What money can buy, a defective title can take away.
You should know that not all title companies are created equal. Every real estate purchase involves the filing/recording of the title or deed with the local municipality. Once this is submitted and registered, the property ownership is deeded to the purchaser.
What Began 150 Years Ago
Title insurance was not always available. Before it was created in the 1800’s, buyers in real estate transactions bore sole responsibility for ensuring the validity of the land title held by the seller. If the title was later deemed invalid or found to be fraudulent, the buyer lost his investment.
It all stemmed back to a case in 1868, when the case of Watson v. Muirhead was litigated by the Pennsylvania Supreme Court. The plaintiff, Watson, lost his investment in a real estate transaction as the result of a prior lien on the property. Defendant Muirhead, the conveyancer, had discovered the lien prior to the sale but told Watson the title was clear after his lawyer had (erroneously) determined that the lien was not valid.
The role of the title company is to ensure that the property title is clean [not defective] and legitimate. Before the title is then transferred, it is determined that the individual is the rightful owner of both the land and its buildings.
When this country was primarily frontier, land was claimed simply by an individual pitching a sign on the parcel stating, “This land belongs to John Jones.” Those stakeholders were called homesteaders.
Today, before the title can be transferred, it must be “searched” to determine, through a thorough examination of the legal records, that the property is indeed owned by the party looking to sell it.
When property records are “scoured” by title searchers, they do so looking to find possible errors that might have been missed by the previous owners or even liens or judgments made against the property.
Oftentimes, properties are the subject of an estate dispute among relatives, and in some cases this may involve the selling of the property co-owned by others without their knowledge.
Bankruptcies and divorces are more common today than they were years ago, and so such liens would appear on the title record.
If you have any questions about this information or title insurance, please contact Ralph Aponte: 732.914.1400.
Counsellors Title Agency, www.counsellorstitle.net, founded in 1996, is one of New Jersey’s most respected title agencies, serving all 21 New Jersey counties with title insurance, clearing title, escrow, tidelands searches, and closing and settlement services for commercial or industrial properties, waterfront properties and marinas, condominiums, townhouses or residential single family homes. Counsellors Title also features its own Attorney Settlement Assistance Program™ [ASAP], which is an individual resource customized to fit the needs specifically of real estate attorneys, including, Documentation, Preparation, Disbursement of Funds, Attendance at Closing, HUD Preparation or Post-Closing Matters.