Escrow Defined - Risks Attending Transfers in the Ordinary Private Way - Abstract Defined - What it Consists of - The Work of the Searcher of Title - limited and Unlimited Certificates of Title Defined - Policy of Title Insurance - Closing Transfers of Title in Escrow by Title Companies Fully Described - Liability of Title Company or Abstracter - Making Escrows with Banks - Insurance, and Policy of Insurance, Defined - Policy Must Be Transferred Contemporaneously with Transfer of Title - Taxes Defined - How Same are Collected - Penalties for Making Evasive Returns - Application to Board of Equalization by Aggrieved Taxpayer - When and in What Amounts Taxes are Payable - Delinquencies.
Sec. 109. An Escrow, in respect to a conveyance, is an obligatory writing, delivered by the grantor or person making the conveyance, to a third person, to be held by the latter until the performance of a specified condition by the grantee or person in whose favor the conveyance is made, and upon the performance of the condition or happening of a certain contingency, the conveyance takes effect. The person to whom the conveyance is delivered is called the depositary or escrowee.
Sec. no. The purpose of this chapter is to explain the handling of real estate transactions in escrow as practiced in large cities by title companies. The parties to a real estate transaction, instead of closing up the deal in the office of a real estate broker or an attorney who may be connected with the transfer, have recourse to the escrow department of the title company. There are many opportunities for something to occur to affect the title from the time the agreement of sale is signed until the certificate of title is written to date (usually requiring about ten days) and the purchase money paid over. There are fourteen places where transactions affecting the title to real estate are proceeding during each working day in the public offices of the City and of the County of Los Angeles, and the same is true in varying degrees in the public offices of other cities and counties throughout the country. Judgments and decrees are docketed by the courts; deeds, mortgages and leases are recorded; State and County, and City taxes are levied or paid; liens for street assessments and of mechanics and others are placed on record; and these may change or divest the title on the faith of which the parties are dealing. Land is subject to the lien of taxes, judgments and other like charges more readily than any other form of property, because its ownership is more open and notorious and can be easily ascertained from the public records.
Sec. III. The law requires that every instrument affecting the title to real estate shall be recorded, and when such an instrument is properly executed and recorded, it imparts notice to all persons of its contents; and thereafter, purchasers and incumbrancers of the same property are considered in law to have notice of the interest which the recorded instrument creates. A knowledge of these facts and a desire to guard against fraud, induces all persons about to make an investment in real estate, to insist upon having an examination of title made, and a certificate of title issued by a reputable title company before the purchase is consummated and the money paid over to the seller. Out of this demand has grown the business of title examination.
Sec. 112. In times past, the searching of all public records was made by abstracters. This is still the case in the smaller counties. The result of the search takes the form of an Abstract of Title. The searcher, in preparing this, begins with the patent issued by the United States Government, and then, in chronological order, gives an abstract of the contents of every deed and other instrument of record, and these are given so fully that no reasonable inquiry of an attorney or other person reading the Abstract will remain unanswered and yet so briefly as to exclude irrelevant details. In many cases, the Abstracter is obliged to commence with the first instrument of any kind of record and set forth all subsequent transfers, as a particular piece of land, if unpatented, may for years have been held by claimants having conflicting posses-sary titles. The wording of every certificate of acknowledgment is given, for if any one of these is defective, that particular instrument would not impart notice of its contents. The Legislature, from time to time, makes changes in the law respecting the forms of acknowledgments, and a certificate of acknowledgment at a particular date must conform to the law in force at that date. A map or diagram, giving an outline of the property, and its relation to contiguous properties, usually accompanies an Abstract. These Abstracts, where they relate to large tracts of land, held originally by one person, and afterwards acquired by various small holders, under divers colors of title, and attended by much litigation as to boundaries, etc., become very voluminous and of considerable pecuniary value, because of the amount of time and degree of care required to compile them. When completed, such an Abstract is turned over to an attorney for examination, and when such examination is finished, the attorney issues his written opinion thereon, pointing out the defects, if any, and advising his client whether or not he can safely purchase the premises. It can easily be imagined that such a procedure must necessarily be slow, expensive and not entirely satisfactory.
Sec. 113. An examination of title consists of a search in the various public offices for trie record of deeds, leases, mortgages, trust deeds, judgments, taxes, street assessments and other information affecting the property. Such examinations are made by searchers - men skilled in that particular profession - who make minutes of their examination as they proceed, and these minutes are afterwards re-examined by the attorneys of the title company. No certificate is issued until such examination and re-examination has been made, and every court proceeding, deed, mortgage, release, etc., affecting the property under search, have been considered and passed upon. The searchers and attorneys use specially prepared blanks, and these, taken together, constitute the office memoranda of the title company. On the basis of these memoranda, certificates of title or policies of title insurance are issued.