The worst case scenario on a title search is missing a lien. So how does it happen? One of the most common reasons a lien is missed is because of using “online” sources for title information. I don’t mean ordering a legitimate title search from a website, I mean trying to shortcut the search process by using data to piece together a search, or “online records” as a replacement for an official property title.
Even major title companies run into trouble on this. Several title insurers have been sued for missed liens when their electronic searches failed to discover liens which were actually on file in paper documents in the official land records. In some cases the searches were deficient because all the names or sources were not checked either.
Three examples of missing liens using “online” title databases:
“a title examiner at Guaranty Title, performed a title search of the Property (the “Second Search”) using the Orbit search engine. Id.at 8:3-9:10. Edgeton’s title search did not reveal the federal tax lien, nor did it reveal the four judgments and the state tax lien found by West Title.” Link to case.
“Columbia failed to report the earlier sale to Dr. Khan in the commitment or the policy. Cambridge and Columbia in performing the title search and failing to discover and report the Khan deed,” Link to case.
“The land was burdened with an easement that was publicly recorded but was not indicated on numerous versions of a title commitment issued by Chicago Title Insurance Company” Link to case
A thorough title search uses official land records to abstract the title, and industry best practices to run the search.
The videos below describe how liens can be missed on title searches as well.