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  #1  
Old 01-07-2012, 09:27 AM
Northern Piper Northern Piper is online now
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Why didn't Torrens title catch on in the US?

Reading the ongoing thread about title-searching in the US, I'm (a) very glad that western Canada went to the Torrens system, and (b) puzzled why it appears that the states in the US have all rejected it.

It's such a cleaner system, with WYSIWYG guaranteed title, no need for title searches, certainty that what's shown on the title are the ony claims against it, and so on.

So, why did the states reject it?

Last edited by Northern Piper; 01-07-2012 at 09:27 AM.. Reason: hit "submit" instead of "preview"
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  #2  
Old 01-07-2012, 09:47 AM
friedo friedo is online now
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New York does have a (somewhat limited) version of the Torrens system. So do Massachusetts and Hawaii.

As for the rest, most of the time, chain of title isn't that hard to prove. It helps that the history of most jurisdictions is a lot shorter. We don't have to prove shit all the way back to Augustus Caesar or whatever.

Last edited by friedo; 01-07-2012 at 09:47 AM..
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Old 01-07-2012, 10:02 AM
Polycarp Polycarp is offline
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Originally Posted by friedo View Post
New York does have a (somewhat limited) version of the Torrens system.
Huh? Up in Jefferson County, I had to work with Abstracts of Title on and off for virtually all my years of adult employment, for one reason or another. Did you mean NYC does?
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Old 01-07-2012, 10:08 AM
Northern Piper Northern Piper is online now
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Originally Posted by friedo View Post
New York does have a (somewhat limited) version of the Torrens system. So do Massachusetts and Hawaii.

As for the rest, most of the time, chain of title isn't that hard to prove. It helps that the history of most jurisdictions is a lot shorter. We don't have to prove shit all the way back to Augustus Caesar or whatever.
sure, but Canada's western provinces were settled about the same time as the mid-west, so that's not a difference.

Plus, it's the difference between having to do title searches and not - I can go on-line, check the title of any parcel of land anywhere in Saskatchewan on the provincial title system, for free, and I know what the title is. That's it. Takes all of a minute.
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Old 01-07-2012, 10:20 AM
friedo friedo is online now
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Originally Posted by Polycarp View Post
Huh? Up in Jefferson County, I had to work with Abstracts of Title on and off for virtually all my years of adult employment, for one reason or another. Did you mean NYC does?
It depends on the county. Use of the Torrens system in New York is a matter of home-rule decisions, as far as I know.
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Old 01-07-2012, 10:22 AM
UFC Is Sux UFC Is Sux is offline
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Perhaps the appropriate baksheesh wasn't placed into the requisite hands (i.e. legislators and other elected officials) by the Torrens Company.
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Old 01-07-2012, 10:51 AM
Northern Piper Northern Piper is online now
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it's not owned by any company. it's called the Torrens system after the fellow who invented it.

Last edited by Northern Piper; 01-07-2012 at 10:54 AM..
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Old 01-07-2012, 11:05 AM
UFC Is Sux UFC Is Sux is offline
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Originally Posted by Northern Piper View Post
it's not owned by any company. it's called the Torrens system after the fellow who invented it.
Noted. Then perhaps the appropriate baksheesh wasn't placed into the requisite hands (i.e. legislators and other elected officials) by Robert Torrens.
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Old 01-07-2012, 11:09 AM
Colibri Colibri is online now
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Let's move this over to IMHO from GQ.

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  #10  
Old 01-07-2012, 12:43 PM
Spoons Spoons is online now
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Originally Posted by UFC Is Sux View Post
Noted. Then perhaps the appropriate baksheesh wasn't placed into the requisite hands (i.e. legislators and other elected officials) by Robert Torrens.
As I understand things, Torrens merely invented the system. He did not attempt to sell it; except, perhaps, in a figurative sense, by urging governments to adopt it. At any rate, Torrens' activities were largely confined to Australia and Australian governments; to the best of my knowledge, he never set foot in North America. Still, in North America, the Torrens system has always been used in parts of Canada, and is slowly replacing a registration system in other parts of Canada, but remains unpopular in the US. Northern Piper has a good question.

In the time since the earlier question in the other thread was posed, I did find this paper, which (among other things) discusses the Torrens system in the American context. Of particular note is this, from page 40 of the paper:

Quote:
Although there is a large group of academics, practitioners, and others that have touted the Torrens system and its efficiencies once there has been initial registration, it has failed to gain much support in the United States, largely because the recording systems meet the needs of the market and its costs for duplication of creating chains of title and examination of title have been reduced by the creation of private title plants, and the availability of title insurance. In all jurisdictions where it has been successful it has been voluntary and used largely as an alternative to quiet title actions to clear known or perceived defects in title.

...

The success [of the Torrens system] in jurisdictions such as Minnesota are the result of personalities in the examiner of titles office ... that are sensitive to the requirements of the market, and it should be noted that the statutes have been amended significantly and often over time to reduce the bureaucracy required in initial and subsequent registration.
Perhaps the reluctance of most American jurisdictions to move to a Torrens system can be summed up as, "We've always done things this way, and if it ain't broke, why fix it?"
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Old 01-07-2012, 12:51 PM
UFC Is Sux UFC Is Sux is offline
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Originally Posted by Spoons View Post
Northern Piper has a good question.
I don't disagree. I myself would like to know why such an apparently effective system isn't used in Baja Canada.
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  #12  
Old 01-07-2012, 12:54 PM
Northern Piper Northern Piper is online now
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Originally Posted by Spoons View Post
Perhaps the reluctance of most American jurisdictions to move to a Torrens system can be summed up as, "We've always done things this way, and if it ain't broke, why fix it?"
Sure, and changing once a system is well-established is very difficult, as the experience in Ontario shows. However, the mid-west and Rocky mountain states were being settled after Torrens came up with his system, so it would have been easy to adopt it when the land laws were first being implemented in those territories and states.
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Old 01-07-2012, 01:19 PM
Spoons Spoons is online now
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Well, there we may have seen a sales job. It is easy to picture the title companies from the east telling the midwestern and western territories and states, "Look we've done this for years and we know what we're doing. You can go with this other thing that is untried in the US, or you can let us--with all our experience--look after things for you. Besides, as a new state, you've probably got other more important things to attend to right now."

