New Jersey Real Estate Practices
- Attorney Involvement
- Cancellation/Commitment Fee
- Certificate of Release (of Mortgage)
- Joinder of Spouses
- Mortgage Tax
- Payment Customs
- Policy Countersignatures
- Real Estate Taxes
- Search and Examination Fees
- Search Requirements
- Security Instruments (Deed of Trust vs. Mortgage)
- Standard Exceptions and Requirements
- State-specific Policy Variations
- Title Insurance Form and Filing Regulations
- Transfer Taxes
- Withholding Taxes
- Witness Requirements
Please describe any requirements under applicable state law for attorney, abstractor or other special professional involvement, for example, in the search, examination, opinion of title, signing, closing, disbursement, recording, preparation of documents, and/or policy-issuance.
You do not need to be an attorney to conduct a search, perform an examination of title or conduct settlement functions. Title agents are however prohibited from the unauthorized practice of law and non attorneys may not prepare deeds.
N.J.S.A. 17:46B-13. Prohibition against the practice of law: No title insurance company and no title insurance agent shall engage in the practice of law or render legal services, legal advice or legal opinions.
Does your state permit or require a cancellation fee or commitment fee upon cancellation?
Yes. N.J. Rate Manual Section 3.1.6: When an application for title insurance is canceled prior to closing or when the proposed transaction is not consummated, the cancellation fee shall be the examination charge plus other charges which have been incurred.
Certificate of Release (of Mortgage)
If anyone other than the lender (such as a title agent, settlement agent, underwriter or attorney) has the authority to release the security instrument, please describe.
N.J.S.A. 46:18-11.7 allows for a NJ attorney or title insurance producer, who has made payment in full on a mortgage, to submit for recording a discharge executed as attorney in fact for the owner or holder of the mortgage provided that it is accompanied by an affidavit setting forth the circumstances of payment. The form of affidavit is provided in the statute.
Please describe the kinds of deeds that are customary for commercial and residential transactions. Please describe the kinds of deeds that are generally not insurable.
A bargain and sale deed with covenants against grantor’s acts is what is typically used for all transactions. All deeds in recordable form are insurable; however, a deed for nominal consideration in the immediate chain must be approved by underwriting.
Joinder of Spouses
If a non-title holding spouse is required to join in the execution of a deed or a security instrument, please describe. Any analogous rights, such as those in a civil union or equivalent, should also be addressed.
Non titled spouse must join in the deed or mortgage if the PQ is the principal marital residence. Similar rights would apply to a same sex couple joined in a civil union. See: N.J.S.A. 3B:28-3: During life every married individual shall be entitled to joint possession with his spouse of any real property which they occupy jointly as their principal matrimonial residence and to which neither dower nor curtesy applies. One who acquires an estate or interest in real property from an individual whose spouse is entitled to joint possession thereof does so subject to such right of possession, unless such right of possession has been released, extinguished or subordinated by such spouse or has been terminated by order or judgment of a court of competent jurisdiction or otherwise.
Is there a mortgage tax in your state? If yes, is it uniform across the state or does it vary? If it is uniform, please describe.
There is no mortgage tax in NJ.
Who customarily pays for:
(a) Owner’s Policy?
(b) Transfer Tax & Recording Fee?
(c) Survey Charges?
(d) Closing/Settlement Fees?
Buyer typically pays for owners policy, survey and settlement. Seller pays for the realty transfer and recording fees. However the parties may agree to any alternate arrangements.
Please describe any statutory or regulatory requirements for countersignatures in order to issue the policy (for example, residency requirements).
N.J.S.A. 11:17A-1.4: Policies must be signed by a licensed producer.
Real Estate Taxes
Please describe the general tax year, due dates, and delinquency dates, including lien dates and payment cycle.
Taxes are due quarterly on the following dates:
First Quarter: February 1.
Second Quarter: May 1.
Third Quarter: August 1.
Fourth Quarter: November 1.
Search and Examination Fees
Is it permissible and/or customary to charge a separate search and/or examination fee, and under what circumstances? If your jurisdiction is all-inclusive, please state that.
