Why is title insurance necessary? Or how about a URL for every parcel?

Oct 9, 2007  |  Michael Wurzer

Bad data, that’s why. The many county governments across the country deploy a dizzying variety of legal and technical approaches to tracking title, and the title industry has evolved to wade through that complexity. Forbes ran a fascinating article in 2006 on the title industry, which is even more interesting in light of the MLS vendor acquisition spree the major title companies have gone on over the last several years, resulting in First American and Fidelity National becoming the two largest MLS software vendors. Here’s an interesting quote from the Forbes article, further quoting Parker Kennedy, CEO of First American:

“We get a little more automated every day,” Kennedy says. “In the old days, if you wanted to double your business you had to double your people. Now you can double your business and increase your staff maybe 10%.”

The tech push must continue, he says, because one day economic rationality and digital reality will catch up to the title industry. Real estate ownership records, always open to the public, are going online, alongside all sorts of other data. Today anyone can instantly learn a property’s square footage, its sales price history, even view satellite photos, at virtually no cost. If records are instantly accessible and accurate, the need for title insurance will fade away. “Eventually insurance won’t be an important component of the product,” he allows.

So Kennedy hopes to harness digital technology to create a new business. Rather than broker one piece of information for an exorbitant cost, he hopes to collect all manner of real estate skinny and sell it to banks, insurers, real estate agents and direct marketers.

The article concludes, “Yet another movement for change comes from efforts by the nation’s county recorders to agree on a uniform way to store property records online, which could severely curtail the need for title insurers.” Whoa, that perked me up. Some time ago, I wrote that the NAR should focus on working with county governments to establish a standard property identification system.

Though I probably should have known of this earlier, the standards effort referred to in the article appears to be by the Property Records Industry Association (PRIA), which is made up of county recorders and title insurance companies. Interesting.

I really don’t know much at all about title insurance and generally am skeptical about slash and burn articles like the Forbes piece. Frankly, not much of that is interesting to me. What is interesting, though, is that there are people working on defining standards for property records. Clearly, the RETS schema working group needs to consider this work, which, fortunately, is based in part on the MISMO standards that are already being considered in the RETS process.

Delving into the details of standards work is daunting. There are hundreds of different parcel number formats, legal description methods, and cadastral formats. Trying to capture all of these into a standard can be paralyzing. So here’s a simple idea that might just be useful to all parties: Every property should have its own URL. With a standard way of identifying a property, bringing disparate records systems together is easier. MLS systems can more easily be integrated to public records and vice versa. MLS regionalization becomes simplified. Title searches become trivial. Interesting.

4 Responses to “Why is title insurance necessary? Or how about a URL for every parcel?”

  1. D. Lambert says:

    “Each property should have its own URL.” This makes sense as a concept, but I think it would break down in practice. Think of all the properties out there that haven’t changed hands in years, and won’t for many more years. There’s no impetus to create content for these properties, so you’d end up fitting a default page in place to show the information that *is* known about the property.

    Additionally, the benefit of “a URL per property” isn’t the fact that the URL exists, it’s in a reliable mechanism to find the URL.

    For these reasons, I’d think about this in terms of a Property Registry (like a domain name registry) that provides some basic information, both as a web page and as a web service. Among this information could be a URL if there’s any additional content to be found for this property.

    This sort of design would also allow for some measure of distributed management where local jurisdictions could be responsible for providing the information, and the registry is only responsible for directing searchers to the correct location for current information.

  2. Perhaps I should have said URI, because I’m not certain that the identifier would have to be a web page. It certainly could and that would likely make things most interesting, but it doesn’t have to be. The idea is to provide a consistent way for county recorders and other parties to the real estate transaction to tag their data as relating to a particular piece of property. Once this is done, searching “public” records would be trivial. To encourage the use of the identifier, laws could be passed that invalidate or at least shift the burden of proof against any claim that is not properly and publicly identified.

  3. ColbyA says:

    An interesting idea and it seems something like RETS could introduce this convention even without participation from the various counties. A URI convention like this would convey much more info in a single identifier than a simple tax id: pubpin://boulder.colorado.usa/R0088068

  4. Great post. We’ve implemented a few of these concepts and while I agree with D Lambert that the devil’s in the details, Michael’s spot on; there’s huge value in solving this problem. Every home on Zillow already has its own permanent URL which corresponds to its ZPID (Zillow property ID) … and today, owners and agents claim those homes with the purpose of updating their public facts and for sale status and new homes can also be added to Zillow by site users. So … it’s definitely do-able.