And perhaps there was a bit of anti-British sentiment as well. "The Torrens system is used in British colonies, and we are certainly not one of those!"

Just a couple of guesses, but they would seem to be sensible ones.
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Old 01-07-2012, 03:53 PM
ralph124c ralph124c is offline
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The Torrens system makes perfect sense. However, widespread adoption would threaten the income of title search firms, closing attorneys, title insurance firms, etc. All of these interests have big lobbying activities in state legislatures.
So, it won't be adopted.
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Old 01-07-2012, 08:59 PM
alphaboi867 alphaboi867 is offline
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Originally Posted by Spoons View Post
...Perhaps the reluctance of most American jurisdictions to move to a Torrens system can be summed up as, "We've always done things this way, and if it ain't broke, why fix it?"
This is also why the US will never adopt the metric system.
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  #16  
Old 01-07-2012, 09:11 PM
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Originally Posted by Spoons View Post
Perhaps the reluctance of most American jurisdictions to move to a Torrens system can be summed up as, "We've always done things this way, and if it ain't broke, why fix it?"
That's a major factor. Also, NIH (Not Invented Here), and the ponderous inertia of government bodies.

I suggested our local county put their zoning book online in 1998. In 1999, I volunteered to post the text myself on my own web site (it's public information), free, and every year I got a floppy from the department with the latest data, made a PDF file, and posted it. It wasn't until 2011 that they finally did it officially, and their site didn't have the search capability mine did.

Government moves at glacial speeds, and unless there is a clear advantage to some new system, may not move at all.
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  #17  
Old 01-07-2012, 10:44 PM
Spoons Spoons is online now
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Originally Posted by alphaboi867 View Post
This is also why the US will never adopt the metric system.
It may be an aside, but this may be one of the reasons why metrication never caught fully in Canada: we had too much in regards to land records in Imperial units. Building plans were all in feet and inches, road allowances were generally one chain (66 feet or the unworkable 20.1168 m), and frontages and depths were as much to the even foot as they could be (for example, my pre-metric-in-Canada house has a frontage of an even 50 feet, which is 15.24 m). On a larger scale, Ontario used the concession road every 6600 feet (1.25 miles or 2011.68 m) to establish baselines for subsequent subdivision, since two north-south concession roads and two east-west concession roads enclosed an even 1000 acres. The western provinces followed the American lead of 160-acre quarter-sections.

At any rate, while conversions could be done, and were as circumstances demanded, many records remained in Imperial units until they absolutely had to be changed, as when land transferred. And there are many properties out there that have not transferred since before we went metric. Their records at the titles/registry office, at the property tax assessment office, and similar; are still in Imperial.
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Old 01-08-2012, 04:41 PM
Cunctator Cunctator is online now
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Originally Posted by Spoons View Post
And perhaps there was a bit of anti-British sentiment as well. "The Torrens system is used in British colonies, and we are certainly not one of those!"
The lecturer that I had for Real Property had done some research into the question of why the Torrens system hadn't become established in any significant way in the USA. His conclusion was basically the same as this suggestion from Spoons...it was British, and therefore not acceptable, regardless of any advantages it might have.

Last edited by Cunctator; 01-08-2012 at 04:42 PM..
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Old 01-08-2012, 05:08 PM
barbitu8 barbitu8 is offline
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Originally Posted by Northern Piper View Post
sure, but Canada's western provinces were settled about the same time as the mid-west, so that's not a difference.

Plus, it's the difference between having to do title searches and not - I can go on-line, check the title of any parcel of land anywhere in Saskatchewan on the provincial title system, for free, and I know what the title is. That's it. Takes all of a minute.
You can easily know the title holder's name, but that's not all there is in a title search. You have to find all the defects in the title and liens, such as taxes, judgments, mechanics' liens, federal taxes, etc.

I think the main reason is that mortgagees demand a title policy. In Cook County, Ill., which allowed the Torrens system (some of the land was placed in the system, but most parcels were not), title policies were also issued to those parcels in Torrens because the lenders required them.

So the next question is why would a lender require a policy on land in Torrens? Several possibilities come to mind. The Torrens system maintains a pot of money from filing fees, but if a claim exceeded that amount, you are out of luck. A title company has more resources. In addition, Torrens will not defend your title. A title company will. How could a Torrens registration be defective? Forgery comes to mind, at first. Even if you register your deed in Torrens, and your name is shown on the certificate, that does not protect you from someone whose name was previously forged on a deed. Your "title" is void. Another: someone who was married executed the deed as "single, never married." Consequently, homestead and dower rights were not waived. In short, the Torrens registration is not a guarantee of good title. It cannot preclude the claims of persons who have an actual undisclosed interest. It also cannot preclude the claim of one who was not notified at the time of the initial registration. (I examined title once to property which was registered in Torrens, but a necessary party was not made a party to the proceedings: entirely void as to that person.)

About 15 years ago, Illinois abolished any new registrations in Torrens. Most of the property in Torrens also had title policies on them anyway. The Torrens department in Cook County's Recorder's Office took up much space and manpower. Waste of taxpayers' money when people were getting title policies anyway.

