Title Insurance FAQ's
 

Why do you need Title Insurance?

When a buyer purchases realty, he or she wants to be sure that realty received is free and clear of any defect in the title resulting from

the chain of title and any encumbrances, such as mortgage or judgment liens. Title insurance insures the buyer against any losses

resulting from the aforesaid defects. Should a discrepancy arise, it is the title insurance company's obligation to provide legal

support to the insured party.

 

What is a Title Search?

A title search is a means of determining that the person who is selling the property really has the right to do so and that the buyer is getting

all the rights to the property (title) for which he or she is paying.

 

What steps are involved in a Title Search?

(1) Chain of Title
This is simply a history of the ownership of a particular piece of real estate from the original owner to the present owner.

The information may be derived from public records, usually maintained in the county clerk's or recorder's office.

In addition to ownership, the existence of any mortgages or other liens against the property will be revealed.

(2) Tax and Municipal Lien Search
This is a search to determine the present status of real estate taxes and municipal liens, such as water and sewer, against the property.

The search will reveal if payments are current or whether they are past due and unpaid from previous billing periods.

In addition, the search will indicate the existence of any special assessments against the property and, if so, whether or not these

assessments are current or past due.

(3) Judgment and Name Search
One of the most important parts of the title search is to determine if there are any unsatisfied judgments against the seller or

previous owners that were in existence while they were in title. A judgment is a general lien against the debtor's real estate and

constitutes security for any money owed under the judgment. The real estate can be sold to satisfy the judgment.

Rights established by judgment decrees, unpaid federal income taxes, and vendor (builders, for example) filed notices of

claim of unpaid balance all may be prior claims on the property, ahead of the buyer's or lender's rights. If a judgment is

discovered that constitutes a defect in the title, it is pointed out and the seller must then eliminate it before the title

to the new buyer can be insured free and clear of that judgment.

(4) Commitment
When these searches have been completed, the title company issues a commitment to insure, stating the conditions under which

it will insure the title. The buyer and seller and the mortgage lender can proceed with the closing of the transaction after

clearing up any defects in the title that may have been uncovered by the search and examination.

 

Who needs Title Insurance services?

Any individual, corporation, or organization involved in the transfer of title or deed for real property, or the mortgaging of real

property will need the services of a title insurance company.

Who uses the services of a title agent?

Attorneys
Lending Institutions
Real Estate Professionals (Brokers and Agents)
Commercial and Industrial Builders and Developers
Residential Real Estate Buyers

 

What is the cost of Title Insurance?

Title insurance rates are set by the New Jersey Department of Banking and Insurance and is based upon the sale price of the realty,

or, in the case of a refinance, the amount of the mortgage obtained.