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What Is Title Insurance And Why Do I Need It?

We are indisputably in a strong seller’s real estate market, particularly so in the suburbs and New Jersey. We are seeing houses from these areas go on the market on a Saturday, a bidding war with multiple offers is received by seller on Sunday, and a fully signed contract is presented by Monday. This trend is understandable in light of Pandemic woes, coupled with other issues. What ensues is that folks are taking this opportunity to make the transition to their dream home, or at least a more spacious one that is more easily accessible outside of New York City. In that regard, we are working steadfastly with our clients to assist with these goals. Whether it involves selling a current home to upgrade, the reverse, or help clients transition as first time home owners.

We as attorneys assist our clients by negotiating the contract of sale, which is the critical document in any purchase and sale transaction. One common question that we get asked is: how do I know that I am buying this house free and clear of the seller’s mortgages, liens, violations and that I will receive free and clear title? The answer is that we engage a title company whose sole purpose to do just that—ensure and guaranty that our clients are acquiring their title free and clear.

Simply stated, a title company provides certain essential services that no real estate purchase of property or a condominium can go without. The title company conducts a full examination of both the property and property owners’ past history, including examining taxes, court judgments, deed, encumbrance, as well as state and local public records. The title company works with the seller’s attorney on the clearance process to resolve any issues or defects, such as violations, mortgages, liens or other claims to a property. The title company reviews the chain of title to ensure that it’s clear and that our buyer is acquiring the deed from the proper party, which is very important, especially if there are heirs, errors in prior deeds or other public records, boundary issues, or possible fraud. Once all issues are resolved, the title agent will issue critical and invaluable title insurance. The title company also sends its agent to the closing to facilitate the proper transition of funds, handling of the deeds, and satisfaction of all of the seller’s mortgages and obligations.

At closing, a buyer will be issued an owner’s title insurance policy that will provide protection of the buyer’s rights to the property after closing. If a lender is involved, the lender will also require a loan policy that insures the lender for any title defects. No closing can do without title insurance.

The premium rates for title insurance are set by the State and are based on the purchase price of the property and the amount of the loan (if any) and is a one-time payment paid at closing. In the context of a real estate purchase, which is typically one of the most significant financial investments that a person can make, the cost of the title examination and policy is typically nominal and a well worth investment. In addition, a title policy is essential to have when you sell or refinance the property in the future and is typically requested to assist with clearing title for the next purchaser.

At Beress & Zalkind PLLC, our attorneys are experienced in all kinds of real estate transactions in New York and New Jersey. We work closely with the title company on the transaction to assist and facilitate a smooth closing.

Call us at 718 513 3500 or send us an email at info@bzlawgroup.com if you want to discuss your transaction.

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Viktoria Beress
Viktoria Beress

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