You may have thought, aren’t all abstracts of title prepared in Louisiana examined by a Louisiana resident attorney? Well the answer unfortunately is not always… Since the late 1990’s and early 2000, many abstracts of title have been prepared OFFSHORE, for more information, read on.
The law in Louisiana currently requires that before a policy of title insurance may be issued there must be a title opinion rendered by an attorney authorized to practice law in Louisiana, which opinion must be based on an abstract of title which complies with the provisions of LRS 22:512, which states in part that §
“Abstract” shall mean a written history, synopsis, or summary of the recorded instruments in the public records affecting the title to immovable property that: (i) is prepared and certified by the abstractor in accordance with the minimum search periods and requirements of a title opinion as set forth in Paragraph (17) of this Section; (ii) includes a photocopy or electronic copy of such recorded instruments, or extracts of such recorded instruments prepared by the abstractor who personally reviewed such recorded instruments; and (iii) is dated and signed by the abstractor and presented to an attorney duly licensed and authorized to practice law in Louisiana, as set forth in Paragraph (17) of this Section and R.S. 37:212, for examination.”
If the transaction being insured is a sale, the minimum search period shall be thirty years, or longer, if necessary, in order to reach an arms-length sale between unrelated, third parties. If only a mortgage is being insured,then the search shall be for a minimum of ten years or two links in the chain of title, whichever is greater”. In 2001 the Louisiana State Bar Association’s Uniform Title Standards Committee (LSBA Uniform Title Standards Committee, 2001) published its “Uniform Title Standards”, which while not law does recommend a minimum search period of 35 years for sales for the real estate attorney.
Today many national title insurance companies use ‘off-shore’ title services located in places such as Bangalore, India, sites in the Philippines and elsewhere. Often these “off-shore” search companies’ property reports, or owner status searches as they are referred to, are not based on a complete and thorough review of the records filed in the parish conveyance and mortgage records, as is required by law, and the abstracts they prepare for an attorney do not comply with the definition of Abstract in LRS 22:512.
Today the vast majority of online mortgage refinance offers are based on such “off-shore” title processes as well. We find the online title service providers prepare documents which make use of improper terms and conditions under Louisiana law and often result in title defects which must be resolved at a later date before the property can be sold to a third party.
‘Merchantable title’ is the standard set by The Uniform Title Standards, and has been recognized by Louisiana courts and title attorneys as the standard to determine the marketability of property. Merchantable Title is based on thedetermination by the Louisiana attorney that no third party has a claim against the property that would be suggestive of litigation. Insurable title is a lesser standard often used by some “off-shore” title service providers. Our experience over the last 10 or more years has been that title to property where prior sales have been handled by these “off-shore” operations, based on such “off-shore” title services, are often subject to title defects which render the property non-merchantable. These title defects must be resolved before the sale of the property can be completed.
If you want to be certain, as Woody Guthrie coined in 1940, that
“This Land is Your Land”
you should request the out of state title company handling your transaction provide you with proof they have complied with the requirements of La 22:512, and ask them for a copy of the title opinion rendered by the attorney licensed to practice law in Louisiana. The report should include the attorney’s name, bar roll number and address. If the title company refuses or is unable to provide that information, you should contact the Louisiana Department of Insurance.