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Underwriters' Bulletin

Procedural Updates

Exception Language

Reviewing a Chain of Title Report

For all transactions, be sure that the search is complete, accurate, and meets ATG's requirements before drafting the commitment. ATG search guidelines can be found in Chapter 1: Abstract Review and Title Search of theATG Underwriting Handbook(link on the member section of www.atgf.com under "Publications/Notices"). You can also order a hardcopy by contacting theATG Order Department, 217.403.0114. ATG search guidelines ensure that you will find almost all possible defects that need to be resolved at or before closing. Furthermore, be sure that you have copies of all search documents, and review them. The following guidelines will help you in reviewing chain of title reports and conveyance documents.

Chain of Title Report

For every property you insure, you must obtain a grantor-grantee search of the same legal description as the vesting deed shows. The grantor-grantee index in the Recorder's Office is the official index for providing record notice of conveyances of a property. Tract indices, which are searched by legal description, are not official indices. If the county recorder's office has an accurate tract index, you may use it. However, if the county has an unreliable tract index, be sure that you or your search provider also searches the grantor-grantee index. If using a computer to search, then you must search using the legal description, permanent index number (PIN), and names to be sure you've found all documents that apply to the property. Furthermore, you must review copies of all documents that appear in your search to determine whether they belong in your search report. If you don't conduct your own searches, be sure your search provider follows these procedures.

Make sure that the search goes back far enough. If there is a prior policy, then the search must go back to the date of the prior policy. If there is no prior policy, then you must obtain a full search. For Illinois residential, platted land, the search period is 20 years. For all other Illinois property, the search period is to date back to 1900. For example, on a property requiring the 20-year search period, a searcher must search back to the last arm's length transaction with a warranty deed predating the search period. From the year 2005, that would mean searching for the last warranty deed between unrelated parties occurring before 1985. For search requirements for property located in other states, please review Chapter 1 of the ATG Underwriting Manual.

When reviewing a chain of title report, or if you are searching in the public records yourself, you may find that some of the documents in it refer to property with a different PIN than the property you are insuring. When this happens, you must review the document to determine whether the document contained the same legal description as the property you are insuring. This is necessary because the legal description controls what property is conveyed by the document, not the PIN, and relying upon the PIN may lead you to ignore documents that affect title. In fact, ATG has experienced claims lately arising out of this very problem.

Copies of All Documents in the Chain of Title Report

Obtain copies of all documents in the chain of title, except for released mortgages. You cannot rely upon the chain of title report to determine the status of title. Rather, you must review each conveyance to determine its effect.

When conducting the review, first check to see that the document is a valid conveyance (it should contain a grantor, grantee, description of the property, and signatures of all of the grantors). Then, for each document, determine the following:

• what interest was being conveyed;

 

• what property was being conveyed;

 

• what type of transaction was taking place;

 

• who the parties were, and whether the grantors were all titleholders of the land; and

 

• whether the grantor reserved any interests or made any new conditions, covenants, restrictions or easements on title to the land.

Once you complete a thorough review of the chain of title and all documents in the chain of title, you will have a clear picture of the current status of title and will be ready to prepare a commitment that accurately reflects it. Please contact the Underwriting Department with any questions you may have regarding your search results.

© ATG|Casenotes/Bulletin 0908_v2n8

[Last update: 9-2-09]