You Canadiens: What about a construction loan? A title company will examine the monthly waivers from contractors, sub-contractors, and materialmen to ensure that there are no mechanics' liens. (Mechanics' liens do not have to be recorded or registered.) Does the mortgagee do that work itself or hire another company to do it?
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Old 01-08-2012, 08:29 PM
Northern Piper Northern Piper is online now
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Originally Posted by barbitu8 View Post
You can easily know the title holder's name, but that's not all there is in a title search. You have to find all the defects in the title and liens, such as taxes, judgments, mechanics' liens, federal taxes, etc.
First, in our system, there are no defects in title as shown on the Certificate of Title (Note: certificate, not registration). WYSIWYG. If you are the person who has been defrauded, you can challenge the title as long as it's still in the fraudster's hands, but once it's in someone else's hands, there's no defect in title. The person defrauded has an action against the fraudster. Nemo dat does not apply.

Second, all the liens, etc., must be registered to encumber the land title. A person with a claim must register them against title. They're shown as encumbrances on the title. If not registered, they don't limit the land title. If you want to review the encumbrances on the title, you have to pay for an online account with the land titles system, but with that account, you can also access all of the encumbrances. And, if an encumbrance is not registered against the title, and someone else buys the land, those encumbrances don't defeat the title that the new purchaser has acquired. WYSIWYG.

Quote:
The Torrens system maintains a pot of money from filing fees, but if a claim exceeded that amount, you are out of luck. A title company has more resources.
Under our version of Torrens, the title is backed by the Province, and the Province's liability isn't limited to the compensation fund. If the land titles denies a claim for compensation, the individual can sue the government agency for the amount claimed.

Quote:
In short, the Torrens registration is not a guarantee of good title. It cannot preclude the claims of persons who have an actual undisclosed interest.
It is in our case. It's not a registration of title; it's a certificate of title.

Quote:
You Canadiens: What about a construction loan? A title company will examine the monthly waivers from contractors, sub-contractors, and materialmen to ensure that there are no mechanics' liens. (Mechanics' liens do not have to be recorded or registered.) Does the mortgagee do that work itself or hire another company to do it?
Same answer as above: If it's not registered as an encumbrance on the title, it doesn't affect the title. WYSIWYG. The primary remedy with respect to the lien is that it's a charge against the holdback that the general contractor is required to maintain.

Not intended as legal advice, of course, just participating in a discussion of comparative title systems.
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  #21  
Old 01-08-2012, 09:22 PM
barbitu8 barbitu8 is offline
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In Illinois, http://www.ilga.gov/legislation/ilcs...4&ChapterID=63
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(770 ILCS 60/1) (from Ch. 82, par. 1)
Sec. 1. Contractor defined; amount of lien; waiver of lien; attachment of lien; agreement to waive; when not enforceable.
(a) Any person who shall by any contract or contracts, express or implied, or partly expressed or implied, with the owner of a lot or tract of land, or with one whom the owner has authorized or knowingly permitted to contract, to improve the lot or tract of land or for the purpose of improving the tract of land, or to manage a structure under construction thereon, is known under this Act as a contractor and has a lien upon the whole of such lot or tract of land and upon adjoining or adjacent lots or tracts of land of such owner constituting the same premises and occupied or used in connection with such lot or tract of land as a place of residence or business; and in case the contract relates to 2 or more buildings, on 2 or more lots or tracts of land, upon all such lots and tracts of land and improvements thereon for the amount due to him or her for the material, fixtures, apparatus, machinery, services or labor, and interest at the rate of 10% per annum from the date the same is due. This lien extends to an estate in fee, for life, for years, or any other estate or any right of redemption or other interest that the owner may have in the lot or tract of land at the time of making such contract or may subsequently acquire and this lien attaches as of the date of the contract.
A lien, of course, runs with the land. There is no requirement to register it in the Torrens system, which, BTW, has been abolished in Illinois. The Torrens system in Illinois maintained an indemnity fund for claims against it.

The possibility remains that the court case placing the property under the Torrens Act may have been defective since a necessary party was not made a party, and that was overlooked.
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(765 ILCS 35/100) (from Ch. 30, par. 137)
(Section scheduled to be repealed on January 1, 2014)
Sec. 100. All sums of money received pursuant to Sections 40, 99, and 108 of this Act shall be paid by the registrar to the county treasurer of the county in which the land is situated, for the purpose of maintaining an indemnity fund under the terms of this Act, and for the purposes provided for in Sections 102.1, 102.2, and 102.3. It shall be the duty of the treasurer to invest all of the fund, including both principal and income, from time to time if not immediately required for payments of indemnities in accordance with Division 3‑11 and other applicable provisions of the Counties Code. The county treasurer shall report annually to the county board the condition and income of the fund and forward a copy of the report to the registrar.
(Source: P.A. 90‑778, eff. 8‑14‑98; 91‑554, eff. 8‑14‑99.)
In any event, mortgagees here require title policies now, which is the main reason they have become common in downstate Illinois (in lieu of an attorney's opinion). The mortgagee just passes the fees unto the borrower.
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Old 01-08-2012, 11:51 PM
Northern Piper Northern Piper is online now
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Originally Posted by Cunctator View Post
The lecturer that I had for Real Property had done some research into the question of why the Torrens system hadn't become established in any significant way in the USA. His conclusion was basically the same as this suggestion from Spoons...it was British, and therefore not acceptable, regardless of any advantages it might have.

So, US exceptionalism even way back then ...?
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Old 01-09-2012, 12:21 AM
Spoons Spoons is online now
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For barbitu8, and any other interested folks, I was able to find an example of an Alberta title certificate. You can see it at page 15 of this link (warning, large PDF).

Notice that the example shows a legal description, and ownership as joint tenants in fee simple. It also shows all the encumbrances--in this case, there aren't many, but the heading "Encumbrances, Liens, and Interests" should serve to show that this part of the certificate would list mortgages, liens, and easements as of the date and time that the certificate was pulled.

