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What is at risk during a New Jersey title dispute?

On Behalf of | May 20, 2024 | Real Estate Transactions

When someone buys real estate in New Jersey, what they technically purchase is the title to the property. A home’s title indicates who currently has ownership rights and control over the property. There can be title defects that impact someone’s use and ownership of a property, such as easements or mechanic’s liens if someone does not pay for repairs performed on a home.

Minor title issues may be easy to resolve by negotiating with the other party, paying a debt or going to court to initiate quiet title proceedings. Other title issues are more significant and may involve an active dispute with another party. Title disputes sometimes follow real estate transactions that occur after a divorce or as part of probate proceedings.

Title disputes can also arise because of forged deeds, fraudulent conduct and boundary issues. Those buying real estate often acquired title insurance to protect against the losses possible in a title dispute. What harm could conflict about the title of a property potentially cause?

Title disputes are expensive

A title dispute that goes beyond an outdated easement or lien that shouldn’t be on record anymore may require litigation to resolve. The cost of securing legal representation and taking a title dispute to trial can add up to tens of thousands of dollars. Typically, title insurance helps pay for those costs when a homeowner faces litigation brought by a party claiming to have an interest in the property. Without a policy or when a title dispute falls outside of that policy, homeowners may have to spend thousands of dollars to protect their interest in the home where they live.

Title disputes can lead to property loss

The worst possible outcome of a title dispute leads to someone losing their interest in the property. A judge could hear the case and determine that the claimant raising the dispute actually has a valid interest in the property. In some cases, those who have invested significant amounts of money purchasing and then maintaining a property could lose their investments when an outside party brings a title claim in New Jersey civil court. Title insurance can also potentially help reimburse those who lose their interest in a property due to a successful claim brought by an outside party.

Responding assertively to a title issue can help someone protect their interest in a property. Homeowners who understand the risks of title disputes may understand why lenders typically require title insurance and why many professionals recommend acquiring it even when conducting a cash purchase.