As seen in the most recent “Home Schooled,” one of the most important parts in purchasing a home is obtaining title insurance. Title insurance is an insurance policy that covers a prospective homeowner from any judgments or liens on a property when they a purchase a home. In New Jersey, purchasing title insurance is required.
As explained by Jim Craft of Foundation Title, a title company will perform a “title search” on a property. The title search will reveal any judgments on the property, liens on the property, or boundary disputes between adjoining homeowners. A title search can also reveal if multiple people own a property, but only one of those persons are actually trying to sell a property, thereby undermining the other owners. In short, a title search can reveal certain problems with a property you are trying to purchase or any money that is owed with regard to the property. Thereafter, any problems or issues that are revealed must be “cleared” or rectified before a closing can occur.
The objective is obtain “free and clear” title to a property. In simple terms, this means purchasing a property that is “free and clear” of any judgments, liens, or claims by previous owners. Should you fail to obtain title “free to clear,” this can lead to a number of problems and expenses down the road. As a result, conducting a title search and obtaining title insurance is an integral part of the home-buying process.
Next week, please be sure to tune in to the next Tip at Ten in the next version of “Home Schooled.” Also, please continue to check this blog periodically for vital information about the home inspection process.