The booklet as a whole is worth a look for an explanation of how titles work locally, but I hope at least that the example certificate serves to illustrate Northern Piper's original point: that he can pull a title in about a minute, and understand all there is to know about it.
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Old 01-09-2012, 01:09 AM
Spoons Spoons is online now
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Originally Posted by Spoons View Post
Notice that the example shows a legal description, and ownership as joint tenants in fee simple. It also shows all the encumbrances--in this case, there aren't many, but the heading "Encumbrances, Liens, and Interests" should serve to show that this part of the certificate would list mortgages, liens, and easements as of the date and time that the certificate was pulled.
A bit of follow-up that I should have mentioned earlier....

As Northern Piper mentioned, WYSIWYG. If any kind of encumbrance is not recorded on title, it doesn't exist against the land. A contractor may have a valid reason to slap on a builder's lien, but if he does not register it as an encumbrance on title, it does not exist, for purposes of enforcement against the title.

I'll add my approval of Northern Piper's earlier post: the Torrens "assurance fund" is backed by the provincial government, which likely has far more resources than any title company. A good point, and a fine post.
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Old 01-09-2012, 02:04 AM
Princhester Princhester is offline
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Originally Posted by barbitu8 View Post
You can easily know the title holder's name, but that's not all there is in a title search. You have to find all the defects in the title and liens, such as taxes, judgments, mechanics' liens, federal taxes, etc.

[gigantic snip]...
Short version: Illinois implemented a half assed system with little resemblance to proper Torrens, and like most half assed compromises, it doesn't work.

A proper Torrens system doesn't have these issues, as NP outlines
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Old 01-09-2012, 05:55 AM
barbitu8 barbitu8 is offline
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Originally Posted by Spoons View Post
For barbitu8, and any other interested folks, I was able to find an example of an Alberta title certificate. You can see it at page 15 of this link (warning, large PDF).

Notice that the example shows a legal description, and ownership as joint tenants in fee simple. It also shows all the encumbrances--in this case, there aren't many, but the heading "Encumbrances, Liens, and Interests" should serve to show that this part of the certificate would list mortgages, liens, and easements as of the date and time that the certificate was pulled.
So does a title policy.

The Illinois law re mechanics liens do not require any recordation or registration. I tried to check the Torrens law in Illinois concerning that, but most of the sections have been abrogated as all new registrations have ended. It is true, however, that in Illinois, judgments had to be noted on the certificate to be a lien. (I couldn't access your link. "Internet Explorer has stopped working.")
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Old 01-09-2012, 08:11 AM
Northern Piper Northern Piper is online now
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Originally Posted by barbitu8 View Post
A lien, of course, runs with the land. There is no requirement to register it in the Torrens system, which, BTW, has been abolished in Illinois.
Here we have a fundamental difference - there's no "of course" in our system about the lien running with the land. It does, if it's registered.

Quote:
The possibility remains that the court case placing the property under the Torrens Act may have been defective since a necessary party was not made a party, and that was overlooked.
This is one of the advantages of implementing Torrens from scratch, which was the case in the western Canadian territories - the great majority of land titles started out registered under the Torrens system, so there was no need for a court action to bring the title under Torrens. There were some patents which pre-dated the land titles system and had to be brought onto it by application, but by and large that hasn't needed to be done for over a century.
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Old 01-09-2012, 10:09 PM
Noel Prosequi Noel Prosequi is offline
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Torrens system is clearly better than the system which existed prior to it of having to keep a bunch of paper deeds back to Adam and Eve. Title Insurance is a less satisfactory arrangement than certainty in the first place. Title transfer under Torrens is not completely effortless, but it is still a lot simpler than the alternative.

All the ballyhoo about American banks post the GFC trying to foreclose and not being able to prove proper entitlement what with the bundling and reselling of mortgages would simply go away under the Torrens system.

I recall a lecturer at law school telling us that attempts at Torrensification in the US had resulted in very expensive litigation against the state. I couldn't understand why this might be so, but the idea of an incomplete compromise Torrens system makes that feasible.

Where Torrens systems have been set up, it has typically been in an environment of nearly "green fields" land law, typically young colonies. As a result the costs of conversion were relatively low. I imagine the upfront costs of conversion from a well-established system would be very high indeed. Like converting from left hand to right hand drive. Once the system is set up, it works like a song, but getting there is massively disruptive. There is, as it were, too high an "energy hill" to climb before one sees the benefits on the other side.
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Old 01-10-2012, 03:56 AM
Northern Piper Northern Piper is online now
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Originally Posted by Noel Prosequi View Post
All the ballyhoo about American banks post the GFC trying to foreclose and not being able to prove proper entitlement what with the bundling and reselling of mortgages would simply go away under the Torrens system.
I have been wondering about this point for some time - how could there be any doubt about who has the mortgage? but you're right - if it's a system of title registration, rather than Torrens title, there may not be a need to register it to keep the interest valid. Torrens requires that the mortgage instrument be registered to be effective, and the mortgage document must be identified with sufficient particularity that it is clear who holds the mortgage. Not all the dicing and slicing which appears to have happened in the US.

