The Torrens system is an alternative method for conveying title, practiced in a few areas of the country. It is, however, quickly falling into disuse, because regular title insurance has become more acceptable. However, they are still accepted in metropolitan areas, such as Boston, Chicago, Minneapolis and New York City.
The typical process for obtaining evidence of title through the Torrens system is as follows:
- Abstract report. The grantor (owner) obtains an abstract report from an abstract company, title insurance company or qualified attorney.
- Application for title registration. The grantor then files a suit against all names on the title, challenging them to come forward if they wish to contest the grantor's application for a registration of title. The grantor doesn't actually have to sue; the application for title registration simply operates in the same fashion. The application must list all parties with any interest in the property.
- Court judgment. If the owner who filed for title registration successfully establishes his or her claim to the title, the court issues its findings and an order. This court document will list the liens, encumbrances and clouds that must remain on the title. So the owner's interest in the property is effectively subject to those encumbrances .
- Court order. Following the court's judgment, the registrar of title will be ordered to register the grantor or owner's title.
- Certification. After registering the title, the registrar will issue a certificate confirming that the title has been issued in the grantor's name, with the required encumbrances and conditions. This certification becomes public record.
The Torrens system creates a different obstacle for real estate transactions. Deeds, encumbrances and other transactions must be registered with the registrar in order to become official. The registrar will then analyze the deed or document filed for recording. If the registrar finds the new deed acceptable, the old Torrens certificate will be canceled and a new Torrens certificate will be issued to the new owner. The registrar then retains the original deed.
Unlike the standard recording office, the Torrens system registrar actually examines the deed and delivers a judgment as to the validity of the conveyance. Another difference between the standard method and the Torrens system is that with Torrens, the property is officially conveyed with the certificate; the standard method uses a deed to convey the title.
The Torrens system is not title insurance , and the registrar is not required to defend the title if a challenge ever occurs. Defending the title remains the owner's responsibility and expense.
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