Real Estate and Public Records
The execution of real estate transactions is largely dependent upon public records. These records are used to confirm that a property exists, as well as its location and boundaries. Buyers, lenders, title insurers, and others use public records to verify the title owner. Mortgages, many legal judgments, and other claims against real property cannot be collected without reference to public records.
The discussion around disseminating data collected by the government for the specific purpose of public disclosure goes to the heart of why we have public records laws. In the case of real estate public records, our forefathers did not want land to be accumulated unfairly or unjustly, or used as a basis for exchange in improper business dealings. Ownership and sale of property must be disclosed to ensure we have an open and fair market.
The public record is the place where third parties make claims against property, such as a claim by a tax authority that taxes haven’t been paid, and the property is being attached, or a claim by a contractor who performed work on the property and hasn’t been paid who wants to attach a portion of the property’s value in lieu of compensation. The validity and legality of these various claims determine whether a property can be sold, transferred, or financed. The public record is also the place where homeowners protect their interests in their properties, and lenders protect their interests in the mortgage. This public recording system helps prevent fraud and impropriety because it removes the veil of secrecy and prevents the development of an underground economy where an unfair interest in property might be obtained.
Consumers receive three primary benefits from open public records in the real estate information industry:
- The first benefit is reduced risk. An open public record is a difficult place to execute fraud. And it’s also difficult to shield home buyers from potential hazards when the information is publicly available.
- The second benefit is informed choice. Greater availability of public record data helps to make people informed buyers and sellers and ensures fairness in negotiations. Absence of public record data creates a negotiating advantage for the party who has access to private sources of data.
- The third benefit is increased speed and efficiency. Access to public record data by commercial businesses has led to the creation of new technologies and services that more quickly and less expensively put people in homes and create financing options than in the past.
Open public records disclosure over the past 20 years aided increased market efficiencies. Automated services, expanded by technology advances, allowed financial institutions to evaluate lending opportunities with individuals and companies they’d never done business with before. Underwriting procedures that used to take weeks were shortened to days or hours. Comprehensive real estate databases now contain property ownership sales, appraisal, tax servicing data, and financing data used to automate the research involved in title insurance underwriting.
Many businesses in the real estate industry help other businesses control risk by redistributing public records documents for verification purposes. Personal information contained in public records is relied upon by the industry in their efforts to reduce risk and unnecessary costs. For example, if removal of Social Security Numbers from public records is mandated, the tool to precisely identify commonly named individuals will create uncertainty in transferring clear title to property which could be encumbered by uncertain lien attachments. If real estate related businesses are unable to ensure preciseness in land transfers, the consumer will be left to bare the risk as insurance policies will carve out title ambiguities as exceptions in coverage.