Quote:
Where Torrens systems have been set up, it has typically been in an environment of nearly "green fields" land law, typically young colonies. As a result the costs of conversion were relatively low. I imagine the upfront costs of conversion from a well-established system would be very high indeed. Like converting from left hand to right hand drive. Once the system is set up, it works like a song, but getting there is massively disruptive. There is, as it were, too high an "energy hill" to climb before one sees the benefits on the other side.
That's exactly what the problem with going Torrens has been in Ontario. The earliest settled parts of Ontario (i.e. around the Great Lakes region) were settled pre-Torrens, and so are on a registry system; later settled areas are on a Torrens system of some sort, if I recall my Land Trans class correctly. There was some hope that the registry areas would be gradually converted to Torrens title, but I don't know if that's been happening.
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Old 01-10-2012, 04:28 AM
Martini Enfield Martini Enfield is offline
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I have to say this has been an extraordinarily interesting thread (and outstanding OP question, Northern Piper!), especially because I didn't know what the Torrens title system wasn't used in the US... it's always struck me as such a fundamentally "right" way of doing things that I'm surprised to discover it hasn't been implemented universally in the Western world.
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Old 01-10-2012, 04:49 AM
barbitu8 barbitu8 is offline
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Originally Posted by Northern Piper View Post
Here we have a fundamental difference - there's no "of course" in our system about the lien running with the land. It does, if it's registered.

This is one of the advantages of implementing Torrens from scratch, which was the case in the western Canadian territories - the great majority of land titles started out registered under the Torrens system, so there was no need for a court action to bring the title under Torrens. There were some patents which pre-dated the land titles system and had to be brought onto it by application, but by and large that hasn't needed to be done for over a century.
By definition, a lien is a charge upon the land, not the persons. If the mechanics' liens laws state that it is a lien, does the fact that it is in Torrens overrides that?

I think Noel Prosequi's post is the main reason Torrens has not been popular in the USA. In the western provinces of Canada private ownership to most land did not come about until the concept of Torrens was developed.

So, the reasons why Torrens did not catch on in the US are the following:

(1) The time-consuming and expense of bringing a suit for each parcel of land to bring it into Torrens ("upfront costs of conversion").
(2) America is not a socialist country. No government is going to be the insurer. In fact, the federal government has no authority under the Constitution to insure anything. The insurance is provided by an indemnity fund set up by registration fees.
Quote:
I recall a lecturer at law school telling us that attempts at Torrensification in the US had resulted in very expensive litigation against the state. I couldn't understand why this might be so, but the idea of an incomplete compromise Torrens system makes that feasible.
This may be related to what I posted above.
(3) The Torrens system does not protect against fraud or forgery. True, there is that indemnity fund, but if it runs out, you are SOL.
(4) Mortgagees required title policies to even those parcels which were in Torrens in Cook County, Illinois.
(5) Title companies will defend your title, which can be quite costly if you had title to the Prudential Building, for example, as noted in the prior thread to which you linked.
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Old 01-10-2012, 05:51 AM
Muffin Muffin is offline
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By definition, a lien is a charge upon the land, not the persons. If the mechanics' liens laws state that it is a lien, does the fact that it is in Torrens overrides that?
In general, yes, Torrens trumps.

Here in Ontario, a construction lien must be preserved by registering it on title (following which it must be perfected by a claim being commenced). If the property is properly transferred (i.e. no fraudulent conveyance) prior to the lien being registered, then the lien fizzles, leaving the contractor having to seek relief against the owner, often resulting in a merry chase for the proceeds of the sale.

This can cause problems for contractors, which for the most part is mitigated by way of smart contractors requiring security up front and tight ongoing interim payments, and also by a chain of statutory holdbacks and the sheltering/nesting of liens.

Last edited by Muffin; 01-10-2012 at 05:51 AM..
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Old 01-10-2012, 06:16 AM
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We use the Torrens land registration system in New Zealand and nobody here can understand why other countries have no adopted it everywhere.

A piece of land, usually with a house on it, is the most significant investment most people can make. It stands to reason that certainty of the title to that land is guaranteed and sacrosanct.

In New Zealand all land titles are issued by the government and the government guarantees title. The only exception under Torrens is fraud - but even then a bone fide purchaser for value obtains an indefeasible title. The defrauded owner can try to claim compensation but they cannot get the land back.

Frazer v Walker [1967] 1 AC 569. The wife mortgaged the property, forged her husbands signature on the Memorandum of Mortgage, took the money and ran. He only learned when the mortgagees auctioneer knocked on the door. Curiously enough he later reconciled with his wife.
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Old 01-10-2012, 06:24 AM
Noel Prosequi Noel Prosequi is offline
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barbitu8, it's not necessary to bring a suit to bring a piece of land under Torrens. The way the transition works is that after a certain date, all conveyances of land have to be done under Torrens, which just means bringing your old system papers in for certification where they are checked, and then the purchaser gets a shiny new Torrens title instead of a bunch of mouldy old papers. This requires a large bureaucracy to manage the initial transfer to Torrens, but once the system is set up, the work does not need to be repeated for every conveyance thereafter.

To say Torrens does not protect against forgery or fraud is not really an issue. There is enough capacity to bring suit to correct the record that a plan to steal land by fraud is rarely viable in practice. I see that someone has mentioned Fraser v walker- that case does not really affect my primary point that such things are rare.

The issue of "socialism" is a red herring. If the state certifies land in error, the state is liable for the loss. This is not insurance as such-primary liability vests in the state, but the state does need a prudential fund to cover the unlikely contingency.

There are modest problems. For example, in speculation driven booms, the titles office is sometimes swamped so that transfers can't be managed as quickly as properties are being flipped, but even that is manageable.

Last edited by Noel Prosequi; 01-10-2012 at 06:27 AM..
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Old 01-10-2012, 06:32 AM
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The earliest settled parts of Ontario (i.e. around the Great Lakes region) were settled pre-Torrens, and so are on a registry system; later settled areas are on a Torrens system of some sort, if I recall my Land Trans class correctly. There was some hope that the registry areas would be gradually converted to Torrens title, but I don't know if that's been happening.
Yes, the transition is going quite nicely. The government has been busy as beavers at converting properties from one system to the other, and apart from that, when something is placed on or removed from title, the property is brought over into Torrens at that time.