Section 5.1 of the NJ Rate manual provides: When the insurer or its agent examines the title to real estate and issues a commitment to insure, the charge for such examination involving a single chain of title shall be $100.00. The examination charge includes only the county search.
Is there a minimum period of time for a title search required: (a) by state law, (b) pursuant to marketable record title acts, or (c) by any other applicable title examination standards (e.g., state bar association)? Please respond to each category. If a minimum search period exists for any category, please state it.
NJ does not have statutory requirements. Practice is to follow Stewart Guidelines. See MU000018.
Absent back title on owners policies a full search should be performed. Loan policies with specific schedule B exceptions no less than 20 years. Short form loan policies: 2 deeds back if no back title. Commercial files should have a full search of 60 years.
Security Instruments (Deed of Trust vs. Mortgage)
Please describe the customary and permissible form(s) of security instruments used in your state.
Who can be listed as the trustee on the Deed of Trust (e.g., residency and/or natural person requirements, etc.)? Can an underwriter or title agent be designated as the trustee, and, if so, is it customary?
Mortgages are customarily used. Deeds of trust are not customarily used in NJ.
Standard Exceptions and Requirements
Please identify the standard exceptions and requirements that are customarily used in your state.
Standard NJ BI Requirements:
The following requirements must be met:
a) Payment of the full consideration to, or for the account of, the grantors or mortgagors.
b) Pay us the premiums, fees and charges for the policies.
c) Document(s) satisfactory to us creating the interest in the land and/or mortgage insured must be signed, delivered and recorded:
1. Deed made by the vested owner(s) set forth in Schedule A Item 2 to the proposed loan insured.
2. Mortgage made by the vested owner(s) set forth in Schedule A Item 2 to the proposed loan insured.
3. Notice of Settlement as to the above transactions must be filed ten (10) days prior to closing of title.
d) You must tell us in writing the name of anyone not referred to in this Commitment who will get an interest in the land or who will make a loan on the land. We may then raise additional requirements or exceptions.
e) Disposition of judgments, bankruptcies, and other matters shown a search of the New Jersey Superior Court and U.S. District Court:
New Jersey Superior court and United States District Court Search dated *discloses returns vs. *
Said judgment appears to be against the present or former owner(s) and must be satisfied of record at or prior to closing.
f) Satisfaction and discharge of record of the following MORTGAGES:
The above mortgage is a credit line mortgage. The credit line secured by said mortgage must be closed PRIOR to closing of title and proof obtained that no further draws may be made on the account after the date of the pay off letter verifying the balance to be satisfied at closing.
g) A Standard form Mortgagor's Affidavit of Title is to be executed at the time of closing and is to be provided to this Company.
h) Subject to receipt and review of a tideland and grant search. Company reserves the right to add exceptions as may be warranted upon examination of same.
I) Subject to a continuation search prior to closing of title.
Standard NJ Schedule BII Exceptions:
1. Defects, liens encumbrances, adverse claims or other matters, if any, created, first appearing in the public records or attaching subsequent to the effective date hereof but prior to the date the proposed insured acquires for value of record the estate or interest or mortgage thereon covered by this Commitment.
2. Rights or claims of parties in possession of the land not shown by the public record.
3. Easements, or claims of easements, not shown by the public record.
4. Encroachments, overlaps, boundary line disputes, or other matters which would be disclosed by an accurate survey and inspection of the premises.
5. Any lien or right to a lien on your title, arising now or later, for labor and material not shown by the public record.
6. Minerals of whatsoever kind, subsurface and surface substances, including but not limited to coal, lignite, oil, gas, uranium, clay, rock, sand and gravel in, on, under and that may be produced from the Land, together with all rights, privileges, and immunities relating thereto, whether or not appearing in the Public Records or listed in Schedule B. The Company makes no representation as to the present ownership of any such interests. There may be leases, grants, exceptions or reservations of interests that are not listed
7. Subject to taxes, charges and assessments, if any:
a) Lien for 2012 taxes. Taxes unpaid for ____ quarters (penalty and interest). Subsequent taxes not yet due and payable.
