Osmeña: Ideal title registration law needed

Tuesday, January 27, 2009

Antonio V. Osmeña
Estatements

IT is amazingly strange that our country’s insurance industry has no interest in lobbying with Congress for the enactment of an enabling title insurance law.

No system of title searching is perfect. As many legal cases have arose, errors may creep in or forgeries and other things that cannot be guarded against may cause loss.

To remedy this situation, title insurance has come into use in the larger cities of America. It is a direct growth of the abstract company. Many of these companies, years ago, devised the idea of insuring not only their abstracts but going a step beyond, and for an additional fee, reading and insuring the title as well.

Like all other insurances, title insurance is a distribution of loss among all insured. Title companies are organizations authorized by law to examine and insure titles. They charge a fee or premium for their service. The amount of premium is usually based upon the value of the property and covers not only the expense of the examination and abstract but an additional amount this is placed in a general fund to cover losses insured against.

The company makes a careful examination of the title. If it is satisfied that there are no apparent defects in the title, it insures against any loss. Should there be a loss later, by reason of forgery or any other defect arising prior to the insurance, the title company pays the loss. This, in brief, is the theory of title insurance.

In seeking title insurance, the person who is about to acquire the title or some interest in the real property first applies with the title company. He agrees to pay a certain fee for examination of the title. The title company, for its part, obligates itself to make an examination of the title and to insure against undiscovered defects. It does not, however, agree to insure against defects and encumbrances that may appear from the examination.

After the examination is completed, the applicant should insist on being given a “report of title,” which is a statement setting forth a description of the property, the name of the record owner, and a detailed list of all objections to the title—such as encumbrances and defects found upon the records.

The reason for having this report is simple: it enables the applicant to know the exact condition of the title. If he is a purchaser, his contract stipulates that he shall take title subject to certain encumbrances.

The report sets forth all the encumbrances found on the records. The purchaser demands that the seller disposes of all those not agreed upon in the contract, before delivering a deed. If the applicant has agreed to make a mortgage loan, he insists that the owner renders his title free and clear before the loan is made. After the objections that were not agreed on have been removed, the title is closed and the instruments passing title are delivered and recorded.

The title company now prepares to issue its policy of the title insurance. There may, of course, still be encumbrances on the property which have been agreed upon. For example, the transaction may be a sale of property subject to one or more mortgages.

The policy should be carefully examined to see that the property is properly insured without any exceptions other than those agreed upon. There is now a need for the Philippines, which had advocated the Torrens Law, to enact a model Land Title Registration Law.

Our country has reached a high development in the larger communities and most title examiners realized that some method must be devised to avoid the inconveniences of the present system of examining and ascertaining the validity of land titles.

The remedy may be merely a simplification of the present system or the enactment of an ideal registration law. The sentiment in favor of one may increase. And it is quite possible that the future will see the general use throughout the country of a title registration law, probably patterned after the Torrens system, with modifications to remove present objections.

Our country’s real estate boards--specifically the Cebu Realtors Board that is comprised of specialists in real service and professional agents who are knowledgeable of facts as well as law—should be capable of presenting to Congress an ideal registration law.