In a real estate transaction, the title company is paid to ensure that the seller has actual ownership of the property being sold and that there are no issues with the title being passed. They do this by doing a thorough search through county records to make sure that there are no missing links in the chain of deeds, so that, down the line, a stranger does not knock on a buyer’s door and claim ownership of the home. They also provide a judgment search against all parties involved in a transaction to make sure that there are no outstanding liens or mortgages against the property. These are all provided in advance of closing so that the seller has an opportunity to correct them or pay them off so that the buyer can take the property free and clear of any liens.
A title company may also provide a service called title insurance which insures the homeowner or their lender against any damages they suffer if there is a claim against the title of the property. This is often required by a lender. The premium is a one-time payment made at the time of closing and provides peace of mind until the property is sold if it is an owner’s policy, or for the life of the loan if it is a lender’s policy. This is usually required by the lender if a mortgage is necessary to purchase property.
Title insurance is a regulated industry in the state of New Jersey, so the prices for title insurance are largely the same. Obtaining a reliable title report without delays is important to any successful real estate transaction. The title company provides an integral function in the transaction, even if the buyer and the seller do not have direct contact with them.