James purchases a home in Ocean County and obtains title insurance at closing. His title insurance policy insures against defects in title that would have been discoverable through a proper search of the public records. Two years after closing, James discovers that a previous owner had forged a deed in the chain of title decades earlier, creating a defect that was not discoverable from the recorded records. Under New Jersey law, which statement most accurately describes James's protection?
Correct Answer
A) James is protected by his title insurance policy, which covers off-record risks such as forgery that would not be discoverable through a public records search
Title insurance in New Jersey protects against both on-record defects (discoverable through a title search) and certain off-record risks, including forgery, fraud in the chain of title, and other defects that would not be apparent from examining the public records. A forged deed is a classic off-record risk covered by a standard owner's title insurance policy. James's title insurance policy provides him with protection against this type of hidden defect, which is precisely why title insurance exists beyond the protections offered by the recording act alone.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Tenancy in common is a form of co-ownership in which two or more persons hold separate, undivided interests in property without the right of survivorship. Each owner can hold unequal shares and can independently transfer their interest.
A freehold estate conveys ownership rights, while a leasehold estate grants the right to possess and use property for a specific period without ownership.
Riparian rights concern properties bordering flowing bodies of water (rivers, streams), while littoral rights concern properties bordering non-flowing bodies of water (lakes, oceans).
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