Title Insurance: Why You Need It
Many buyers are confused about title insurance. Most think it is another thing cooked up by the banks to drive up the cost of real estate transfer. The truth is that while it is expensive, it can be critical, especially in Hoboken.
What is title insurance anyway?
From our friends at Wikipedia… Title insurance in the United States is indemnity insurance against financial loss from defects in title to real property and from the invalidity or unenforceability of mortgage liens. Title insurance is principally a product developed and sold in the United States as a result of the comparative deficiency of the US land records laws. It is meant to protect an owner’s or a lender’s financial interest in real property against loss due to title defects, liens or other matters. It will defend against a lawsuit attacking the title as it is insured, or reimburse the insured for the actual monetary loss incurred, up to the dollar amount of insurance provided by the policy. The first title insurance company, the Law Property Assurance and Trust Society, was formed in Pennsylvania in 1853. The vast majority of title insurance policies are written on land within the U.S.
Typically the real property interests insured are fee simple ownership or a mortgage. However, title insurance can be purchased to insure any interest in real property, including an easement, lease or life estate. Just as lenders require fire insurance and other types of insurance coverage to protect their investment, nearly all institutional lenders also require title insurance to protect their interest in the collateral of loans secured by real estate. Some mortgage lenders, especially non-institutional lenders, may not require title insurance.
What is important is that title insurance will not protect your property as much as it protects your investment.
Why do I need it if the mortgage company also does a title search?
The title insurance is a backstop in case the title search misses something. Is it possible? absolutely. Have you ever been to the county records department in Journal Square. It’s filled with a bunch of “moles” locked in this windowless room, hacking away on terminals looking for liens against properties. It’s like a little fraternity of politically incorrect partially shaven, partially bathed glorified fast food workers. I am sure their work is impeccable, even if their hygiene isn’t.
Title Problems in Hoboken.
Two words for you. Riparian rights. Riparian refers to water. ( I learned that while studying for my real estate license. Never thought I would need it since I wasn’t planning on selling lake front homes…) In case some readers are not familiar, Hoboken used to be all streams and canals. Then the land was filled in, factories built, factories torn down, homes built, homes torn down apartment building built. Ahh but what about those riparian rights? Seems as though the State of New Jersey has land rights to the riverbeds. Rights do not just go away even when the river runs dry, factories are built, factories are torn down, homes are built, homes are torn down and condo buildings are built. So The State of New Jersey wants it’s pound of flesh a century and a half later. Title companies are scrambling….What if they are out of business? I don’t know. Hire a lawyer I guess. I do know the state has claims and will be looking for some way to pay for all of those excess state workers.
What does this mean to the Hoboken Homeowner?
Probably not a big deal unless you are selling. Then what? Depends on the buyer’s mortgage company and the results of a title search. Banks are looking for any excuse not to lend. Do you think a cloud on the title based on a centuries old claim by the state government might be one of them? However, if your title company is working to settle with Mr. Christie then maybe you get to sell and move to Montclair or some higher elevation.
After two days in the desert sun
my skin began to turn red.
After three days in the desert sun
I was looking at a river bed.
And the story it told of a river that flowed
made me sad to think it was dead.
Title Insurance: Why You Need It