Ever wonder how title insurance came about? Investment Title is here to tell you the story of why and how title insurance began. We’ll try our best to not make this another boring history lesson- this is interesting, we promise!
Land and property ownership have always been extremely valuable and special attention has been necessary since the early days. There have been laws and regulations surrounding the transfer of land from one person to another since the 17th century, but none of them ever provided enough protection for the purchaser, which is why the need title insurance eventually came about.
The History of Title Insurance Timeline
1066: The idea of land transfer began in England, where the feudalism system was being used and basically was an exchange of land for military service. William the Conqueror claimed all the land in England and divided it between himself, the church and the remaining land was given to Norman soldiers and nobles. Peasants who were not categorized in the above criteria would have to work for the land and pay dues in order to use the land. Whenever there was a change of land ownership the peasants were obliged to work for the new owner. This went on for hundreds of years in many nations in Europe. Finally, England moved from land-based economy to a money-based economy. Luckily, these days are way behind us. This is just an example of where land possession began.
(Fast forward a few years, and across the pond)
1626: A law was established in the English Colony of Virginia. The law required that all land transfers and sales be recorded within one year of the transaction to the General court in Jamestown.
1640: Another law was enacted stating that a deed (the legal document that shows ownership of property) given to a new owner would not be legal unless it was recorded in court. This law allowed a small amount of regularity and record of who owned the land.
1868: The case of Watson v. Muirhead. This was a defining factor for the introduction of title insurance. At this time there was someone known as a conveyancer, this person was responsible for all aspects of the title transaction. They were in charge of going through the public records and property abstracts to verify the title and check for liens and encumbrances. If something were to come up after the conveyancer approved the title, the affected party would have to then bring the conveyancer to court for negligence. Unfortunately, this was not easy to do. In the case of at Watson v. Muirhead, the conveyancer, Muirhead, chose to ignore certain recorded judgments, as directed by his lawyer, and falsely reported the title as good. Trusting his conveyancer, Watson went forward with the purchase and later was presented with several liens, therefore, suffered from financial damages due to the encumbrances on his title. The property was later sold at a Sheriff’s sale to cover the lien. Watson lost the case because he could not prove Muirhead negligent. To play devil’s advocate, Muirhead did seek out professional guidance from a lawyer regarding the lien prior to approving the title, so technically he could not have been proven negligent.
1876: After this case, there was an obvious need for something to be put in place in order to protect people like poor Mr. Watson. A group of Philadelphia conveyancers then decided to establish a way to protect buyers, which became the very first title company.
1940: There was a great increase in the number of homebuyers after the war. Servicemen were starting families and settling down. During this time title insurance became an extremely integral part of the homeownership process.
TODAY: Title insurance is still an integral part of buying a home. It changed the transfer process from being a substantial risk for buyers and lenders to a more manageable, secure transaction. If you think about it, the growth of title insurance and the growth of America are closely related. America has developed, the population has increased, and more people became property owners. Since the start of title insurance, it has continued to help home buyers move forward with a safe, secure and efficient purchase.
We hope you enjoyed this short history lesson. It’s important to know how something started to understand the importance of it.
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