A critical error in a title plant is one that prevents a ‘prudent searcher’ from knowing that a document is related to their search. The term prudent searcher is important, because it assumes that the searcher is:

• • using the title plant only to find documents that apply to their search, not as a substitute for looking at/examining the documents themselves

• • running a search by both property and by name

The practice of “prudent searching” creates a defined separation between keying an index to the documents (title plant records) and document examination.  The underlying assumption is that the data entry operators keying the title plant postings are not required to have the knowledge to examine the documents and make critical judgments related to the purpose of the document.

If the concept of prudent searching is applied, it becomes easier to define what a critical error in the title plant is. The rule is: a searcher must be able to find all recorded documents relevant to a property.

There are generally two levels of searching/examination:

• documents where property is shown on the document (PI search)
• documents where property is not shown on the document, but are relevant to the search because the owner of the property is involved (GI name search) and the event recorded may have an effect on the property.

Title plant software sweeps the plant index by legal description and by name(s).  For the software to bring up all documents relevant to a search, they must be posted into the index correctly.  If they are not, it has become accepted practice to include the following as critical errors:

Missed or incorrect property postings.

This is the most important of the critical errors. This is because if a property is noted on the document, but it is not posted or incorrectly posted to the title plant, the document will be missed when searching by property.  It may be caught by a name search.  An example: an investor has several properties in his portfolio and takes out a loan pledging the entire portfolio of properties; during the title plant posting process, one of the properties is not picked up; later that property is sold and the lien is not picked up in the search/exam process and results in a claim.

It is accepted knowledge in the title insurance industry that sometimes properties get missed or mis-keyed during the title plant data entry process. To avoid claims, most companies require their examiners to do a name search in addition to the property search (on PI documents), and if something pops up, the examiner will note the missed property.

Missed names or typos in the name field on GI postings.

This is more of a gray area because of the power of computerized searching (near matches, wild card searches, soundex etc.).  Many established title plant providers consider a typo in the first four characters of the last name as a critical error.

Other critical errors.

Once we get past the two big ones above, other critical errors are often a function of the company’s system and examination rules. HDEP has seen the following considered to be critical errors in some title plants but not in others:

• Incorrect document type codes. Many companies consider this a critical error – but should they? A prudent title searcher is required to examine each document that affects the search – if an examiner is actually opening the selected documents, then the erroneous document type code would be identified.  If a searcher is relying only on the chain rather than using prudent search practices, the document may be missed.
• A release with an incorrect prior reference.  Again – if the examiner is actually opening the document and examining it, the incorrect prior reference would be caught.
• Incorrect filed date. If the examiner is using the title chain to exclude mechanic’s liens, this would be considered a critical error – if the examiner is actually opening the document and examining it, the incorrect filed date would be caught and corrected.

The discussion on prudent searching and actually examining documents is complicated by the time and expense of opening the documents themselves and examining them. The cost of opening the documents and examining falls into two broad categories:

• The labor cost of the prudent searcher – it takes time to collect the documents, open each one up, examine the various data elements, confirm that there was no error in the title plant and only then, prepare the report.  It is far faster to assume that the title plant is correct and use the information on the title chain to exclude documents.
• The cost of acquiring documents to examine.  Many counties and joint plants levy large fees to supply recorded documents to the title examiner – the fees can vary from $0.50 per document to $1 per page.  It can become quite expensive to acquire the documents and this pushes even the most prudent of searchers to be judicious in what documents they request for examination.

There are no established metrics for an acceptable accuracy rate in a title plant.  HDEP International’s clients have demanded accuracy rates between 98% and 99.6% of all documents posted to the title plants.  HDEP International has always met the critical accuracy rates demanded by its title plant customers.

If you have any questions or would like more information on how to outsource title search and examination, please feel free to contact us.