by Steve Fair
Title Search or Abstract Companies were created in the mid 1800s to provide buyers of property peace of mind. They searched for the documents affecting the title to the land in question usually by going to the county courthouse, pouring through dusty records and files, copying them, and putting them into a neat organized pile. They charged ‘by the page’ and the security of knowing the piece of ground you were purchasing did not have an outstanding mortgage or lien- that someone else had claim to it- was a valuable and necessary service. However, this procedure has been found to be cumbersome and inefficient in most of the US. With computer technology and advanced software, an abstractor can ‘access’ court house files from their office and print the documents off. It has become nothing more than a glorified copy business.
Oklahoma and Iowa are the only two remaining states that require real estate transactions be finalized at an Abstract office. Because of so much criticism and frequent questions from Oklahomans on why the state still uses the out of date abstracting process, the Oklahoma Abstractor Board addressed the question on their website.
In response to why the two states are the only two that still do abstracting, they wrote, “This is simply not true. Every state requires some form of "abstracting" and the final product the "abstract". Other states call it "evidence of title", "title report," "title search," or "title examination"--and some states do call the search "abstracting." The search process, no matter what it's called, has to be done, and is done, in every state.” The board’s website is: http://www.ok.gov/abstractor/FAQ/index.html
It is true that Title Searches are done by purchasers in other states. It is also true that other states HAVE abstractors, but only Oklahoma and Iowa REQUIRE them to be used in the transfer of property when a mortgage is involved.
Most buyers of property employ a real estate attorney to research and determine whether or not there are any liens on the property they are purchasing. But even a real estate attorney’s word is not good enough for most lenders. Banks and lending institutions require ‘Title Insurance’ which can be conveniently purchased from the abstractors at closing. So why do you need insurance on a title you just paid someone to research? According to one Oklahoma abstractor, “Title Searchers do searches and human error exists. You do not want their bad day to become your problem, insurance is your protection.” So much for standing behind your work.
Former State Senator Gene Stipe, (D-McAlester) at one time owned all or part of nine (9) abstract companies across the state. Ironically, Stipe was the author of the bill that requires Oklahomans to use abstractors to close real estate transactions.
The oversight of the abstract business in Oklahoma is the duty of the State Auditor and Inspector. Former State Auditor & Inspector Jeff McMahan was ousted from office after accepting illegal campaign contributions from abstractors Stipe and Steve Phipps, Stipes partner. Phipps was sentenced to a year in prison for his part in diverting nearly three (3) million dollars in taxpayer money to his businesses and according to his own attorney broke the code of silence that brought down the Little Dixie political machine.
Abstracting has been found to be cumbersome, unnecessary and inefficient in most of the U.S. Its heyday has past and it adds little or no value to a transaction. In effect it is a ‘good ole boy’ system that has made millions for a few select Oklahomans, including the Askins family. Real estate abstractors should have to run their business by convincing consumers they are providing a value and a service, not by lobbying lawmakers to mandate their services.