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What Are Title Curative Services? When Are They Necessary?
ALTA Best Practices Business Strategy Title Curative Services

What Are Title Curative Services? When Are They Necessary?

Justin Nedell

While many title companies understand the process of release tracking well, the other side of the coin is not always clearly understood. Title curative services, the result of errors during release tracking, is when a title must be cleared of any defects or clouds, and the process can be lengthy.

While the timeline can be unclear, there are ways to avoid the situation altogether. We sat down with Ayla Pettyjohn, who helps oversee the Curative Title Services Department at PropLogix, and clarified why release tracking is so important and what curative services entail if the process wasn’t handled properly in a previous closing.

 

What Are Title Curative Services?

Title curative services are there to correct any defects or clouds on the title that prevent a closing from happening on time. These defects are typically the result of an error committed during a past closing on the same property. Someone at some point in the process of a previous closing may have made a mistake or forgotten to check the public record for the proper recording of an instrument, mortgage, etc.

 

How Do Curative Services Work?

Whether working with a third-party provider of title curative work or tackling it in-house, the first place to start is the title commitment. This will show where the outstanding mortgage or deed of trust (or any unreleased lien) appears. The investigation then begins to uncover the reason why the mortgage or other title defect is still present. The best way to clear the title defect is by providing proof of the mortgage being paid off, resolving a lien, etc.

Unfortunately, the documentation for these title defects is often not readily available, especially proof of payment. Some mortgages that appear on the title commitment date back several decades if the home hasn’t changed owners multiple times. Additionally, financial institutions are commonly absorbed by larger ones or go out of business entirely.

 

“You don’t know if the institution sold their assets and didn’t have to document anything that was left untouched after the fact. The successor typically only receives information about active loans, but not the loans that were not properly dealt with.” - Ayla Pettyjohn

 

Curative services teams typically use federal databases to track down the information. The FDIC and other financing institutions will have information posted related to the mortgages. Sometimes the search extends to the SEC. These databases may have filings from very old lenders. There may be contact information of the executives in charge when that loan was signed off. The process is very investigative and can be challenging for someone unfamiliar with it.

 

Some examples of who curative title service contacts:

  • Financial institutions directly
  • Legal departments within
  • SEC
  • FDIC
  • Federal databases
  • Court records for relevant information

 

There is no way to show a connection between the lender and the person that was paid at the time of the closing. Curative services teams essentially have to connect the dots and cover as much as possible in the research. They don’t find just one party, send the request, and accept it. They look at all the options to make sure that they find the actual institution that received the request.

One perk of working with a curative services team is that they have cultivated relationships with lenders over time and will have a database to store the contact information. Leveraging those key points of contact to then escalate issues speeds up the process for these specialized teams. In tough situations, a curative services team will even go through the BBB to file a case when they cannot get through to resolve the issue.

 

What’s the Difference Between Release Tracking and Title Curative?

Release Tracking occurs post-closing when a lien of any kind is paid off. Maybe a mortgage/deed of trust, lien, judgment, UCC financing statement, etc. gets paid by the seller’s proceeds from the transaction. A release must be recorded within the state’s statutory timeframe (typically 30-90 days).

The purpose of release tracking is to search the county records and guarantee that the correct release documents have been recorded accurately. This is the best way to prevent future curative title services from being needed.

 

“An ounce of release tracking is worth a pound of curative” - Ayla Pettyjohn

 

Release tracking prevents clouds on the title and helps the settlement agent avoid any kind of repercussion for not completing this as required by the title insurance company. Curative title services must be completed before closing to avoid further title issues or penalties being incurred.

 

What’s Included In Title Curative Services?

Mortgages, liens, deeds of trust, missing assignments, and other title-related documents are all a part of what title curative services can help clean up. Other times, corrections are required to clear up any defects. This includes requests to the lender or the succeeding lender/servicer, their research time, and the recording process.

 

When Are Title Curative Services Necessary?

Curative is required any time a cloud or defect appears on the title. This could be from a prior owner’s matter that was not tracked to ensure recording after payoff at a prior closing or a missing/erroneous document such as assignment or satisfaction that needs to be corrected. 

 

Preventing the Need for Curative Services

Although it is a part of the title policy, title agents rely on lenders and other parties to record mortgage satisfactions, deed of reconveyance, and other trailing documents. However, lenders expect to receive the policies within 30 days, but differing state regulations allow for these documents to be recorded past 30 days.

Delays in a lender’s process or a slowdown at the recording jurisdiction may allow for these releases to take more than 30 days to be recorded, too. Checking the public record when writing out a title policy doesn’t necessarily guarantee the release of these documents within the title commitment.

That said, the release tracking process needs to be carefully considered in a title company’s operations yet continues to be a problem across the country. According to the 2021 State of the Title Industry report, only 50.5% of respondents said they always check the public record to ensure that mortgage satisfaction and other instruments are properly recorded. 62.2% said that they’ve had to settle a title defect through quiet title action, which takes up precious time from these organizations.

 

“Curative is the last stop before going to quiet title. Avoid the thousands of dollars involved in that process by doing the proper release tracking process.” - Ayla Pettyjohn

 

Take the time now while the market slows down to refine the release tracking process and improve the experience for future homeowners. There are a few ways to tackle this refinement and ensure no stone is left unturned.

  1. Break down each step of the post-closing process
  2. Assign each task to a specific individual
  3. Standardize the timeline of when and how often you check the public record
  4. Utilize automated reminders to keep the process on track
  5. Stay persistent with problematic files

 

Consider Outsourcing The Work

If you reach a point where release tracking or even curative becomes too daunting, PropLogix offers dedicated teams to tackle these tasks for you. Being that the process can be long and drawn out, it’s helpful to have the support of a third-party provider who has developed relationships with lenders, handles the communication, and knows the nuances of the process (especially with curative).

Check out our resource center for more helpful blogs, webinars, and videos related to the title industry or if you’re ready to get started with our services, you can check out our services page for all the latest info.

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Justin Nedell Content Marketer

Justin Nedell is a Content Marketer at PropLogix who enjoys writing blogs and other digital content as well as facilitating webinars for the company. He currently lives in Denver, has traveled to over 30 countries, and enjoys hiking, trail running, snowboarding, yoga, learning French, and spending time in the mountains.