Leveraging Second Best Asset - The Title Plant

Independent Title Agents' greatest asset, after their people, are their Title Plants. It is important, in this information age, for owners of title plants to maximize the value of this asset by fully automating their databases thereby creating greater efficiencies and productivity; and, by strategically making title plant information available to others. (Note: Comments in this article are directed toward Texas Title Agents but may apply to Title Plant owners throughout the country.)

In Texas, Title Plants are regulated by the Texas Department of Insurance under Rule P-12. There are approximately 8 states with title plant laws and Texas is one of them. The definition of Title Plants and the State requirements can be found at: Title Plants.

Plant owners know the blood, sweat and tears that goes into building a title plant. For those who think the information is filed at the courthouse so what's the big deal about a Title Plant? Listen up...

Title Plants are tools Abstracters and Examiners use to research land records more effectively. The plant builder/maintainer indexes all of the documents filed in the courthouse against legal descriptions for the properties when legals are available. So, when the Examiner is running title in a given survey or subdivision all the records pertaining to the land are found in the same part of the plant.

Many plants and title agencies are family owned business passed down through generations. Historically, Title Plants were hand written, "Tract Books" or typed "Index cards." The indexing person for the title company would work at the courthouse for hours transcribing information from the daily recorded documents before the documents were sent off by the county for microfilming or before being bound in books. Since much of the indexing was done in the courthouse County Clerks would sometimes make space available to title companies to complete this task.

Historically, Title Plants were on paper so local Abstract and Title companies installed vaults, similar to bank vaults, to store their records. In fact, our firm leased an office across the street from the Fort Bend County courthouse and we kept our records in the old "Peirson Abstract Company" vault, which was a step back in time.

The obvious concern with tract books and index cards is the risk of loss due to a fire or flood. Tracts Books are usually very large books which take up large amounts of space and only one person can use them at a time. The problem with index cards is sometimes they can be misindexed or go completely missing. Inadvertently, cards may end up in an abstracter's file.

Some plants have already gone through the expense of microfilming or scanning their cards to preserve them which is a great start. Typical progression for older plants is from paper to microfiche (or microfilm) and then to computers or a combination of these.

A Title Plant can either be an ARBed plant or an unARBed plant. Acreage tracts in ARBed plants are assigned an "arbitrary" tract number. An unARBed plant post acreage tracts to the Survey or Abstract Numbers.

There are reasonable arguments to be made for both ARBing and not ARBing. The biggest problem with ARBing is it is very expensive and if a parcel is ARBed to the wrong tract then it will NEVER be found in the plant. In most cases, the persons ARBing are not as skilled as Examiners who can make determinations of the relavance of a instrument relatively quickly. The main drawback of an unARBed plant is it may take longer to search. But, with electronic images, wherein an image can be opened and closed in seconds, this is less of a concern. The time lag was an issue, when documents had to be viewed at the courthouse, or copies were made from microfilm.

There are still Plant owners who think protecting their asset means keeping it to themselves and NOT making the information available to others. If you are the only title plant in a county then you have a "legal" monopoly in the county and until now, keeping data to oneself may have made sense.

But, advances in technology makes it possible to build a quality title plants to compete with a plant in operation for decades. The "new" plant may not be as detailed or go back as far as the one in business for generations but if it meets the state requirements and is sufficient for examining title then it will likely be acceptable to the Underwriters.

Some small county plant owners would like to change the law to increase the number of years a plant must be posted geographically. In my opinion, it doesn't matter if it's a 50 year plant law or 75 year plant law. If competitors wants to build a plant in a county they will do so and you will be loathed to stop them.

Plant owners desiring to protect their assets and generate more revenue may need to look at their Title Plants differently.

This means using the latest technology to convert all data into an electronic format, making information available via the Internet, using contacts from the sale of online data to generate more business for the agency and creating additional revenue by providing data through mulitple sources. The end results may be to make it less economically attractive for competitors to move into a market.

The benefit of historical plant converstions are Preservation, Productivity and Profits.

