Title Searches and Title Insurance in Plain English
The short answer: A title search checks the public records to confirm who owns a property and what claims, such as unpaid mortgages, liens, judgments or easements, affect it. Title insurance is a policy, paid for once at closing, that protects against covered title problems from before the purchase. Lenders usually require a lender's policy. An owner's policy, which protects the buyer, is generally optional (CFPB).
Here's how the pieces fit together in a New Jersey sale, and where agents come in.
What is "title," and what can go wrong with it?
Title is legal ownership. The deed is the document that transfers it. Problems come from the past: a previous owner's unpaid taxes, or a contractor who says they weren't paid for work done before the sale, can become claims against the home (CFPB).
New Jersey's homebuyer guide from the Department of Banking and Insurance says most purchase agreements are conditioned on a title search covering liens and judgments, including whether the seller is in bankruptcy. If someone else has a claim, the seller's title isn't "clear," and the guide says the buyer isn't obligated to finish the purchase. It tells buyers that their real estate attorney can evaluate the title and advise them (NJ DOBI, Everything You Wanted to Know about Buying a Home). Your actual rights depend on the contract, so treat that as general guidance.
What does a title search look for?
A searcher works back through recorded documents tied to the property. Typical findings:
| Finding | Example | Usual fix |
|---|---|---|
| Open mortgage | The seller's loan | Paid off from the seller's proceeds at closing |
| Lien or judgment | Tax lien, contractor's lien, court judgment | Paid, released or bonded before closing |
| Easement | Utility line, shared driveway | Disclosed; usually stays with the land |
| Restriction | Deed or HOA limits on use | Disclosed; buyer decides if acceptable |
| Survey issue | Fence or shed over the line | Resolved, or listed as an exception |
| Ownership gap | A missing heir, or a probate issue | Corrective deed or court process |
The PSI exam outline lists "potential title problems and resolutions" and "marketable and insurable title" under Transfer of Title (PSI bulletin). Marketable title is title a reasonable buyer would accept without fear of a lawsuit. Insurable title is title a company is willing to insure, sometimes with exceptions.
Does New Jersey law require a search before a policy?
Yes. Under the state's Title Insurance Act, no title policy may be written until the insurer has had a reasonable examination of the title conducted and made a determination of insurability under sound underwriting practices. Evidence of that work is kept for at least 15 years (N.J.S.A. 17:46B-9).
What is a title commitment?
Before closing, the title company issues a commitment: its promise to insure, subject to listed requirements (such as paying off the old mortgage) and exceptions (things the policy won't cover). New Jersey adds a consumer notice. Unless the applicant is a NJ attorney representing the buyer, or the insured is a government body, the title company must mail the proposed insured a notice, at least 5 days before closing. The notice says the commitment may contain conditions, exceptions and limitations, and that the buyer may review it with an attorney of their choosing before title transfers (N.J.S.A. 17:46B-9).
The exceptions are where to look first. Anything listed there isn't covered.
What's the difference between an owner's policy and a lender's policy?
| Lender's policy | Owner's policy | |
|---|---|---|
| Protects | The lender's loan | The buyer's ownership and equity |
| Required? | Usually, to get a mortgage | Generally optional |
| Coverage | Pays the lender the remaining loan principal on a covered, unresolved problem | Typically up to the full purchase price |
| On the Loan Estimate | Listed as a title cost | Marked "optional" when the lender doesn't require it |
Sources: CFPB, lender's title insurance; U.S. Treasury; CFPB TRID title factsheet.
The key point for buyers: a lender's policy doesn't protect the owner's equity. If someone brings a claim against the home, the owner is the first one responsible (CFPB). Both policies are paid with a one-time premium at closing (U.S. Treasury).
Who sets the price in New Jersey?
Every title insurer must file its schedule of fees and rating manuals with the Commissioner of Banking and Insurance, either on its own or through a licensed rating organization. It may not charge except under the rates in effect for it (N.J.S.A. 17:46B-42). The CFPB says you can usually shop for a title provider separately from your mortgage, and buying both policies from the same provider usually costs less in total (CFPB).
Can the seller pick the buyer's title company?
Not as a condition of the sale when the buyer uses a federally related mortgage loan. Federal law bars the seller from requiring, directly or indirectly, that the buyer purchase title insurance from a particular company. A seller who does is liable to the buyer for three times the title insurance charges (12 U.S.C. 2608).
Why should agents understand title?
Title touches the contract, the timeline and your client's money. Title problems can delay a closing, a contract's title provisions decide what happens if title isn't clear, and the referral rules for settlement services apply to you. The glossary defines other closing terms, contingencies explains the other conditions buyers rely on, and the attorney review guide covers the first days after signing. Kickback rules are in the financing exam guide.
Title and closing are part of the 75 hours of pre-licensing education every NJ agent completes. Business Elementary's 75-hour pre-licensing course page explains that first step.
Sources
- CFPB, What is owner's title insurance?: https://www.consumerfinance.gov/ask-cfpb/what-is-owners-title-insurance-en-164/ ; What is lender's title insurance?: https://www.consumerfinance.gov/ask-cfpb/what-is-lenders-title-insurance-en-163/
- CFPB, TRID Title Insurance Disclosures factsheet: https://files.consumerfinance.gov/f/documents/cfpb_tila-respa_title-insurance-disclosures-factsheet.pdf
- U.S. Department of the Treasury, Exploring Title Insurance: https://home.treasury.gov/news/featured-stories/exploring-title-insurance-consumer-protection-and-opportunities-for-potential-reforms
- N.J.S.A. 17:46B-9 and 17:46B-42 (via Justia): https://law.justia.com/codes/new-jersey/title-17/section-17-46b-9/ ; https://law.justia.com/codes/new-jersey/title-17/section-17-46b-42/
- 12 U.S.C. 2608 (RESPA section 9, via Cornell LII): https://www.law.cornell.edu/uscode/text/12/2608
- NJ DOBI, Everything You Wanted to Know about Buying a Home: https://nj.gov/dobi/division_consumers/pdf/buyingahome.pdf
- PSI New Jersey Candidate Information Bulletin (updated 2/1/2026): https://test-takers.psiexams.com/api/content/bulletin/1667
Last reviewed: October 28, 2026
Related guides:
- Wondering what the title search can't see? Property Surveys in NJ Home Purchases explains what a survey shows and why buyers order one.
Frequently Asked Questions
Do buyers have to buy owner's title insurance?
Lenders generally require only the lender's policy. The CFPB describes owner's coverage as typically optional for the consumer, and the Loan Estimate labels it "optional" when the lender doesn't require it (CFPB TRID factsheet).
Do you pay for title insurance every ye
No. It's a one-time premium paid at closing or refinancing (U.S. Treasury).
Does a refinance need new title insurance?
The lender generally requires a new lender's policy, and many insurers offer lower "reissue" rates for it. Owners may also choose a new owner's policy, for example if the home's value has risen a lot (U.S. Treasury).
Can title companies in NJ charge whatever they want?
No. They must charge according to rate filings in effect with the Department of Banking and Insurance (N.J.S.A. 17:46B-42).
Is title on the NJ real estate exam?
Yes. "Title insurance policies and title searches" is in the Transfer of Title section (Sales 6%) (PSI bulletin).