How E-Recording Helped Keep The Title Industry Humming During Covid

The coronavirus pandemic caught everyone by surprise in 2020, with parents adjusting to kids being at home, and businesses quickly adapting to a remote workforce. 

Initially, it was a period of confusion and chaos. But some industries weren’t caught quite so flat-footed thanks to technologies they had adopted long before the pandemic.

“If Covid had happened 25 years ago, this would have been more disruptive, that's for sure,” said Shawn A. Elpel, senior vice president and senior underwriting counsel – West region for Stewart Title Guaranty Co., a large national title insurance underwriter. “I think what saved us were the technological advances over the last 20 years.”

This is not to say that the title insurance industry was untouched by the pandemic, Elpel added. The county departments that these companies normally interact with were suddenly closed or operating with skeleton staff — which might have been just as well because no one wanted to worry about contracting Covid as they stood in a long line at the county recorder’s office.

Fortunately, the title industry had taken steps decades earlier to improve the speed and efficiency of title transactions. As it turned out, the technology it adopted would also help it navigate the disruption of Covid.

As early as 2002, the industry began to use electronic recording tools. This meant that, in most cases, a title company no longer needed to send someone to stand in line for hours at the local courthouse with a stack of documents that needed to be recorded in person. Elpel described it as “excruciating” work that usually befell junior members of the staff; today, in the era of Covid, it would also be seen as work that could put that person’s health at risk.

“Over the last 20 years, more and more county recorders throughout the United States have adopted e-record technology,” he said. “Some county recorder offices can only do mortgages while others can record both deeds and mortgages. But this has really helped us because it meant that in a lot of counties in 2021 we didn't have to worry about taking the documents down to the courthouse. So even if the county was closed, we could still e-record.”

Title companies were also an early adopter of video/audio conferencing, which, as the rest of the world learned during the pandemic, proved to be invaluable in keeping lines of communication open among stakeholders. In large commercial real estate transactions, those participants could be spread across the country. 

“You may have a transaction in Los Angeles County, but you've got attorneys in offices in New York, Houston or Chicago and you’ve got some type of conference call on a daily basis,” Elpel said. “After Covid, everybody was at home, but they still had access to all the same information.”

Of course, real estate transactions are more than just algorithms, and Elpel noted that people and planning remain pivotal to the title insurance process, perhaps now more than ever. After all, adoption of e-recording is not universal among counties, and even now many of them continue to operate with reduced staff. 

This means participants in property purchases or construction loan closings must account for the “gap time” between when the title documents are submitted to a county for recording and when the documents actually are processed and recorded, which might be a week or so.

“If you've got a transaction that's going to close in 30 days on a particular day, you need to understand the dynamics involved at the county level,” he said. “We've had multi-site deals where you've got e-recording in one county, but the only way to get the documents to another county is to drive them up and throw them into a drop box. The question becomes, how often does someone from the county come in to check the drop box?”

Parties to a title transaction can face another “gap,” Elpel said: a communication gap. There is a common misconception that the title company assumes all risk and responsibility in transactions, he said. 

In reality, he said, sellers, borrowers and lenders need to recognize they are all participants in the process with a stake in finding solutions when challenges arise. 

“When title issues or issues with the transaction come up, a big part of reaching the solution falls not just to the title company, but also the seller, borrower and lenders,” he said. “They all need to be involved in a discussion about what each party’s concerns are and what each needs to move forward with the transaction.”

A test of the title process, whether it concerns technology tools or simple communication, might be on the horizon with the growing interest in repurposing retail properties for industrial uses such as warehousing and distribution. 

Elpel said the trend certainly has momentum, but questions are likely to arise that will require solid communication among all involved. These could involve mechanic's lien exposure and the type of coverage the construction lender is going to be looking at, and compliance with local zoning restrictions and how open cities and counties are to approving new uses for their old malls.

“That's going to be an interesting discussion for municipalities because the industrial warehouse market seems like it's really taken off,” he said.

This article was produced in collaboration between Studio B and Stewart Title. Bisnow news staff was not involved in the production of this content.

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