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Moving to Torrens Title System to Lower Title Insurance Costs


What is Torrens Title?

In a Torrens Title system, your title and ownership rights in a property are created simply by the act of registration or recording in a government register or record. The concept relies on the fact that ownership in property is evidenced by registration, or "title by registration." Any other transfers or mortgages cannot make claim on the title unless recorded at the same central registry. This concentrates all records in one place, making the research of title much more reliable and less costly.

Iowa Uses a Form of Torrens Title

In 1947, as a response to a spate of bank failures, Iowa outlawed title insurance and took on the insuring of property ownership by the state. Residents of Iowa save a lot in their title insurance premium costs. Iowa home buyers pay 20% to 30% less for title insurance than the national average. One example cited is the cost of coverage for a $500,000 home in Washington, D.C. coming in at 16 times the same coverage cost in Iowa.

From the congressional testimony: "Another very important part of the Iowa system is that the title is fixed, so the homeowner isn’t out his or her property if a defect is later discovered. In contrast, title insurance simply pays up to the limit of the policy and the buyer can lose the property. Thus consumers get a better product in Iowa than in the rest of the nation, at a much lower price."

One would question how much title companies also spend in lobbying the government. Otherwise, why would this type of testimony and data still have created little action from Congress after more than four years?

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