This is quite a good find, as it is from 100 years ago. Note the section on the “Machinery” required- this relates to the “Machinery Act” in NC Statutes. This writing states that the County Recorder must also act as a Register of Deeds.
VOL. 14 APRIL, 1917 NO. 2 THE Maryland State College OF Agriculture BULLETIN THE TORRENS SYSTEM OF LAND TITLE REGISTRATION BY F. B. BOMBERGER issued monthly, excepting the months of November, December, January and February. Entered at College Park, Md., as Second-Class Matter under Act of Au- gust 24, 1912.
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MARYLAND STATE COLLEGE OF AGRICULTURE BULLETIN No. 2
THE TORRENS SYSTEM OF LAND TITLE REGISTRATION.
By F. B. BOMBERGER.
Owing to the wide-spread discussion of the subject of Rural Credit in recent years and the establishment, by Act of Congress, of the Federal Land Banks for the purpose of providing farmers with ready capital for their agricultural operations, attention has been directed towards the system of Land Title Registration now operating in the State of Maryland.
The Federal Land Bank of Baltimore, through which farmers of Maryland must borrow in order to take advantage of the Act, requires from each borrower an abstract of title to his land which is to become security for his loan. This requirement has brought to the notice of many farmers the fact that our system of Title Registration and transfer is very cumbersome, expensive and uncertain in its operation.
It would seem, therefore, that the time is ripe for a consideration of our Title Registration and Transfer System with a view to discover its chief defects and to suggest remedies, if any be known. This bulletin has been prepared with the aforesaid end in view.
Land is the most tangible and least perishable form of wealth known to man. It constitutes the largest single item of wealth in the United States; yet, the difficulties attending its transfer make it almost unavailable as an emergency asset. Although more desirable as security than most personal property, yet it cannot be converted into money nearly so rapidly as can personal property. Moreover the cost attending any change of title in this country prevents its use as security for small amounts. This is not true in other countries. Why is it so in the United States? The answer to this question may be learned by looking more carefully at the difficulties attending land title transfer in this country. Such a survey will present, at the same time, the problems to be solved by any proposed reform.
THE PRESENT SYSTEM OF LAND TITLE TRANSFER.
When John Doe desires to buy a parcel of real estate from Richard Roe, he will, if he be a prudent man, have Roe’s title to the estate examined. This means that a lawyer or expert title examiner will look up a series of successive transfers, running back for 50 or 100 years or longer, by which the estate came into Roe’s possession. This is necessary, for if Richard Roe has not a good title to the property, he cannot pass a good title to John Doe. The cost of this examination of title is by no means a small one; and more significant still is the fact that, if later John Doe wishes to sell the estate, the prospective purchaser will have another expert to re-examine the title; and so on every time the estate changes hands. The same is true of the process of placing an encumbrance in the form of a mortgage on the estate. The title must be examined in each instance; and the fees must be paid.
It need not be pointed out that often the examination produces delays pending the determination of some legal point involved. It may, therefore, be concluded that the examination of titles under the present system is a constantly recurring expense and may cause much delay in the transaction of transferring title to real estate.
But the worst feature of the whole system is that after the delay and expense attending the examination of title, there is no positive assurance that the title is after all a good one. It may be and then again it may not. All that John Doe or any other buyer has after the examination, is the opinion of a lawyer or a more or less expert title examiner that the title is clear. There is nothing in the process, in many cases, to prevent another lawyer or expert from reaching an exactly contrary conclusion. In fact the multifarious lawsuits hinging upon the question of title to real estate show conclusively that experts and lawyers do have different opinions as to the validity of titles. Title Guaranty Companies do insure the title for an individual; but the guarantee to any one holder does not extend to a subsequent holder. Each in turn must pay a fee for his insurance.
Hence, we find, that we have in use a system of procedure which charges a constantly recurring fee of considerable proportions every time title to real estate changes hands or is modified by encumbrances; that the system is unnecessarily tedious; and, finally, that the title acquired after the examination is good only in the opinion of some lawyer or expert, or is insured only while in the name of the person who pays the insurance fee. The fact must not be lost sight of that the expense attending the transfer of title to land under the existing system is in effect a tax on land. Moreover, it is an unnecessary tax; a tax attended by no economic benefit to the person who pays. A sound system of title registration would reduce this charge to a minimum. The Torrens System of Land Title Registration is designed to remove the delay, the expense and the uncertainty inherent in our present system of transferring title to land.
LAND TITLE REGISTRATION.
3 HISTORY OF THE TORRENS SYSTEM.
The Torrens System takes its name from Sir Robert R. Torrens, an Englishman, who in 1841 went into the customs service in South Australia and introduced into that state in 1858 the system of land title registration which bears his name. Having devised the plan, he had the unusual satisfaction of administering its operation when the law went into effect in South Australia, he having been appointed Registrar-General for the Commonwealth.
It must not be thought that this was the origin of the practice of land title registration. The practice had been customary in parts of Europe before the fourteenth century. When Torrens began to study the subject he found that similar systems had existed in Austria, Hungary and Bavaria for centuries before his day. He did not, however, copy these European systems, but devised -a new one based upon the system, then in vogue in Australia of registering title to shipping.
