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"Title and Survey"Title and Survey contingencies are important because the seller must have clear title to convey to the buyer at the closing. Otherwise, without clear title the purchase is worthless to the buyer. The first step in satisfying this contingency is ordering a title search. This is typically the buyers' New Jersey Real Estate attorney's function. The most common title issues that come up in title searches are as follows: Undischarged Mortgages This issue is addressed by ordering a payoff statement from the mortgage lender so the loan may be paid off from the proceeds of the sale on the day of closing. This issue becomes problematic, however, when a mortgage lien is still showing on property - in Plainsboro Township, for instance - after it was already paid off. In that case it becomes the responsibility of the sellers' attorney to obtain a discharge of mortgage directly from the lender. This is a time consuming process that may delay a closing. Possible resolution to avoid such a delay is to close title with an escrow to be held pending receipt and filing of the discharge of mortgage. In determining an escrow amount the title company should be consulted. Judgments Judgments are decisions of a court at a conclusion of a lawsuit which range from a few dollars to millions or even billions of dollars. Judgments are liens on personal and real property and as such create a defect in title on all properties owned by individuals who have Judgments entered against them. Judgments stay with the property so once property is sold by an individual who has a Judgment entered against him or her the judgment continues to serve as a lien on that property even though it has a new owner. This issue is especially difficult if the judgment is against a prior owner in the chain of title as opposed to being against the sellers. There are several ways to address Judgments. First, the judgments may be paid off at or before closing so that a warrant of satisfaction which erases the Judgment may be obtained. Second, sellers' title insurance policy may eliminate this defect in title or insure against it. Third, sellers' prior owners' affidavit of title may eliminate this defect in title. Judgments automatically expire after twenty years. Public Liens Public liens always have priority, even over secure private liens like mortgages. An example of a public lien is unpaid property taxes to a municipality like East Brunswick, for example. The only way to address this title defect is to pay off the lien with all interest and costs. If seller is unable to payoff such a lien because not enough proceeds from sale are available, for example, buyers should not proceed with the transaction unless they are willing to accept the financial burden upon themselves. If sellers breach the contract pursuant to the title and survey contingencies, then the language in the contract should be consulted. This is why the title and survey contingencies and how they should be governed under the contract is one of the most important issues that New Jersey lawyers practicing Real Estate must raise and address during the attorney review period. Typically however in such an event the seller returns the buyers deposit and reimburses the buyer for their out of pocket costs such as mortgage application fee, appraisal, title costs, attorney fees, etc... unless a cap was placed on such reimbursement during attorney review. An important part of the title and survey contingencies is the survey of the property that may reveal issues with boundary lines especially as to decks, pools, fences and driveways. Ordering the survey is also the function of the buyers' NJ Real Estate attorney. Such problems with boundary lines that a survey may reveal also cause title to be defective. Since title defects are inherited by the buyers it is important to address these issues prior to closing.
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