Once under Torrens, it saves having to make a forty-year title search every time title is changed, which gets to be a bit redundant. This speeds up transactions while at the same time cutting the cost passed on to clients.

What has really made Torrens in Ontario shine is the move to electronic search and registration, which has been phased in while the transition to Torrens has been made. The real estate clerks have the information they need at their fingertips, and when they register, they don't have to fiddle about getting papers over to the registry office. For litigation folks, it makes fact gathering quicker and cheaper.

Torrens combined with electronic search and registration is the shiznits.

Last edited by Muffin; 01-10-2012 at 06:37 AM..
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Old 01-10-2012, 06:43 AM
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In general, yes, Torrens trumps.

Here in Ontario, a construction lien must be preserved by registering it on title (following which it must be perfected by a claim being commenced).
In New Zealand construction liens were abolished in 1989 because of the litigation and complexity they imposed on innocent property owners who just wanted a house built. There is an alternative Building Resolution procedure.
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Old 01-10-2012, 06:53 AM
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Torrens Downside

Let me say that as a conveyancing lawyer I envy those of you who retain the Deeds System. Why? The extra work required, the intellectual puzzle of tracing a piece of land back into history, the litigation possibilities...Dang!! You guys have it made.

Torrens is straight-forward. Unfortunately that means clients undervalue lawyers work and conveyancing fees are very low.

As a matter of interest we still have a Deeds Registry but its under Torrens and I suspect most young lawyers aren't even aware of it these days. It makes no difference in practise and I've never heard of a claim against an old deeds based title.

Everythings computerised these days after watching our Canadian cousins trial that first. I do miss the old goatskin and waxed paper titles though. An A4 printout of a computer register title looks so bland and cold by comparison.
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Old 01-10-2012, 07:10 AM
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In New Zealand construction liens were abolished in 1989 because of the litigation and complexity they imposed on innocent property owners who just wanted a house built. There is an alternative Building Resolution procedure.
I can certainly see why that was done. Here we try to simplify that by treating construction liens in a manner that is somewhat similar to class actions -- gather up all the various pissed off contractrators and sub contractors, mortagees and owner into one case, and then have a single judge ride herd on it all (or if everyone is on-board and judge time is scarce, divert it to alternative dispute resolution, such as arbitration). It works for commercial projects quite nicely, but for Joe homeowner, it is confusing, for holdbacks, sheltered liens, and mortgage/lien priorities make most folks jump out the nearest window, and some litigation lawyers avoid it due to the technicalities, making it a bit of a boutique practice area (for example, in my region of our province, we have so few lawyers who are comfortable handling construction lien litigation matters that there is considerable passing of clients about so as to avoid conflict of interest).
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Old 01-10-2012, 07:31 AM
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(2) America is not a socialist country. No government is going to be the insurer. In fact, the federal government has no authority under the Constitution to insure anything.

(3) The Torrens system does not protect against fraud or forgery. True, there is that indemnity fund, but if it runs out, you are SOL.
When I was working in the States 20 years ago my bank account was insured by the Federal Deposit Insurance Company which is an agency of the American government. I and everyone I knew believed the federal government guaranteed our meagre savings.

As for fraud, nothing can protect against that. Dishonesty happens. However Torrens does protect the innocent buyer who obtains clear title and certainty. The loser can be compensated - that isn't ideal but its a tradeoff which provides land dealings with utter integrity.

Torrens works best under a government hand. Unlimited funds and a dispassionate interest in keeping land ownership clear for all citizens. There is no vested interest, no insurance companies, no title companies, no aspect open to the vagaries of human behaviour.
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Old 01-10-2012, 08:00 AM
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I can certainly see why that was done. Here we try to simplify that by treating construction liens in a manner that is somewhat similar to class actions -- .
Yes been there, done that in my youth. As you say, it works for large projects where there is a lot of money at stake. Still I never want to have to argue competing priority of builders liens again. That is head churning stuff.

Do you guys use Caveats to protect unregistered title interests? http://www.netlaw.co.nz/civil.cfm?PageID=335 We use them sparingly and they are very useful.

A post further up refers to an encumbrance being registered followed by seeking a court order to sustain or validate it. That's really the same thing as a Caveat although you don't have to sustain it here by court order until notified by the Registrar of Land - who does so immediately upon the owners request.

Last edited by Ken001; 01-10-2012 at 08:00 AM..
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Old 01-10-2012, 09:13 AM
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Do you guys use Caveats to protect unregistered title interests? http://www.netlaw.co.nz/civil.cfm?PageID=335 We use them sparingly and they are very useful.
We use a Certificate of Pending Litigation (via motion to a Court) in conjunction with the commencement of a claim, which does not prohibit a property transfer, but does record (and deems that all are put on notice) that the there is a claim against the property – it changes the nature of the action from in personam to in rem, so just as the Torrens trumps a lien if a lien is not registered in time, a Certificate of Pending Litigation clouds the title despite it being under Torrens. That usually scares away potential purchasers and potential mortgagees.

Beyond this, we use an Injunction (via motion to a Court) to prohibit transactions, but the test is a bit tougher.

Apart from this, under the Torrens/Land Titles legislation, a Caution (via application to the Land Registrar) is used to block transfers for a couple of months. By running into the Land Title’s office with one’s hair on fire, an application for a Caution can sometimes be a quicker way of blocking a transaction than putting together a claim and making a motion for a Certificate of Pending Litigation. (In my region, judges tend to be available, and the Land Registrar is not thrilled about dealing with litigation, so I go by way of a quick and dirty claim and CPL motion without notice, and then amend my claim once the CPL is in place, rather than go through the Land Registrar for a Caution.)

