conveyances of any interest in the land going all the way back to the original land grant.  Every mortgage, every release, every court case - both closed and open, every encumbrance and restriction whether or not they still impact the title.  The examiner would then decide what information was relevant.

Today, the "abstractor" does a hybrid of abstracting and examining.  We only show those items that still affect the property.  We make decisions during the course of the search and decide not to show old mortgages that have been released, eliminating the need to abstract them.  We also determine whether certain liens are out by time, extinguished through foreclosure, released, etc.  These decisions were previously made by the examiner, or an attorney, after the abstractor completed the abstract. 

The way we do things today could be seen as much more efficient - why waste time abstracting documents that we know no longer impact the status of title?  However, there are some problems with "title searching" as it exists today.  This could be the reason why some clients are starting to request a quasi-abstract of title instead of the customary title search.  Will this be a new trend? 

We have recently had a couple of clients order unusual searches that more closely resemble true abstracts of title.  They aren't asking us to search back to the original land grant, but they are asking that we show everything - including all of the mortgages and releases, any liens which may be out by time, released, or otherwise extinguished.  This is certainly something we can do, although there will be a premium added to our fee for the extra time involved.  But, I wondered why the client would ask us for obviously irrelevant information.  I have a hypothesis... they are probably in a claims situation and they are trying to figure out why.

Most likely, something was missed, or misinterpreted, on a previous title search, and the client wants to see everything to see what the abstractor might have incorrectly excluded from the report.  A true abstract-like product will be extremely helpful for such a purpose.

So, what are the problems with the way we search title today?  There are a few that I can think of, but they have been largely ignored by the industry mainly to save money. 

Title searching today borders dangerously on the practice of law.  True abstracting didn't - because the abstractor was merely providing a report showing what documents were filed in the public records.  However, today, a title searcher makes legal determinations when they decide to omit documents from the report because they no longer affect the title. 

This wasn't a problem when the title companies employed their abstractors because a title company doesn't engage in the practice of law when it makes determinations of insurability.

The business of insuring land titles, with its necessary incidents, does not constitute the practice of law.  A title insurance company may take such steps as may be necessary to inform itself of the status of the title which it purports to insure.
Land Title Co. v. State, 299 So. 2d 289 (Ala. 1974).

But, does the same hold true when independent abstractors are hired by the title company to provide a title search?  Certainly, the argument could be extended to independent abstractors when their searches are used by a title company to determine the status of title.  On the other hand, the general rule could be seen as allowing the title company to do their own title search as incident to issuing a policy, but a third-party who provides a title search is crossing the line into the unauthorized practice of law. An independent abstractor is providing an opinion of title because they have made legal determinations as to which documents to include in their report, and since they are not issuing title insurance - it is not really incident to issuing a policy.

A Massachusetts case provides an interesting point of view.

[A] title evaluation is a two-step process: a search for the pertinent documents and an assessment of the legal significance of those documents. It is the latter task that requires a thorough knowledge of the law. For example, an attorney must be familiar with the law relating to easements, adverse possession, attachments, bankruptcy, condominiums, divorce, leases, partnerships, liens, trusts and corporations in order to adequately evaluate title to real property. A title examination for issuance of a title insurance policy in a residential purchase transaction is the same examination that an attorney conducts when he certifies a title...

[T]he search of records of real estate to ascertain what may there be disclosed without giving opinion or advice as to the legal effect of what is found does not constitute the practice of law. Title examiners who search the records of the registry of deeds and prepare abstracts of the title detailing its history, including encumbrances and defects, are not practicing law.
Mass. Conveyancers Ass'n v. Colonial Title & Escrow, 13 Mass. L. Rep. 633 (Mass. Super. Ct. 2001).

The problem with this opinion is that despite their very detailed analysis of what is, and is not, the practice of law as it relates to title evidencing, it is vague.  What exactly does the court mean by "pertinent documents," "opinion or advice," and "detailing its history?"  By pertinent documents, is it indicating that it is acceptable for a searcher to decide what is pertinent?  Or, does omitting a document because the searcher "knows" that it is no longer relevant to the status of title providing an opinion or advice?  When it states that preparing abstracts of the title detailing its history is not the practice of law, is the court referring to true abstracts (which are rarely done) showing everything?

This is a very murky area of the law.  They use the term "abstract" that now has a different meaning than it once did, at least in its practical application.  Quite clearly, an abstractor, as we consider them today, must be familiar with all of the areas of law the court mentions, i.e. the law relating to easements, adverse possession, attachments, bankruptcy, condominiums, divorce, leases, partnerships, liens, trusts and corporations.