Preservation - preserve paper plants (cards or tract books) by bringing in an onsite scanning team to:

• Place index cards in proper order
• Create Folders representing current file drawers
• Create Sub Folders representing Surveys and Subdivisions/Section/Block/Lots
• Consult Plant Managers with organizational and scanning questions
• Scan Cards, Tract Books, Maps, Abstracts, Base Files, Run Sheets and Starter Files
• Backup scanned data daily and make available to Abstracters and Examiners immediately
• Save complete sets of data and images on DVDs and store off-site in secure location

An additional benefit to scanning is that all index cards will remain in place and should never again be out of order.

Productivity - in most card plants the title staff is continually getting up to search file drawers to find the records they need. If researchers remain at their desk and navigate the plant from their computers this is a huge time saver. If researchers still want to touch the paper they can simply print hard copies of the pages they need. Time is money and increased productivity among the title staff can not be underestimated.

Profits - many Agents are unwilling to allow Landmen or outside researchers in their facilities because they are legitimately concerned about the lack of care some of these individuals take when handling the records. The solution is to scan the indexes and images and make them available via a computer "kiosk", with no connection to the Internet and without the ability to print. Then, depending upon the oil & gas or other real estate activity in your area, plant owners may be able to generate another revenue stream.

Landmen are usually less concerned about the costs for title plant access as they are in buying leases. So, if you can generate more revenue without risks of loss or damage to your plant then allowing access to landmen may make sense.

Another concern is if there is more than one plant in a county then the competing plant will do just as I've outlined above and you could be left behind.

The biggest complaint we hear from large title operations in metropolitan area when ordering Title Evidence from smaller counties has little to do with the quality of the product, but rather the turn around time. The biggest compaint we here from small county Agents is, once they deliver Title Evidence they do not get paid or they have to fight to get to get paid. By having more accessable electronic title plants these concerns may be reduced or eliminated.

It doesn't make sense for independent Agents who do not get paid by the Underwriter Direct operations for Title Evidence to continue to send the same Underwriters a large number of premiums.

This is an excerpt from an earlier writing:

The Underwriter trend is to build Title Plants in large metropolitan counties and adjacent growing counties. Once established, the underwriters can deny local title agents access to title evidence and underwriting.

Rural agents need to look no future than this map to see what the future holds. Looks like the attack of "The Blob" doesn't it?

Independent Agents are in a strange predicament. The same underwriters who sponsor their licenses at the Department of Insurance are competing against them in their own backyards. Some Agents are reluctant or afraid to voice their objections because they do not want to be dropped or bullied by their Underwriters.

Several companies sell software for title plant posting and conversion such as Hal Systems Corporation and Ultima Corporation, (a Stewart Title Company.) Also, there are several companies who perform the locating and keying function for Title plants such as D. Bellow Associates, Inc. , SLK IT Enabled Services, or Extract Systems. If you are considering using a particular software for posting or outsourcing your keying or land locates function, it is prudent to perform thorough reference checks before deciding on which service to use.

Many times, hard copies may not leave the premises because these are resources being used everyday or are too sensitive to be taken off-site to a production facility. In that case, you may want to consider using a company like Imersion Technologies who can send a crew into the plant to perform the scanning of the data.

The primary focus of our companies, CourthouseDirect.com and Integrity Title Records are to consult with companies considering a large conversion project. We may also serve as a hosting facility and reseller of data. Although, Integrity Title owns Title Plants in major metropolitan areas our goal is not to build plants in every county. We prefer to work with local agent and help them publish their plant online in a secure environment.

CourthouseDirect.com serves as the marketing arm for the information plant owners want to sell. Currently, we have over 350,000 page views, over 30,000 unique visitors and over 12,000 returning visitors per month. We bring customers to local agents through our web portal by the same name.

If as the owner of the title information, you should always remain the gatekeeper and decide who should accesses your data, what data should be made available and at what price.

It requires a monetary investment to mold a paper or microfilm title plant into a concise, online product offering but it can be done. The success of doing so depends mainly on the will of title plant owners and their capacity to look beyond the present.

For those hoping to cash out on their title plant investment, an additional benefit of digitizing your records may be to increase the value of the plant asset so it will be easier to sell.

Note: An [Article] published in the January 3, 2005 Edition of the American Land Title Association online newsletter is informative and more technical in nature but it more or less makes the same arguments that title plants can serve as, "opportunities for revenue growth, higher productivity, enhanced employee satisfaction, and improved customer service."

Feel free to contact me directly with any questions or comments.