Last edited by Muffin; 01-10-2012 at 09:13 AM..
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Old 01-10-2012, 10:01 AM
barbitu8 barbitu8 is offline
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Originally Posted by Noel Prosequi View Post
barbitu8, it's not necessary to bring a suit to bring a piece of land under Torrens. The way the transition works is that after a certain date, all conveyances of land have to be done under Torrens, which just means bringing your old system papers in for certification where they are checked, and then the purchaser gets a shiny new Torrens title instead of a bunch of mouldy old papers. This requires a large bureaucracy to manage the initial transfer to Torrens, but once the system is set up, the work does not need to be repeated for every conveyance thereafter.

To say Torrens does not protect against forgery or fraud is not really an issue. There is enough capacity to bring suit to correct the record that a plan to steal land by fraud is rarely viable in practice. I see that someone has mentioned Fraser v walker- that case does not really affect my primary point that such things are rare.

The issue of "socialism" is a red herring. If the state certifies land in error, the state is liable for the loss. This is not insurance as such-primary liability vests in the state, but the state does need a prudential fund to cover the unlikely contingency.

There are modest problems. For example, in speculation driven booms, the titles office is sometimes swamped so that transfers can't be managed as quickly as properties are being flipped, but even that is manageable.
Where do you live? Canada? In the US, you must bring an action to get the property into Torrens. All necessary parties must be made parties. The Torrens Dept. in Cook County, Ill. had examiners who examined the title before the initial registration to ensure the proceedings covered all bases. They didn't rely on papers you brought in but made their own independent search, using the tract books right across the aisle in the Recorder's Office, judgment searches, and tax searches. (Since Torrens has now been abolished, I suppose there is just a skeleton staff there now.)

Other possibilities of claims are forgery and federal tax liens. No state law is going to preempt the federal government's lien on taxes, which do not have to be recorded, registered, etc. As to state insurance, I was referring to a previous post that stated the Queen had much more resources than any title company. I agree that the Torrens system is not state insurance, as there is an indemnity fund set up.

Muffin, your link to the Canadien case refers to Canadien law, and the Mechanics Lien law refers to registration. Illinois law has no reference to registration, and the only county in Illinois which ever had Torrens (Cook) now has repealed the Torrens Act.

Ken oo1
Quote:
When I was working in the States 20 years ago my bank account was insured by the Federal Deposit Insurance Company which is an agency of the American government. I and everyone I knew believed the federal government guaranteed our meagre savings.
FDIC is a quasi-government corporation set up by the federal government to guarantee loans. SCOTUS long ago ruled that SSA disability insurance benefits are not insurance payments, but entitlement benefits.
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  #43  
Old 01-10-2012, 04:28 PM
Northern Piper Northern Piper is online now
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Quote:
Originally Posted by barbitu8
Quote:
Originally Posted by Ken 001
When I was working in the States 20 years ago my bank account was insured by the Federal Deposit Insurance Company which is an agency of the American government. I and everyone I knew believed the federal government guaranteed our meagre savings.
FDIC is a quasi-government corporation set up by the federal government to guarantee loans. SCOTUS long ago ruled that SSA disability insurance benefits are not insurance payments, but entitlement benefits.
I think Ken 001 was responding to your post that stated:

Quote:
Originally Posted by Barbitu8
(2) America is not a socialist country. No government is going to be the insurer. In fact, the federal government has no authority under the Constitution to insure anything. The insurance is provided by an indemnity fund set up by registration fees.
The Federal Deposit Insurance Corporation is in fact a federal government entity which provides insurance, not for loans, but for the deposits of ordinary citizens in accounts in banks which participate in the FDIC. And while the bulk of the insurance fund comes from premiums paid by the banks, the ultimate guarantee is the United States government, as the FDIC explains on its web-site:

Quote:
Originally Posted by FDIC
Symbol of Confidence

Each depositor insured to at least $250,000
...

When a Bank Fails
The FDIC pays depositors within just a few days after an insured institution fails, usually the next business day. The FDIC protects depositors in one of two ways – by either:

Facilitating a merger with another FDIC-insured institution, or

Issuing a check to each depositor for the insured portion of their accounts at the closed institution.

FDIC’s Deposit Insurance Fund
The FDIC is funded by its member institutions through premiums and assessments paid on deposits. And, if ever needed, the FDIC can draw on a line of credit with the U.S. Treasury.

Full Faith and Credit of U.S. Government
FDIC deposit insurance is backed by the full faith and credit of the United States government. This means that the resources of the United States government stand behind FDIC-insured depositors.

The Federal Deposit Insurance Corporation is an independent federal agency created in 1933 to promote public confidence and stability in the nation’s banking system.
So saying that Torrens couldn't be adopted in the United States because no government would provide an insurance system is met by the counter-example of an extremely important federal agency which does just that.

If the federal government can provide an insurance system to protect bank deposits of ordinary citizens, why can't the state government provide an insurance system to protect land title, which is an equally important asset for the average citizen?

Last edited by Northern Piper; 01-10-2012 at 04:31 PM.. Reason: forgot underlining for emphasis
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  #44  
Old 01-10-2012, 04:48 PM
Northern Piper Northern Piper is online now
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Yes, the transition is going quite nicely. The government has been busy as beavers at converting properties from one system to the other, and apart from that, when something is placed on or removed from title, the property is brought over into Torrens at that time.
...
What has really made Torrens in Ontario shine is the move to electronic search and registration, which has been phased in while the transition to Torrens has been made.
...

Torrens combined with electronic search and registration is the shiznits.
Glad to hear it. It would make Professor H.R.S. Ryan proud.

On our first day of Land Trans, Ryan, then in his late 70s, said to us:

"You may in your life time see all of Ontario under a Torrens system.

