Most title insurance policies don’t cover unrecorded real estate documents. This means your title insurance policy is worthless if ADRE determines years later there was a mistake. It doesn’t matter how insignificant the mistake. A minor mistake such as a clerical error empowers ADRE to declare a prior land ownership transfer illegal. Who will finance property without title insurance covering these unrecorded documents?
There are numerous items covered by title insurance that are not recorded. Frankly, I'd like to talk with local "professional" title examiners and ask them how they handle the ADRE issue. In our area, if we are aware of unrecorded risks like these, we obtain letters from the government office certifying that there is no unrecorded issue pending.
If it's not predictable and it's really a government agency out of control, then I would understand title companies putting standard exceptions for this ADRE issue into their policies. If that's the case, the lender and the consumer would have an opportunity to review exceptions prior to close. In any case, I would think citizens should lobby for government relief from an out of control ADRE.
What do you think?