I can understand why information on the sale of a home and property taxes are public record to show fairness in housing. But why are mortgages including a HELOC of public record?
Ed, you asked this same question three years ago, and it was answered there.
https://boards.straightdope.com/sdmb/showthread.php?t=823266
Dang, do you remember that stuff or look it up for new threads?
Yes, and it didn’t answer my question then – why is it public record? Credit reports aren’t public record. They run a credit report and it isn’t available to anyone in the public. Your salary history isn’t public record either, but is accessed during the mortgage process. When buying a home, if there is a mortgage/lien against it, that could be accessed just like a credit report. The title company charges a lot and that could access that information without it being public for the benefit of the buyer. Seems odd that original mortgages and liens (HELOC) are public record. It would be like making it public record if someone has a loan for their car. What’s so special about real estate that this is commonplace?
Yes it was, you just don’t like the answer.
sorry I didn’t make it clear but the question was for RickJay
That’s because it wasn’t a good answer. I guess I should have specified a good answer, not just an “answer”.
Perhaps the answer is that unlike most other property, land title is something vested in, controlled and managed by the state. The fact that you have title to land is a legal thing that is rooted in the power of the state. Back whenever, most land, and most certainly modern divisions of land for residential purposes, involves a chain of tile, the power of which devolves from the state. In some places that is very complex, others it can be very clear cut. But unlike, say a car, the state has an interest in seeing that land ownership is clear. No land, no state. The land is the state.
Where I live, title is very clear cut. There is a single deed to a property, and it tracks the entire history of ownership, from first release by the state, through every owner, and includes every mortgage on the property.
There is no value, and significant downside, to making this information hard to find. Making it public means that no-one has any way of claiming lack of knowledge of liens, or lack of title to a property. From the state’s point of view this means reduced complexity in dealing with disputes, and generally reduced disputes. Making it closed access just adds complexity and cost to managing things, and makes for unwelcome disputes. There is no up-side to closing access, so they don’t.
OTOH, where I live, access to data isn’t free. And a search that will turn up all the mortgage information will run you over $300 Oz (say 200USD). But if you need to know, you can get it.
The alternative to open access (even at a price) is controlled access - access limited to those who “need to know”. This just leads to a closed shop of lawyers managing property conveyancing and loans. Professionals with a “need to know” charge for their access and control the market for services. There is no upside there.
I will note that many states here in Oz provide a similar service for car loans. You can apply to get a certificate describing title and liens on a car. The states indemnify a purchaser if a lien subsequently becomes known and a problem after the certificate is issued. This is however more recent, and more of a public service.
Do you think prospective buyers should hire a title insurance company before they’ve even firmly decided to buy? For that matter, how should the title company get the info? If it purchases the info from banks it would overlook small lenders who have valid mortgage contracts. Mortgages must be registered with government if the government is to resolve title disputes. Do you think the government should award monopoly licenses for the information? Guessing someone’s personal credit history is NOT the same as knowing what encumbrances affect a piece of real estate.
A question is: How does the public mortgage information get converted into a mailing list? Probably nobody pores over individual records. Instead some entity
computerizes and sells the data. Your complaint should be with them.
[anecdote, slightly off-topic]
Not long ago, my wife purchased a piece of land here in Thailand. Buyer and seller meet at the government land office, where lien information is available for public inspection: no title insurance. Government workers check the records, chat with buyer and seller, compute a tax and finally, instead of "Kiss the bride" say "Turn over the banknotes." The seller had brought some of his creditors along who then started furiously counting the thousand banknotes my wife had handed over. The "escrow," if that's what it was, lasted half an hour.
(I wasn't involved in the transaction ... except that I was summoned by telephone to attend. Government saw my name shown as the father of children on wife's house registration document and wanted me to appear. I had to sign that the purchase funds were wholesome Thai money, not foreign money sent in from another country.)Because if I want to buy a piece of property from Dave Jones, I have to check more than just Dave’s credit report. I have to check if anyone else in the entire world has a claim to that property. Should I pull everyone’s credit report?
Chain of title in the county courthouse shows that I own a certain piece of property to the exclusion of all others, subject perhaps to a bank’s deed of trust. What if there are power lines on a remote corner of the property and I demand that they be taken down? Well, if we look in the courthouse, the power company (under the name it was known then) was granted/sold an easement over my property in 1926.
Sure, we could undertake a monumentally expensive task of having every deed recorded since Western Society came to a certain state converted to electronic format and trace every single piece of real estate back to the grant from the sovereign.
Do we trust clerks to do that? Many of these deeds have words which have strict legal meaning. What about gaps in the chain of title because of adverse possession or transfer by intestate succession? What if there is a renter currently on the property with a 4 year lease that is unrecorded yet the law of the state requires a “view of the land” for a potential purchaser? What if a deed specifies that an person takes land so long as it is used for charitable purposes? The current person is using it for Trump Charities. Is that good enough or does it revert back to the fee simple owner?
Are we going to hire lawyers for both sides of an issue and hire special judges to rule on largely abstract principles of law to do this electronic conversion? For what purpose? Just so nobody else knows that you own a piece of real estate? What is the reason for that secrecy?
To prevent fraud.
“I own this house free and clear.”
“Then why does it say that it’s mortgaged to the hilt?”
Also, mortgages were handled differently when the system was set up. Large down payments (usually 50% of the purchase price) and a five year term with balloon payment (or another mortgage).* Given those circumstances, the banks needed to know the mortgage status of the property before granting a new one. It was convenient to keep the information in a central depository at the county clerk where you could get on a horse to check out.
*Zeno never paid it all off.