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Prior to the invention of title insurance, buyers in real estate bore sole responsibility for ensuring the validity of the land title held by the seller. If the title were later deemed invalid or found to be fraudulent, the buyer lost his investment.

In 1868, the case of Watson v. Muirhead was heard by the Pennsylvania Supreme Court. Plaintiff Watson had lost his investment in a real estate transaction as the result of a prior lien on the property. Defendant Muirhead, the conveyancer, had discovered the lien prior to the sale but told Watson the title was clear after his lawyer had erroneously determined that the lien was not valid.

The courts ruled that Muirhead, and others in similar situations, were not liable for mistakes based on professional opinions. As a result, in 1874, the Pennsylvania legislature passed an act allowing for the incorporation of title insurance companies.

Joshua Morris, a conveyancer in Philadelphia, and several colleagues met on March 28, 1876 to incorporate the first title insurance company. The new firm, Real Estate Title Insurance Company of Philadelphia, would insure the purchasers of real estate and mortgages against losses from defective titles, liens and encumbrances, and that through these facilities, transfer of real estate and real estate securities can be made more speedily and with greater security.

The first South Dakota title insurance policy was sold in 1954 by Land Title Guarantee. The Sioux Falls based Land Title Guarantee was started by Ernie Carlson and is still in business today.

The first and only title underwriter domiciled in South Dakota incorporated in 1993 in Sioux Falls. Dakota Homestead was started by Mark Meierhenry, Todd Meierhenry and David Dyke. Dakota Homestead is 1 of only 47 title underwriters currently operating in the United States.

There are abstract companies in South Dakota that date back into the 1800's. These abstract companies performed some of the same services as performed today by the current land title agencies. In fact most of these abstract companies would now be classified as land title agencies. That's because currently most transactions in South Dakota utilize title insurance with very few abstracts being completed or updated.