As for me, I have given up hope."
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Old 01-10-2012, 05:10 PM
Northern Piper Northern Piper is online now
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By definition, a lien is a charge upon the land, not the persons. If the mechanics' liens laws state that it is a lien, does the fact that it is in Torrens overrides that?
Yes, a lien is a charge on the land. But to be effective in burdening the land title, the lien must be registered.
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Old 01-10-2012, 10:39 PM
Noel Prosequi Noel Prosequi is offline
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Originally Posted by barbitu8 View Post
Where do you live? Canada? In the US, you must bring an action to get the property into Torrens. All necessary parties must be made parties. The Torrens Dept. in Cook County, Ill. had examiners who examined the title before the initial registration to ensure the proceedings covered all bases. They didn't rely on papers you brought in but made their own independent search, using the tract books right across the aisle in the Recorder's Office, judgment searches, and tax searches. (Since Torrens has now been abolished, I suppose there is just a skeleton staff there now.)

Other possibilities of claims are forgery and federal tax liens. No state law is going to preempt the federal government's lien on taxes, which do not have to be recorded, registered, etc. As to state insurance, I was referring to a previous post that stated the Queen had much more resources than any title company. I agree that the Torrens system is not state insurance, as there is an indemnity fund set up.

Muffin, your link to the Canadien case refers to Canadien law, and the Mechanics Lien law refers to registration. Illinois law has no reference to registration, and the only county in Illinois which ever had Torrens (Cook) now has repealed the Torrens Act.

Ken oo1 FDIC is a quasi-government corporation set up by the federal government to guarantee loans. SCOTUS long ago ruled that SSA disability insurance benefits are not insurance payments, but entitlement benefits.
I live in Oz, home of all things Torrens. No wonder it failed in Cook if you have to go to the trouble of bringing suit to get Torrensed. The way it worked here was that whenever you wanted to sell a property after the cutoff date, you had to transfer it to Torrens. Mortgagees were protected because they had the title deeds (that's how old system mortgages worked) so the transfer couldn't go ahead without them knowing about it. And the vendor and purchaser all had a clear interest in going ahead. In those days (the 1860s), exotic encumbrances on title other than mortgages were rare. And there wasn't a Federal Govt in existence to worry about. So while land title is a state matter and income tax a federal matter here, the historical reality that the Federal Govt did not come into existence until after Torrens was well established throughout the colonies meant that we have no problems with the Feds registering whatever interests they may claim.
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Old 01-11-2012, 03:30 AM
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We use a Certificate of Pending Litigation....it changes the nature of the action from in personam to in rem, so just as the Torrens trumps a lien if a lien is not registered in time, a Certificate of Pending Litigation clouds the title despite it being under Torrens.

....a Caution (via application to the Land Registrar) is used to block transfers for a couple of months. By running into the Land Title’s office with one’s hair on fire, an application for a Caution can sometimes be a quicker way
May I say how much I'm enjoying this discussion. Thankyou Muffin and everyone else. By golly I haven't heard in personam and in rem used in a conversation in decades.


Sounds like the Caution is similar to our Caveat, the main difference being a Caveat can sit on a title for years if the registered proprietor doesn't try to sell or encumber the property.

Last edited by Ken001; 01-11-2012 at 03:32 AM..
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Old 01-11-2012, 03:34 AM
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So saying that Torrens couldn't be adopted in the United States because no government would provide an insurance system is met by the counter-example of an extremely important federal agency which does just that.

If the federal government can provide an insurance system to protect bank deposits of ordinary citizens, why can't the state government provide an insurance system to protect land title, which is an equally important asset for the average citizen?
YES! Northern Piper for the win! Thank you.
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Old 01-11-2012, 06:51 AM
barbitu8 barbitu8 is offline
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Yes, a lien is a charge on the land. But to be effective in burdening the land title, the lien must be registered.
That sounds like something from Alice in Wonderland. Muffin's cite to the case re mechanics liens appears it hinged to some degree on the fact that the mechanics lien law referred to registration, something the Illinois law doesn't. The court there acknowledged the conflict between the two laws.

It would take a great change in mindset for the state government to begin insuring land titles. Taxes would have to be increased to cover the loss contingencies. It sounds like in Canada, or at least in Ontario, the government is very active in the conversion. That is something that a non-socialist government is not apt to do.

FDIC was created to foster the nation's banking system. Funds are primarily paid out of the indemnity fund, and, if needed, the government would cover any further loss. It guarantees the loan. Insurance is secondary, if needed. I believe SCOTUS has ruled that the federal government cannot be in the insurance business, and it upheld Social Security not because it is insurance, but it is an entitlement program.
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Old 01-11-2012, 01:22 PM
Northern Piper Northern Piper is online now
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It sure sounds like a federal insurance program to me: the FDIC charges premiums to the banks, based on the size of the accounts they hold; if the bank gets into financial trouble, FDIC pays out on the insurance to the account-holders as needed.

In any event, whether the federal government can run an insurance program or not is irrelevant to this discussion, isn't it? Land titles systems are a state matter, not federal, and states have plenary powers, except as limited by the federal Constitution. So before you can say that the insurance fund would be unconstitutional, you would have to point to something in the state constitution that would bar it.

And sure, FDIC was created to foster the nation's banking system - by providing certainty of protection to deposit holders. Their money is safe, up to a quarter million. That prevents runs on the bank, increases consumer confidence, all sorts of good things for both the individual deposit holder and the economy at large. But that same sort of policy can apply equally to land titles - by creating a more secure system of land titles, it creates greater confidence for the individual land-holder, and the economy generally. And by requiring that everything must be registered to be effective, it creates greater transparency in the system and may help prevent the slicing and dicing and lost mortgages that have been plaguing the housing market during the downturn. But I fail to see how any of that is socialism - it's a government program that increases the security and confidence in the private real estate market, for individual and corporate property holders. That in turn helps keep that economic sector strong.

Last edited by Northern Piper; 01-11-2012 at 01:23 PM..
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