Monday, October 11, 2010

Property Title Insanity

Something that I have not heard mentioned in the context of either the collapse of the housing market or the more recent, associated fiasco of lost and misplaced mortgage notes, is that our system of tracking ownership of property, liens, encumbrances, rights of way, etc., is archaic, anything but user-friendly, and exceptionally costly to consumers.

Why should the title to your house be any more difficult to obtain, review, update or transfer than the title to your car? It's not about relative values - there are cars that cost more than houses, and in some areas of the country the average price of a home is less than the average price of a new car. It's not about volume - more than 250 million cars are registered to people in the United States. Yet when you buy a house you can expect, at least, to pay companies to perform title searches and to insure your title. If you haven't guessed, those entities along with real estate agents have lobbied hard to maintain the status quo, as it's incredibly lucrative for them. But let's not pretend it's good for consumers. (Granted, a new system would likely take many years to phase in.)

I have nothing against real estate agents, and don't begrudge them the fees they've earned in my real estate transactions. I have nothing against paying real estate professionals for valuable services, such as preparing needed documents and facilitating closings. But I think it's well past time to consider how a modern title system could make the process of buying and selling real estate much more efficient, reduce surprises to buyers such as easements buried deep in the title history, and reduce transaction costs. And it should make it simple to figure out whether the entity you believe owns the mortgage note in fact owns it - whether they're trying to foreclose or sell you a mortgage-backed security.

1 comment:

  1. I do begrudge the real estate professionals I've worked with . . . but otherwise agree with you. There is no legitimate reason to continue the current system.

    CWD

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