After its adoption in South Australia, it was in turn adopted in Victoria, New South Wales, New Zealand, Tasmania, and Queensland. Finally all Australasia adopted the system and it has been in operation there for over half a century. It was introduced, in a much modified form, into England in 1862. Lord Cairns’ Act of 1875 improved the system somewhat; and, though it was opposed very much in the beginning by certain interests and is purely voluntary, it is constantly growing in public favor.
The system was extended to various Canadian Provinces from 1870 to 1885 and was introduced into Illinois in 1897 and into Massachusetts in 1898. Since then it has been adopted in 12 other States of the American Union, while legislation is pending for its adoption in several more. It is also in operation in Hawaii and the Philippines.
From this historical review of the inception of the Torrens System of Land Title Registration, the questions naturally arise, what is it. What does it aim to do, and what does it actually accomplish? In answering these questions, discussion must be limited to only the main features of the system. No two of the plans found in the different States are exactly alike in detail; but, on the other hand, there are certain salient features that are common to all. Hence, instead of describing any one plan, only those features will be explained which are essential to the working of the system.
THE MAIN FEATURES OF THE SYSTEM.
First. There is the examination of the title by a public official or officials whose special business it is to do this work. This gives to the title examinations what they do not now have — the stamp of official, judicial approval.
Second. There follows the official public registration of the certificates of title after the examination has shown the title to be good. Of course, ample provision is made to settle any legal question arising or to remove any cloud on the title before it can be registered. After such judicial proceeding is ended, the official registration makes the fact of the legality of the title a matter of public record, beyond impeachment by anyone except for a limited time and then only under unusual circumstances.
Third. There is made out by the public official, the Registrar of Titles, a copy of the registered certificate showing the true ownership of the land, which copy is given to the owner as evidence of the legality of his title.
All incumbrances against the estate that exist at the time of the registration are entered upon the original certificate that is recorded in the registrar’s books and are also incorporated in the copy which is furnished the owner. New encumbrances as they arise are entered upon the record and also upon the owner’s copy. Discharge of encumbrances is noted in like manner. This enables anyone to ascertain at a glance, from the books of the registrar or from the copy in the hands of the owner, the exact status of the title at any time.
Fourth. Whenever the property changes hands, a new certificate is made out on the record in the name of the new owner, the new certificates being numbered in succession from the first original certificate registered, as second, third, etc. A copy of the new certificate is given to the new owner as in the first instance.
Fifth. In a great many of the systems in operation an indemnity fund is provided by charging a small fee for the initial registration to pay for any injury that might arise to anyone’s interests through the operation of the law.
MACHINERY NEEDED FOR THE SYSTEM.
The machinery provided to carry out the system is very simple. The Clerk of the Court or the Recorder of Deeds may be made also Registrar of Titles. A separate court consisting of two or three members may be provided to have jurisdiction over the questions arising out of examination of title and title registration, just as our Judges of the Orphan’s Courts have jurisdiction over matters testamentary; or, if it be desired, all legal questions can be carried to the regularly existing Circuit Courts in the Counties. The examiners of title are court officials who may be paid salaries or by fees for the services which they perform. The Registrar is responsible for all official acts of his deputies.
The system may be voluntary or compulsory, or mixed. In the voluntary system only those who desire may have their titles registered. In the compulsory system all transfers of title after a certain date may be required to be registered. In the mixed system.
LAND TITLE REGISTRATION.
5 those who desire may have their titles registered, and in addition all changes of title resulting from judicial decrees (as in case of fore- closure of mortgage or transfer of title by descent or by will) are required to be recorded and registered. The rule in all systems invariably is, however, that when a title has once been registered it must always be registered thereafter.
These are the salient features of the Torrens System of Land Title Registration, although there are many other minor features involved in the process. These successive steps may now be shown a little more in detail.
HOW THE TORRENS SYSTEM WORKS.
In the first place the applicant files an application in writing, which contains the name, age and address of the applicant; a statement as to whether he is married or single ; a description of the land to be registered; a statement of the applicant’s interest in the land; whether or not the land is occupied and, if so, the name and address of the occupant. It states what encumbrances exist against the estate and any claims by way of reversion or remainder against it. It also states the names of the owners of adjoining properties and contains any other matter necessary to give the court a basis for action on the case. The application is signed and sworn to by the applicant. Suitable forms are provided by the court haying jurisdiction over registration of title.
The application is recorded in the Land Registration Docket and numbered consecutively with others on file.
The application is then referred by the Registrar of Titles to examiners, with orders to make an examination of the title.
If there are adverse claims pending, notice is given to adverse claimants; non-resident claimants being notified by publication of the notice in the press for a certain number of days.The application may be answered by anyone having an interest in the estate. Defendants are summoned for the hearing.
The Registration Court may have jurisdiction over eases arising from disputed title or such cases may be referred to the regular Circuit Courts. In any case either party may appeal within a limited period (ninety days is recommended) to the Court of Appeals for final decision.
