Suit: Wayne improperly handled firms' land titles

Seven land title companies filed a federal lawsuit Thursday
Paul Egan / The Detroit News/ May 5th, 2006



At issueSeven title insurance companies are suing to have the Wayne County Register of Deeds placed in receivership. Complaints include:
Improper record-keeping
A backlog of documents waiting to be recorded
Unequal treatment of various parties who want real estate documents recorded.
Previous reports Wayne Co. deed logjam will cost you


DETROIT -- Seven land title companies filed a federal lawsuit Thursday asking that the Wayne County Register of Deeds office be placed in receivership for failing to follow state and federal laws.

Wayne County Register of Deeds Bernard Youngblood "has violated numerous state and federal laws in the conduct of his office" and "has abused his position as a public repository of land title records," the companies allege in a complaint filed in U.S. District Court in Detroit.
Youngblood declined comment Thursday afternoon, saying he was aware of the lawsuit but had not yet read it.

At the root of the dispute, the companies allege, is improper record-keeping and months-long delays in recording deeds, liens, mortgages and other real estate transactions. The stalled documentation makes it impossible for buyers to know whether they truly own the property they are buying or whether the property is burdened with hidden debts.

The title companies, which are seeking millions of dollars in damages and want a receiver appointed to run the office, say they are often left holding the bag because they sell insurance that is supposed to guarantee the integrity of the transactions.

They say the situation also contributes to real estate fraud. For example, someone can take out multiple mortgages on a property before any of the involved mortgage companies are aware the other mortgages exist.

In receivership, the court would appoint an official to run the office until problems were resolved. Robert Meredith, the incoming president of the Michigan Land Title Association and vice president and state manager of lead plaintiff First American Title Insurance Co., told The Detroit News in April the "six-month black hole" resulting from record-keeping problems was prompting higher costs for title insurance in Wayne County and causing some title companies to consider not doing business in the county.

Youngblood promised in April a new computer system that would be online in August would correct the problems. On Thursday, he said he is awaiting an update from the computer contractor and could not say whether the August date for correcting the problem was still on target.

The strongly worded lawsuit contains a list of complaints against the operation of the Register of Deeds office and Youngblood, who is in his second four-year term. He first was elected by Wayne County voters in 2001.

The seven title companies, which their attorney John Cameron said together are involved in the vast majority of Wayne County's real estate deals, allege the county office violates state law by not keeping an "entry book" -- a chronological list of real estate transactions that records the time each document was filed, down to the minute, and which can be used as a safeguard to check on transactions that would not show up in a search because they are still waiting to be entered into the computer.

And they allege Youngblood's office violates the U.S. Constitution because those who present files to be recorded at the office are not treated equally or fairly.

Cameron said the damages the companies seek will be in "the seven figures or eight figures." It's true that other Michigan counties do not keep the entry book required by state law, but "Wayne County has the largest volume, the largest backlog and is the place in the state where, because of the failure of the recorder to comply with the statutes, the most damage is being done."

You can reach Paul Egan at (313) 222-2069 or pegan@detnews.com.