NJ’s Title insurance protects property owners and lenders against losses due to disputes about ownership and title defects not found in a search of the public records. Title Protection in NJ also protects property owners against claimants that are not listed in the policy. This includes forged documents and improper deeds as well as undisclosed heirs.
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Title insurance doesn't cover defects, but it covers losses due to other title defects than those excluded. The title company must defend the policyholder against any claims against the owner of the land. The cost of a title insurance policy is usually paid with a one-time premium at the closing of a loan.
There are two types of title insurance.
To protect the mortgage company's interest in the property, the first type of title insurance is the mortgage policy or lender's. The lender's policy covers the outstanding loan amount at the time of a claim being paid. This policy will be in line with the owners to ensure that there are no duplicate claims. Lender's policies are helpful in facilitating the sale of mortgages to secondary markets.
The Owner's policy is the second type of title insurance. The owner's fee policy is title insurance that is issued to the property owner. The seller or buyer may pay for it as per the terms of the sale contract. The owner's policy covers the property title and any liens, encumbrances, or defects, except those that are listed as exceptions.
Borrowers must ensure that they choose a reliable title company to do the title search and issue title coverage. Title insurance is an essential service for all mortgage lenders, even though it is the most costly charge.