Pending the settlement of such questions, the registration of title is suspended. But when these matters are disposed of, the court decrees title and orders the title to be registered and a copy of the certificate of registration to be given to the owner. If there is no dispute or judicial contest, the registration proceeds immediately as a matter of course.
On this certificate of registration and on the copy thereof given to the owner, all encumbrances, such as liens, mortgages, and judgments are noted.
In special cases, writs of error and appeals are permitted within a short period after the title is registered, and any new claim arising against the title may be asserted within a limited time after the claim accrues; but after the expiration of the time fixed by law for the bringing of such actions, the title is as binding as is the decree of courts in other cases. The title is absolutely unimpeachable.
If there are more owners than one, each owner receives a copy of the title certificate.
Whenever the owner creates an Encumbrance against the estate, such encumbrance is noted on the original certificate on file in the Court of Registration and the owner is required to deliver up his copy to have the encumbrance noted upon it. A glance at the owner’s certificate will show at any time the exact status of the title.
When the owner wishes to transfer the estate, the prospective purchaser can ascertain the condition of the title by a mere examination of the certificate of registration or the owner’s copy of it. Thus the recurring expense of examination of a chain of titles is eliminated.
In some systems a small fee amounting to one-tenth of one percent of the value of the estate is charged for the first registration.By this means an indemnity or insurance fund is accumulated out of which to pay for any damages resulting to owners from errors in registration of the titles.
In practice, however, it has been found that there is really little necessity for such a fund. It would seem, therefore, that if fees are to be charged for such a purpose the practice should continue for only a limited time until the system has been well established; or, if continued, the fees charged should go to pay the cost of administration.
RESULTS OF THE TORRENS SYSTEM.
Such is a brief outline of the Torrens System. What are the results of its operation? In the first place, it eliminates a large part of the expense, because the costs of examination of titles are limited to the one single charge that attends the original registration of title. A mere examination of the certificate of registration at any subsequent time does away with any further examination of the previous transfers of title.
Secondly, the delays incident to the transfer of title under the present plan are eliminated. Whatever delay is occasioned upon the first examination and the necessary judicial proceedings upon which the original certificate of title is founded, concludes the matter. Thereafter, new transfers, except in rare cases, may be made immediately as a matter of course. The whole transaction of title examination and transfer of the estate can be made without risk in one day, and at a minimum of cost. The fees that are charged under the LAND TITLE REGISTRATION system as it operates elsewhere will illustrate the small expense attending the transfer. The application fee is about $3.00, plus postage; fee for indexing or filing any other paper is 50 cents; examiner’s fee for examination of title is $10.00, plus one-tenth of one percent of the value of the land, plus postage. This fee is charged but once. Granting and registering title certificate costs about $3.00. Original assurance fee — one-tenth of one percent of the value of the land at time of registration. This fee is paid but once. Subsequent transfer and registration cost about $3.00 each. A new copy of certificate in ease of loss or to show state of title costs 50 cents.
Thirdly, the title that is registered is an official, guaranteed, judicial title; and, except within a limited time, under unusual conditions, it is absolutely unimpeachable. In other words unless it is attacked within a fixed time, say ninety days, it becomes absolutely final. One does not, thereafter, have to depend upon the opinion of a lawyer or title examiner, however expert he may be in the law of real estate. The State declares the title to be valid and guarantees the ownership. Thereafter the title is always shown by the certificate; nothing that occurred prior to registration of title can affect it. In case of error on the part of the examiner or of the court, the person injured may be indemnified out of the insurance fund; but the registered title remains valid.
The Torrens System enables an owner to sell a part of his land or to subdivide his estate and sell it off as building lots. All that is necessary is for the registrar to note on the certificate of title, accompanied by a plat, what parts or portions have been sold. The certificate of title shows at a glance just what part of the property has changed hands and what part remains.
THE TORRENS SYSTEM IN THE UNITED STATES.
Already 14 States of the Union have adopted some form of the Torrens System. Usually it has taken the form of the voluntary system, with a compulsory registration of titles transferred by descent or by will or by judicial decree. The experience of these States has been favorable. It is a significant fact that no country or state that has tried this system has ever repealed it. It absolutely meets the needs of the situation. Land transfers, under this system, are made easy, inexpensive, free from delay, and, best of all, free from doubt or uncertainty as to the validity of the title after the registration. Moreover the Torrens System has been declared constitutional by the United States Supreme Court. The reform is demanded on account of the cumbersome, expensive and uncertain conditions attaching to our present methods.
The gradual adoption of the system could be provided for by making it optional and requiring all titles determined by probate or judicial decree, to be registered and requiring title to all lands used as security for trust funds to be registered. By this means more and more of the land in any county would be registered until ultimately none would be without the guarantee of registered title. This would avoid any revolutionary upheaval; but would ultimately result in eliminating the vexatious delays, the constantly recurring expense and the obvious uncertainty that characterize our present system of unguaranteed transfer of title to land.