Real estate is one of the most significant investments a person/family will ever make. Provided the mortgage makes sense–or you’re a savvy home-flipper–a property purchase is a near surefire bet to solidify your financial future.
Naturally, there’s a lot at stake with real estate investments. As such, red tape is integral in protecting buyers and sellers from legal and regulatory landmines.
The many elements of making a real estate investment or transaction are entirely necessary. Too much money is on the line for the process to be a seamless a-to-b scenario.
Nonetheless, a part of us wishes these transactions could be more straightforward.
Instead, there’s much leg work involved. As a real estate buyer, protecting yourself against possible pitfalls is a must to ensure your investment pays off. Even more importantly, you require a robust defense against your real estate investment backfiring and costing you a fortune.
The title transfer is one component of real estate transactions that seems simple but can be incredibly complicated.
Associated risks involved in this process mean finding the best title insurance NJ offers a top priority. Interestingly, taking this approach can make the title transfer process headache-free.
Read on as Clear Skies–the leading title company New Jersey calls its own–breaks down New Jersey title insurance.
What Is A Title In Real Estate?
The title-holder to a property is that very property’s registered owner. This distinction applies to personal and real property–however, our guide will focus on real property.
Typically, lawyers will transfer your soon-to-be property title to you. During this stage, your attorney will ask who will actually own your home. Your answer will be the name on the title.
Whose Name Can Be On A Title?
It’s common for one name to be on the title. However, a fellow investor’s (e.g., a parent’s or a spouse’s) name can be added to the title.
The person’s name on the title can have great significance when someone puts up most or all the money for the real estate in question.
Additionally, a title can be held by parties that aren’t people, such as corporations and partnerships.
Other Factors To Consider With Real Estate Ownership And Title
Real estate ownership has many forms–each with unique implications on financing, ownership transfer, taxing, and collateralization.
Specific advantages and disadvantages apply to all title methods. Thus, your choice of title method will depend on your particular circumstances and how you want ownership to pass in case of divorce, death, sale, etc.
Typically, the title-holding methods are as follows:
- Tenants by entirety
- Tenancy in common
- Joint tenancy
- Community property
- Sole ownership
How Can Real Estate Titles Get Complicated?
When you’re buying a property, the current owner and their family/heirs have claims or rights to and in the property.
Furthermore, the following entities/parties can have a lien upon or interest in the property:
- Contractors
- Governmental bodies
- Judgment creditors
- The IRS
- Lenders
You can be sold real estate without knowing the other party has claims or rights to and in a property. Nonetheless, the claims and rights might still be valid, impacting the property title until handled appropriately.
So, how can you protect yourself against potential liens, encumbrances, and other title-based defects?
Simple, you purchase the top title insurance NJ has to offer.
What Is Title Insurance?
Title insurance is a contractual obligation. It offers coverage against future losses or claims resulting from title defects triggered by an event that occurred before you acquired your property.
Moreover, title insurance grants carriers loan priority.
A title insurance policy’s terms will clarify covered and uncovered risks. The insurer will reimburse any covered losses you or your lender incurred up to the policy’s face amount and any associated legal expenses.
The protection comes into play as of the policy’s issue date. Owner and lender’s policies are the two most typical types of title insurance NJ policies.
How Are Homeowner’s Insurance And Title Insurance Different?
Homeowner’s insurance and title insurance often get confused but are vastly different.
When you buy homeowner’s insurance, you typically receive coverage for losses due to theft, vandalism, fire, lighting, or personal liability claims against you. The premiums for these policies are billed in installments (e.g., annually, quarterly, or monthly).
Conversely, title insurance only protects from title defects (and other encumbrances/liens involved with the title).
As the top title company New Jersey has to offer, Clear Skies Title will do the leg work and examine public records and title plants to locate potential claims, liens, or similar encumbrances. We’ll then inform you of any title defects.
Unlike homeowner’s insurance, paying a one-time premium for title insurance is typical. Generally, this one time payment would be made during escrow closing.
The Importance Of Receiving A Clear Title To A Property
Receiving a clear title to your property is the best way to avoid any potentially related snafus.
The number-one way to sidestep any encumbrances or defects within the property title is to learn of existing claims or rights that could cause future strife. As discussed above, our NJ title insurance company performs this legwork to ensure all title-related threats are neutralized, including the claims/rights search and examination phase.
Breaking Down The Claim Discovery Process.
Protecting yourself from title-related encumbrances and defects with the top title insurance NJ offers is crucial to your peace of mind.
Given how Clear Skies Title simplifies this process, taking the precaution of purchasing title insurance is the easiest choice when purchasing an NJ home.
After all, sidestepping costly title encumbrances and defects can be vastly aided by avoiding them in the first place.
What do we mean by the above statement? How does working with a title company help you avoid the perils of real estate title defects?
At Clear Skies Title, we’ll perform the due diligence and discover any claims or rights that could adversely impact your claim to the property title.
We perform a rigorous public record search for relevant documents linked to the property in question. Clear Skies then goes through those records with our proverbial fine-tooth comb, determining if your prospective property is subject to any claims or rights that can cause murkiness with the property title.