This is important because many title searchers today are not familiar enough with these concepts to make the determinations that are now required to provide title evidence.  I was recently speaking to some colleagues at a conference regarding the qualifications of abstractors, or more accurately, the lack thereof.  Too many abstractors believe that they are qualified to provide title searches if they can use the index and provide copies of deeds and mortgages - but there is much more to it than that. 

An abstractor today must be familiar with several areas of law and their state's title standards, where such standards exist.  One of the attorneys I spoke to told me that he was involved in litigation over a divorce case that was omitted from a title search.  The abstractor admitted that she did not even pull the case file because she didn't believe it was relevant.  In choosing to omit the information from her report, she made a legal determination that she apparently was not qualified to make - she arguably engaged in the practice of law by making such a determination.

An abstractor should also have a thorough understanding of title insurance underwriting practices.  Many do not think it is their job to make underwriting decisions.  However, by choosing which documents can be properly omitted from a search, they are making underwriting decisions.  How can that be done without understanding how the client uses a search and what coverage title policies provide.

I would even hazard a guess that most abstractors have not even read an ALTA title policy.  If an abstractor doesn't know what coverage will be extended, how can they possibly decide what is relevant on a title search?  Obviously, they cannot.  Yet, it happens every day.

Basically, abstractors today are not permitted to provide a legal opinion of title and they are doing that to some degree because of their determinations to omit certain documents from their searches.  And, they most likely do not fall into the "incident to issuing a title policy" exception because they do not work for a title company.  Most are even woefully unprepared to make the underwriting decisions they are charged with.

I think many of us have noticed that there are more and more title problems cropping up in our land records.  This was also a topic of discussion at the conference I attended.  It was said that our land records are vital to our economy and a stable housing market.  This is undoubtedly true, but the state of our land records is most definitely on the decline.  Problems are not getting corrected.  This is, in part, caused by the mentality of our title insurance industry today - insure over it, issue an indemnity letter, etc.  But, there is also another aspect that many do not consider.  Too many abstractors do not recognize, or report, all of the potential title defects on their searches.

I believe that this may explain why we are starting to see requests for searches that include all of the recorded documents - including those that no longer apply.  There are many problems that have been overlooked, or intentionally omitted.  By requesting everything, the client is essentially taking the examining function out of the hands of their searchers so they can make the underwriting determinations.  Perhaps that is the way it should be. True abstracting, if the industry heads back in that direction, would eliminate the concerns about the unauthorized practice of law.

I do not believe that a J.D. is necessary to provide title evidencing.  However, more and more of the examining process is left in the hands of non-attorneys and non-title company personnel.  If a further exception to the unauthorized practice of law is carved out for independent abstractors, then something must be done to ensure that they are well qualified.  Abstracting is a profession, but most do not treat it as one, nor behave in such a manner.  In the vast majority of states there are no regulations for independent abstractors, they are not required to possess any minimum level of education, they are not required to have any specialized training, and they are not required to obtain any continuing education courses.  Is this wise?

If the abstractors do not take it upon themselves to become more educated in their profession, they may become extinct.  A strong argument could be made that they are crossing the line into the practice of law.  If that were the case, they would be forced to operate under the supervision of an attorney (as some states now require), or their jobs will be moved back in-house at the title companies they now work for.  The only other alternative is to go back in time to when abstractors provided true abstracts of title - without any opinion or advice as to the status of title.  Unfortunately, that would be too costly for the industry and is not likely to be a viable long-term option.

To some extent, this self-preservation through education is a goal of NALTEA.  The education committee has prepared a very thorough certification test.  Such a test could be a springboard for state licensing programs.  This serves two lucrative purposes.  First, it shows that the abstracting industry recognizes deficiencies in state regulation and that it can effectively self-regulate.  Second, it promotes the idea of state licensing laws.  State licensing of abstractors would carve out a statutory exception to the unauthorized practice of law. 

The best way to remain independent is to make sure that abstractors are providing an exceptional level of professional service and skill.  In other words, do not give the industry any reason to doubt their abilities or qualifications. 

I would be curious to hear what you think.  Obviously, these issues vary to some degree by state.  Do you think that abstracting as we do it today infringes on the practice of law?  Why, or why not?  Are you concerned that if the general of level of competence in our field does not improve, an unauthorized practice of law challenge could put us all of out business?

Robert A. Franco
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