Blog: R.E. Tales
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Abstracts of Title
Abstract of Title
New York is called “an abstract state”. This does not mean our attentions are diverted, but rather that we typically convey title through the use of an Abstract of Title to establish what is called the “Chain of Title” (history of ownership). More common in the US now is the use of Title Insurance and a lot of the big firms that deal all over the US, make the incorrect assumption that Title Insurance is what we want here as well, so that’s what we get, whether we actually want it or not. Personally, I disagree with this, not that they listen to what I say. Either can be used to convey good title, but the insurance ends when I sell the property. With an abstract, all that needs to be done is have it updated then given to the next owner.
Once I get a Purchase Contract signed, the next step (assuming it is a cash sale) is to send the abstract out for updating. This means the seller has to deliver it to his attorney. If he can find it that is. So many can’t, and a frantic search ensues. After all, they haven’t looked at it or even seen it since they bought the place they are now selling. They will triumphantly produce the Deed. But we can get copies of that easily from County Clerk where they have been filed. Abstracts are not filed in New York and, until recently, not even copied. Some firms now provide digital copies, a huge improvement by my way of thinking. If your county files are converted to digital then the main reason abstracts are not filed disappears (lack of space - they get bulky). Some states have gone ahead have these routinely filed at the County Clerk’s. But not New York. You are responsible for it.
So you are in the middle of your frantic search and you realize you may not recognize it even if you found it. It may not say “Abstract of Title” on it. What does it look like? Most are on legal paper (8.5x14”) and have covers of colored somewhat heavier paper, stapled at the top. All but certainly, it will be fairly thick. I have seen them way over 100 pages. On the front is probably a tax map of the land. Inside will be all sorts of legal documents pertaining to the property: old deeds, wills, easements, various maps, deeds of neighboring properties which once may have been part of yours, foreclosure documents, mail receipts, mortgages, marriages and divorces information, tax searches, memorandums, copies of judgements, purchase contracts from the past, lis pendens (notice of a pending legal action), and certification of the abstract. If you can stand to wade through all this, it gives a legal history of the premises. Not everything mentioned above will be in each abstract - and there may be other documents someone once thought important to add.
Suppose you cannot find it at home, what now? Find out which attorney represented you when you purchased the property. He may have it in his files. Or check with the bank if you had a mortgage. Sometimes they have them. I have an abstract here of a place I sold 20 years ago. It had been at my lawyer’s who has since retired. When he gave me all my files, I found it in there. I called the current owner and told him I had it, but it should be in his records, not mine. He thanked me and probably promptly forgot about it. If he ever decides to sell, he is going to be frantic. Unless he remembers I have it, it will cost him an un-needed bundle and some lost time to recreate it.
Now how did it come to be in my files? I am not sure but when I sold ti, I carried his mortgage. That would explain how it came to be there, even though I was not in the habit of holding onto the abstract in such cases. There ware quite a few over the years, but this one, for some reason, was the only one my lawyer had retained. Or it could have simply been mis-filed. There are abstracts of property I own that are missing. I wonder where they ended up in? I keep such things in my safe and no where else.
Another lawyer had a flood in his office and lost all his older files. Not only his but the ones his father had before him, 2 generations worth. When all those folks need their abstracts, there will probably be a hundred grand spent creating them. Typically we go back 40 years in our abstract searches, so some of the abstracts, say those from 50 years ago, will be interesting perhaps, but not terribly useful.
After the abstract is updated, it is sent to the buyer’s attorney, who reads through it to give his opinion as to who he feels the legal owner is. If he feels someone else may have a legal interest in the property, then he’ll let the sellers attorney know about it and then they will have to do whatever is necessary to rectify this. We had one case recently where the title over time had passed through 4 different lawyers in various sales, each of whom was satisfied that the title was good. Not one ever challenged it. Then it got to the 5th lawyer who found something he didn’t like. It seems way back when there were like 17 heirs and when it was sold; one was feuding with the others and failed to sign off. As luck would have it, he was still alive. And still mad. This all happened so long ago that the Statute of Limitations had long passed, meaning he couldn’t have done anything about it if he had wanted (you have so many years to enforce your rights and if you fail to do this, you lose any rights you thought you had). He’d long ago lost his rights to complain. and, to be fair to him, he wasn’t complaining, not making any waves for subsequent owners. But he wasn’t signing anything either. The buyer’s lawyer would not let the closing take place until another lawyer, the owner of a title company, agreed to insure the title. Everyone knew there was no problem that had any chance of being informed, but the buyer’s lawyer didn’t want his client in any difficulty in case another lawyer surfaced who did not understand that the sorehead’s rights had long been extinguished.
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Some blogs are designed to amuse; others can be an immense help. All are interesting.
After 40 years, I've learned a lot, & acquired unforgettable experiences. Follow these long enough and you'll eventually get the whole book. (Names probably changed, for obvious reasons.)