Title Insurance in New Jersey: Do You Really Need It?

Title Insurance in New Jersey: Do You Really Need It?

In nearly every residential and commercial real estate closing in New Jersey, the question of title insurance arises. Buyers often ask whether they truly need it, particularly when they believe the seller has owned the property without issue for many years. The answer is that title insurance is not optional in any meaningful sense. It is a critical protection against risks that buyers cannot identify on their own.

Title insurance protects the buyer and the lender against defects in the chain of ownership. These defects can include unpaid taxes, old mortgages that were never properly discharged, forged signatures in prior deeds, errors in the recording of documents, boundary disputes, and even claims by unknown heirs. These issues may not appear in a routine title search, and they can surface long after the closing. Without title insurance, the buyer bears the cost of resolving them, which can be devastating.

In practice, lenders will not fund a mortgage without a title insurance policy. For buyers paying cash, there is no such requirement, but the risk of proceeding without coverage is significant. I have handled matters where a buyer believed title was clean, only to discover years later that a lien had been recorded against the property before the seller’s ownership. Defending against that lien without insurance required litigation, and the costs far exceeded the premium that would have been paid for the policy.

One of the unique features of title insurance is that it is purchased once, at closing, and provides coverage for as long as the buyer owns the property. Unlike homeowner’s insurance or auto insurance, there are no recurring premiums. The one-time cost is a fraction of what a buyer could face if a defect arises without coverage.

Some buyers confuse title insurance with a title search. The search is the process of examining public records for potential defects. The insurance policy is what protects the buyer when the search fails to uncover a problem. A search without insurance is like a medical test without treatment. The test may find nothing, but if it misses something serious, the buyer has no remedy.

From a legal perspective, declining title insurance is one of the most dangerous cost-cutting measures a buyer can make. In more than two decades of handling real estate transactions, I have never advised a client to close without it. The risks are simply too great, and the protection too valuable, for any prudent buyer to decline.

For more information about your legal rights or to schedule a consultation, please contact the Law Offices of Peter J. Lamont at www.pjlesq.com, call 201-904-2211, or email info@pjlesq.com.

Contact us today to discuss your business or legal matter. Put our 20+ years of legal experience to work for you.

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For detailed insights and legal assistance on topics discussed in this post, including litigation, contact the Law Offices of Peter J. Lamont at our Bergen County Office. We're here to answer your questions and provide legal advice. Contact us at (201) 904-2211 or email us at  info@pjlesq.com.

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About Peter J. Lamont, Esq.

Peter J. Lamont is a nationally recognized attorney with significant experience in business, contract, litigation, and real estate law. With over two decades of legal practice, he has represented a wide array of businesses, including large international corporations. Peter is known for his practical legal and business advice, prioritizing efficient and cost-effective solutions for his clients.

Peter has an Avvo 10.0 Rating and has been acknowledged as one of America's Most Honored Lawyers since 2011. 201 Magazine and Lawyers of Distinction have also recognized him for being one of the top business and litigation attorneys in New Jersey. His commitment to his clients and the legal community is further evidenced by his active role as a speaker, lecturer, and published author in various legal and business publications.

As the founder of the Law Offices of Peter J. Lamont, Peter brings his Wall Street experience and client-focused approach to New Jersey, offering personalized legal services that align with each client's unique needs and goals​.

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