The D.C. Bar Association said this week that it is opposed to a lawyer committee plan to eliminate property title searches and conventional title insurance through the establishment of a land registration system. The association, largest private lawyers organization in the city, says it plans to ask the City Council for a number of reforms in the traditional deed recordation system already in use here.
A consumer action committee of the D.C. Bar, the 23,000-member organization all lawyers must join to practice law in the city, recommended last May that a land registration system be set up as a way of cutting closing costs and helping more low income people buy homes. Martin H. Lobel, a member of that committee and the plan's chief proponent, maintained that it could cut as much as $300 off the price of a $70,000 house.
The 4,300-member private bar association, on the other hand, maintains that costs would be higher and holds that a land registration system would "wreak havoc on the public ad (bring) incredible disruption to the existing prompt, orderly and the efficient method of effecting transfer of real estate" in the District.
Under the present deed recordation system, the buyer of a house must prove clear title to the property in order to get a mortgage. This means a search must be made by a title company to find any outstanding financial liens against the property. To protect against errors or the possibility of a missing heir turning up, the buyer must take out title insurance for the lender and, optionally, for himself.
The search may entail digging out property records dating back to 1972 when the District was founded. The records are scattered around the city and are often filed under property owners' names rather than by lot. The cost for such a search runs between $400 and $600 for housing ranging from $50,000 to $100,000.
Under a land or title registration system, the official certificate in the possession of the recorder of deeds would always show the state of the title and the person who owned the property. In other words, ownership would be guaranteed by the city after it is established to the satisfaction of the Supreme Court, which would then issue the registration.
A fee of 0.25 per cent of the assessed value, paid to the recorder of deeds for a title certificate, would serve as title insurance.
This system is in force in New Zealand, Australia, Western Canada and London. It is similar to the system now used in Germany, Austria, Switzerland and Scandinavia. In this country, it is in effect in Cook County, III., Massachusetts, Minnesota, Colorado, Georgia, New York, North Carolina, Ohio, Utah, Virginia, and Washington state.
However, within the United States it is only compulsory in Hawaii, and there only for lands owned by corporations. The consumer affairs section proposal would make the system mandatory here 180 days after passage. Properties would be put into the new system gradually as they turn over.
The association notes that the initial registration under a court system is far more costly and time consuming than under the existing land recordation system. Therefore it is likely to meet opposition from existing owners who would have to bear the increases costs.
The private lawyers groups also objected to the Lobel proposal on the grounds it would cause court logjams, would not eliminate the need for title insurance, and create chaos in the real estate market during those 180 days when owners might be forced to sell at below market value in order to avoid applying for a title certificate.
Asked to comment on the association's statement, Lobel replied, "They've thrown up a lot of straw men." Noting that a number of the members of the drafting committee are associated with title companies or lending institutions, Lobel added, "They admit that private companies are duplicating public records. Yet all they want to do by their reforms is not to benefit the public, but to limit the comapnies' liability and thus increase the profitability of title companies."
The association's proposals call for;
A 60 year limit on claims by anyone not owning the property.
Validation of tax title deeds held for more than 21 years.
Priority for a purchase money mortgage - usually a loan by the seller to the buyer - over existing judgments against the buyer.
Reduction of the tax lien period from 12 to six years.
A minimum dollar amount, such as $1,000, for a judgment to become a lien against real estate.
Elimination of water rent as a lien because of the delay in gettinhg a meter read.
Additional personnel for the recorder's office.
Copies of all subdivision plats, assessment and taxation plats filed in the recorder's office.
A computerized "tract" system for retrieval of property cards.
The association also proposed a series of workshops for those connected with the title industry to focus on ways to make examination and insurance processes and coverage more responsive to the needs of low and middle income consumers. Paul D. Pearlstein, a member of the association's drafting subcommittee, said no cost-benefit analysis of its proposals had yet been made, but conceded that no large savings to consumers were likely to result.
City Councilwoman Nadine Winters has recommended a study or the land registration system. Ye even its proponents admit passage of any such legislation is a long way off.