See attached tax searches.
b) Municipal assessment search shows no pending unconfirmed assessments
See attached search.
c) Liability, if any, for additional assessment for taxes in connection with new construction pursuant to N.J.S.A. 54:4-63.1 et seq. Affidavit of title must disclose any new construction or improvements to the premises, if any, within the last twelve months.
State-specific Policy Variations
If there are state-specific changes to the provisions in the ALTA policies (e.g., Arbitration, Minerals), please describe.
Title Insurance Form and Filing Regulations
Please describe the form and/or rate filing requirements, if any, related to policies and endorsements. Please describe any applicable rating bureau.
See N.J.S.A. 17:46B-42. Rate filing:
a. Every title insurance company shall file with the commissioner its schedule of fees, every manual of classifications, rules and plans pertaining thereto, and every modification of any of the foregoing which it proposes to use in this State. Every such filing shall state the proposed effective date thereof, and shall indicate the character and extent of the coverage contemplated.
b. A title insurance company may satisfy its obligations to make such filings by becoming a member of, or a subscriber to, a licensed title insurance rating organization which makes such filings, and by authorizing the commissioner to accept such filings on its behalf.
c. The commissioner shall make such review of the filing as may be necessary to carry out the provisions of this act.
d. Beginning 90 days after the effective date of this act, no title insurance company or agent of a title insurance company shall charge any fee for any policy or contract of title insurance except in accordance with filings or rates which are in effect for said title insurance company as provided in this act.
e. The commissioner shall not require the filing of rates or fees for reinsurance contracts or agreements, or policies of excess coinsurance.
Is there a transfer tax in your state? If yes, is it uniform across the state or does it vary? If it is uniform, please describe.
NJ Realty Transfer Fees:
Where consideration is less than $350,000:
$2.00 per $500 or fraction thereof of consideration up to $150,000
$3.35 per $500 or fraction thereof of consideration in excess of $150,000 but not in excess of $200,000
$3.90 per $500 or fraction thereof of consideration in excess of $200,000 but not in excess of $350,000
Where Consideration is GREATER than $350,000:
$2.90 per $500 or fraction thereof of consideration up to $150,000
$4.25 per $500 or fraction thereof of consideration in excess of $150,000 but not in excess of $200,000
$4.80 per $500 or fraction thereof of consideration in excess of $200,000 but not in excess of $550,000
$5.30 per $500 or fraction thereof of consideration in excess of $550,000 but not in excess of $850,000
$5.80 per $500 or fraction thereof of consideration in excess of $850,000 but not in excess of $1,000,000
$6.05 per $500 or fraction thereof of consideration in excess of $1,000,000
Reduced fees for Senior Citizens, Blind Persons, Disabled Persons or property which is low or moderate income:
Consideration of less than $350,000:
$ .50 per $500 or fraction thereof of consideration up to $150,000
$1.25 per $500 or fraction thereof of consideration over $150,000 but not in excess of $350,000
Consideration Greater than $350,000:
$1.40 per $500 or fraction thereof of consideration not in excess of $150,000
$2.15 per $500 or fraction thereof of consideration in excess of $150,000 but not in excess of $550,000
$2.65 per $500 or fraction thereof of consideration in excess of $550,000 but not in excess of $850,000
$3.15 per $500 or fraction thereof of consideration in excess of $850,000 but not in excess of $1,000,000
$3.40 per $500 or fraction thereof of consideration in excess of $1,000,000
There is also due from the buyer 1% of the total consideration for all residential transfers and commercial transactions involving class 4A property where the consideration is in excess of $1,000,000.
Is usury coverage available?
Usury coverage is not available in NJ.
What are your state’s requirements, if any, with regard to withholding proceeds from a sale, similar to but not including FIRPTA?
Under the NJ Gross Income Tax Act (N.J.S.A. 54A:1-1) non-resident individuals, estates or trusts must pay estimated income taxes at the time of the recording of a deed. Payment is based on the gain earned by the seller multiplied by the highest tax rate (8.97 percent). In no event can the amount withheld be less than 2 percent of the consideration on the deed. Payment is made to the State of NJ Division of Taxation and is submitted to the clerk at the time of recording.
Are witnesses required on a deed or security instrument? If so, please describe.
Witnesses are not required although it is customary for the party taking the acknowledgment to act as a witness as well.