By. Dina Vicari, Esq.
Many people ask their attorneys, “what is a title search and why do I need title insurance?” Next to having the appropriate funding to purchase your new home, ensuring that the home you intend to purchase has clean or clear title is essential. All mortgage companies require clear title. It is important to ensure that you have title insurance in the event a title issue arises after you have purchased the home.
Title searchers review old deeds, mortgages and wills at the County Clerk’s office to trace the ownership history of the property. They look for any current or past mortgages, liens or judgments on the property that have not been discharged as well as whether there are any tax liens or unpaid municipal utility bills. The title searchers will also examine the chain of title to confirm that the seller’s ownership rights have not been affected and that the sellers are, in fact, selling you a home without any adverse possessory or equitable interests such as pending litigation or easements. These examples are endless, but the title company performing the search has the expertise to find all relevant concerns prior to the purchase.
Once the title company completes its search it will issue an insurance policy after closing which will insure you and your lender should anyone at any time in the future come knocking on your door claiming an ownership or possessory interest in your property. Should this occur, the title company will step- in and provide you with a legal defense and assume the costs of any litigation. This coverage is similar to automobile insurance after you have become involved in an automobile collision. After an automobile collision, your automobile insurer will provide you with legal assistance and take corrective measures in the event you are sued. Fortunately, unlike automobile insurance where you pay your premium annually, monthly or quarterly, your title insurance premium is paid only once at the time of closing and this one time premium will provide insurance coverage for as long as you own the home.
It is also important to note that if you have a mortgage you need to obtain both a Lender’s and Owner’s policy. The Lender’s policy covers the mount of the mortgage that is due at the time any claim is made. An Owner’s policy covers your ownership interest, which is a relatively inexpensive addition to the policy premium. In New Jersey, title insurance is usually paid by the buyer. After closing the buyer’s attorney may need to perform additional legal tasks to complete the conditions of the title policy such as filing additional deeds and discharge of mortgages. The purchaser will receive the final title policy in the mail approximately 6-8 weeks after closing.
While all of this may be overwhelming, we at R.C. Shea and Associates can help you through the process. The law firm of R.C. Shea & Associates, Counsellors at Law, is a full service law firm representing and advising clients in the areas of Wills and Trusts, Estate Litigation, Personal Injury, General Litigation, Real Estate, Medicaid, Medical Malpractice, Workers’ Compensation, Land Use and Planning, Powers of Attorney and much more.