1. What does the real term "Title" mean?
A title is the evidence or right in which a person has the ownership and possession of land. A defect in that title can be any legal right held by someone other than the owner to claim that property or to make demands on the owner of that property.
2. How can a defect in title occur?
There are many possible causes of title defects. A few of the most common are:
Fraud- false impersonation of the real owner(s) of the property
Documents not executed by all necessary parties such as a spouse, co-owner or legal heir
Improper or forged deeds, wills, releases and mortgage discharges
Documents executed by persons who lack the competency or capacity or who are not of legal age
Documents executed by unrecorded, invalid or expired Powers of Attorney
Errors in the recorded legal documents such as incorrect descriptions, missing signatures, improper acknowledgments
Misreading of wills, missing or undisclosed heirs
Documents not properly recorded.
3. What is Title Insurance?
Title Insurance is protection offered to the owner and lender against defects in the title of the real estate that is insured. The owner title insurance policy guarantees the owner against loss due to defects in the title pursuant to the terms of the policy. Your investment in real estate, whether residential or commercial, is quite possibly the most important, and expensive, investment you'll ever make. An owner title insurance policy protects that investment. Your owner title insurance policy remains in effect for as long as you or your heirs retain an interest in the property or have obligations under a conveyed warranty.
4. Why do I need to buy Title Insurance when I refinance?
A loan title insurance policy protects the lender's interest only. The loan title insurance policy remains in effect for as long as the specific mortgage remains a lien on the property. When you refinance, your new lender requires title insurance covering their new mortgage on your property. It provides protection to the lender against events that may have occured since you purchased the property. The new policy, following updated searches, insures the lender only. It does not protect the borrower.
5. How much does Title Insurance Cost?
Title Insurance is a regulated industry and there are set premium fees that must be charged. The rates vary depending on whether it is a refinance or purchase as well as other variables mentioned above.
Your owner title policy is paid by a one time premium at closing. Each time you refinance, your lender will require a new loan policy which requires the payment of a new, but reduced, premium.
6. If I shop around can I find a lower Title Insurance Premium Rate?
Absolutely not. Title Insurance premium rates are regulated and may not vary from one company to the next.
7. Do I need an attorney to close my loan?
No. However, we strongly recommend it. Anyone with a title insurance license may close loans but they are not allowed by law to give you legal advice. If a defect on the title arises only a lawyer is allowed to advise you. Some bank documents may only be explained by a licensed attorney. It is in your best interest to have an attorney working on your behalf.
8. Will it cost more to have my loan closed with an attorney?
Not necessarily. The amount charged by many attorneys to close and disburse a refinance is the same as the minimum charge mandated by the NJ Department of Insurance for a title insurance company or agent to close and disburse a refinance.