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ARE
YOU AWARE OF...
THE HISTORY OF TITLE INSURANCE?
In 1848, the treaty of Guadalupe Hidalgo gave California
to the United States, and in 1851, after California became
a state in I1850, congress appointed "A Board of Land
Commissioners, " and the "Rancho" boundaries
began to be established and confirmed in the United States.
In 1852-1853 the U.S. Government survey extended sectional
township and range lines over all public lands that were not
ranches.
In 1859, the Atchisos, Topeka and Santa Fe railroad, chartered
by Cyrus K. Holliday, started construction westward in 1868,
reaching Dodge City, Kansas in 1872. It purchased the Atlantic
and Pacific tracks to El Paso and Needles. It leased Southern
Pacific's line to Mojave and built through Cajon Pass into
San Bernardino in 1885. In 1887, by building to Azusa and
buying the Los Angeles and San Gabriel, it got its line into
Los Angeles. It immediately became involved in a rate war
with the Southern Pacific.
With millions of acres of land available and reasonable and
two railroads in a transportation price war, the original
tourist business began to hum. Fares from Kansas City to Los
Angeles dropped to $5.00 and finally to $1.00. Trains on both
roads had to run in sections to accommodate all who wanted
to come.
In the beginning "patents" were handed out by
the government, for people coming west.
"Title" - the evidence one has of right to possession
of land.
The word "insurance" means an agreement to pay
for loss or damage arising from an event occurring within
the prescribed time of the agreement.
"Title Insurance" - insurance against loss resulting
from defects of title to a specifically described parcel of
real property. Defects may run to the fee (chain of title)
or to encumbrances.
Until just over a hundred years or so ago, conveying real
property, although relatively simple by today's standards,
did not include any form of guaranty or insurance. Many of
the transactions were handled by conveyances some of whom
were attorneys, who either personally searched the title or
obtained a title search or a form of abstract to ascertain
ownership of the property and to discover any encumbrances
on the title. Historically, before taking title to the property,
the buyer required that the title be free of any existing
rights, interest, liens or encumbrances for which the buyer
would be responsible. Based on the title search or the abstract,
the title could be examined and an "opinion" rendered
by an attorney (or the conveyancer, if an attorney) stating
whether title was marketable. The need for title insurance
arose when traditional methods of conveying failed to provide
safety to buyers or lenders.
In 1868, the court in Watson vs. Muirhead (1868) 57 pa 161,
held that the conveyancer was not negligent when he chose
to ignore, following a good faith consultation with an attorney,
the existence of recorded judgements. The innocent purchaser,
who suffered financial damage because of the encumbrances
on title, had no recourse against the conveyancer or anyone
else. As a direct result of this decision, the Pennsylvania
legislature enacted a law that incorporated and regulated
title insurance companies. Thereafter throughout the country,
many title insurance companies were organized to insure purchasers
against losses from title defects, liens and encumbrances.
Liz Esqueda
(562) 624-6714
Investors Title Company
101 E. Glenoaks Blvd.,
Glendale, CA 91207
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