Research by the Arthur D. Little consulting firm shows that residential land registration systems - a type of property information certification that has been suggested for the District - are too costly, Irv Plotkin, researcher for the firm, said at a recent seminar here sponsored by the American Land Title Association.
Preliminary conclusions of an extensive study into the various land registration systems throughout the United States "clearly show that placing a piece of residential real estate in a registration system is an unwise investment from the point of view of the individual who must bear those costs or from the point of view of society," Plotkin said.
The American Land Title Association is the national trade association for the land title industry. Land registration, popularly known as the "Torrens system," calls for official certification of property ownership. If there are liens, mortgages or other claims against the property, they must be listed on that public certificate or they have no legal effect. When an owner transfers property, the owner's duplicate certificate must be presented, and a new certificate is issued by the public official.
During the early part of the 20th century, 21 states adopted the Torrens method as part of their land recordation system, but in recent years only Hawaii, Illinois, Massachusetts and Minnesota have any ongoing experience.
"The Torrens system offers no positive solution for elimination or reducing settlement costs for residential homebuyers," Plotkin maintained. "Rather, the Torrens system produces a . . . cross subsidy from the small homeowner to the large commercial developer, builder, or speculator."
Reid Patterson, a lawyer with the home mortgage branch at HUD, told the title seminar participants that his agency would soon be contracting to develop a model land recordation systems. In recent weeks, HUD has been criticized by the Nader Housing Research Group for failing to initiate any such study into this area.
Martin Lobel, a Washington attorney, outlined his proposal - which has been sent to the D.C. City Council - for the use of the Torrens system in the District. Lobel told the seminar that Washington is "a jurisdiction where the need for drastic reform is particularly acute." Citing the high homeowner turnover in the District, Lobel proposes that landowners be required to obtain title certification before selling their property. This system would be mandatory, unlike all the other Torrens systems in the United States, which are voluntary.
Under the Lobel proposal, the title certificate would be conclusive evidence of ownership, and all interests or claims to the property must be shown on the certificate - other than for tax liens and public easements - or the calim would not exist.
Lobel said such a system would simplify the transfer of land and provide greater security and lower costs for buyers. "But," he charged, "economic self-interest on the part of the title industry has kept reform from being enacted."