Liens, defects, and encumbrances are relatively broad terms that we’ve used as an umbrella to describe issues with a property title. More specific examples are as follows:
- Unsatisfied mortgages
- Unpaid taxes
- Tax liens and judgments against current/past owners
- Court actions
- Easements
- Restrictions
- Missing interest in the deed chain
After the discovery/examination process, we’ll remove any liens, encumbrances, and defects before you finalize your purchase. From there, it’s your choice on how you wish to proceed based on the information provided.
Moreover, you’ll be protected from any damages or losses experienced due to unreported title encumbrances, liens, and defects (provided they are within the scope of coverage).
Insights Into The New Jersey Title Search And Examination Process
Our title search and examination processes are catered to New Jersey regulations and procedures. For instance, New Jersey has two separate deed and mortgage recording systems: Land and Electronic Recording.
When original mortgages/deeds are mailed to the County Clerk/Registrar, it’s an instance of a land recording. From there, the documents are recorded in the deed and mortgage books. Then, these instruments are of permanent public record. Anybody searching the county’s records can ascertain who’s on the title and any potential claims associated with the property.
We have immersed ourselves in these New Jersey-specific processes at Clear Skies Title. We can navigate them with our eyes closed as we’ve learned the necessary nuances and forged relationships with the appropriate entities to ensure streamlined search and examination efforts.
That Nature Of Undiscovered Claims
Yes–it is entirely possible for even the best title company New Jersey has to offer not to discover title-related hazards during the search and examination processes. These are hidden risks–claims or rights not visible through public records. Such items can’t even be located through the most rigorous search and examination processes.
Here’s a list of examples that fall under the “hidden risk” umbrella:
- Fraudulent impersonation
- Forgery
- Incapacity/incompetence of the parties
- Unknown record errors
Clear Skies Title offers coverage against the above claims (and more).
The Right Title Insurance Company Will Be On Your Side
Not all title companies are made the same in New Jersey. The landscape is filled with varying qualities of service and levels of expertise.
Clear Skies stands proudly as the most reliable title company New Jersey offers. We’ve cultivated this reputation through customer service and prioritizing the needs of our clients.
When people hire us, they get more than someone to dot some i’s and cross some t’s (although we’ll help with that too). Instead, you’re partnering with an advocate to defend your title against claims made against your insured title.
So–if a person or entity comes out of the woodwork trying to take what’s yours, we’ll have connected you with an insurer who’ll be on your side. You’ve taken the necessary precautions and invested in protecting yourself from title defects. We’ll ensure that investment pays off by giving you the resources to preserve your undisputed claim to the property title.
Additionally, your title insurer will bear the cost of a case settlement to ensure your title and property remain in your hands.
Understanding Title Fees
One of the fees of working with a title insurance company is your title fee, this is an entire flat fee. It is worth noting, the premium is regulated by underwriters, an agency’s fees can vary. Comparing estimates and having in writing that the agency bills to estimate could save a buyer hundreds of dollars.
Others include Search fees are labeled as such ie., County Title Search, US District & Superior Court Search, Property Tax & Assessment Search, and Tideland Search. The title examination fee covers the cost of examining those records and preparing documentation of what is needed to clear the title.
Another title fee is the settlement. The associated settlement services include disbursing funds and holding escrow.
It’s worth noting that lenders require title insurance to protect their property interest, but the insurance lapses once the mortgage is 100% paid off. An owner’s title insurance can be purchased for a nominal additional cost when combined with the requisite lender’s policy. It then protects you for the duration of your homeownership.
Delving Into Recording Fees
The deed, mortgage, or related documents must be recorded at the County Registrar/Clerk’s office to be valid and in effect.
Any cost associated with recording encapsulates a recording fee. These costs vary depending on the instrument type and how many pages are involved. Once documents are recorded, all collected overages will be returned.
When And How Do You File A Claim?
Okay–you’ve purchased title insurance as a precaution. You never thought you’d need it but decided to be strategically risk-averse.
It turns out this precautionary maneuver proved wise–as there was a hidden risk that your title insurer didn’t discover.
Sure–it’s all bittersweet. Who wants to be involved in this kind of dispute? It’s stressful and can diminish your quality of life. However, you’ve put this problem in the hands of savvy professionals by investing in title insurance. You don’t need to bear the brunt of this issue because Clear Skies Title is on your side.
That said, there remains the need for some legwork on your part. You must file your claim with your insurer at the precise moment a person or entity tries to challenge your legitimate title claim.
You can do so by contacting the underwriter listed on your policy–and they’ll take care of the rest. Check the top left corner of your policy for your underwriter’s name, then contact them to submit your information–and voila! You can relax because we’ll have it covered.
Below is the hyperlinked contact information for your potential title underwriter if you’ve partnered with Clear Skies Title:
Why Work With Clear Skies Title?
Google will tell you that Clear Skies Title is the top-rated title insurance company New Jersey has to offer.
We’ve earned this reputation by focusing on putting you–the customer–and your needs first. We work tirelessly to provide accuracy and transparency with our examinations and communications.
Want to learn more about title insurance? Schedule a call with Clear Skies Title today!