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Title Talk Newsletters
Notice of Settlement Act Amended
The Notice of Settlement Act has been revised, as of May 1, 2012, as part of an extensive revision of Title 46 of the New Jersey Statutes (discussed elsewhere in this edition). Although the overall operation and effect of the Notice remains largely unaffected, a number of important changes have been made. The most significant is the extension of the life-span of the Notice from 45 to 60 days. The duration of the Notice may be extended for one additional 60 day period by the filing of a second Notice before the expiration of the original N/S. As a result of the statutory amendments, as of May 1, 2012 the operative portion of the statute will state:
“Any person who claims an interest in or lien upon the real property described in the notice of settlement during the time that a notice of settlement is effective shall be deemed to have acquired the interest or lien with knowledge of the anticipated settlement and shall be subject to the estate or interest created by the deed or mortgage described in the notice of settlement provided the deed or mortgage is recorded within the time that the notice is effective.”
P.L. 2011, c. 217, eff. May 1, 2012, repealing N.J.S.A. 46:16A-1 et seq. and enacting N.J.S.A. 46:26A­11.The wording set forth above is intended to be substantially the same in effect as the earlier statutory version.
The revised statute expressly permits the Notice to be executed by “a party [to the transaction] or the authorized representative of a party or a licensed title insurance producer...”. N.J.S.A. 46:26A-11a. However, (as in the original version of the law) the Notice must be acknowledged if executed by anyone other than an attorney-at-law of New Jersey. N.J.S.A. 46:26A-11b. The form of the Notice is set forth in the statute, and it is substantially similar to that prescribed by the previous statutory version. In addition, the statute now provides for a Discharge of Notice of Settlement, so that the record may be cleared when a transaction fails to close. N.J.S.A. 46:26A-11d.
Many title companies (including the FNTG family) insert a requirement in the title commitment that a notice of settlement must be timely filed in connection with the transaction to be insured. Furthermore, if the closing is delayed, so that it appears that the Notice may expire, a second should be filed before this occurs. Nevertheless, it is important to recall that the Notice of Settlement is not intended to relieve a party from his or her obligations; rather, its purpose is to protect bona fide purchasers and mortgagees from intervening liens or other matters which could not have been disclosed through a reasonable search of the public records. Thus, if a lien or other adverse matter is returned by a pre-closing continuation search, title companies generally require the same be disposed of at closing, regardless of whether it appeared of record before or after the filing of a Notice of Settlement.
FNTG Reinsurance Limits Set for 2012
The self-imposed risk retention limits for the Fidelity National family of title insurers have been established for 2012. If a company is asked to issue a policy in an amount greater than the retention limit in a particular transaction, it will minimize its risk by ceding reinsurance to another insurer. Typically, reinsurance will be ceded to other companies within the corporate family, if possible. The normal aggregate limit is $861,500,000.00, which is the sum of the insurers listed below. This may be broken down as follows (in alphabetical order):
Company
Chicago Title ........................
$414,500,000
Commonwealth Land Title....
200,000,000
Fidelity National Title ...........
247,000,000
Fidelity Family Limit............
.$861,500,000
In other words, a policy in the face amount of $861,
-500,000 can be issued without the need to cede re
-insurance to insurers outside the corporate family.
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