The New Jersey Supreme Court recently handed down a decision that should be of interest to title insurance companies, lenders, developers and other property owners. In Henry J. Shotmeyer, et al. v. New Jersey Realty Title Insurance Company, the Court interpreted the effect of a voluntary property transfer on title insurance coverage. The Court examined the circumstances of the transfer and concluded that, according to the policy, the transfer of the property from one company to another, both owned by the same individuals, cancelled the title insurance policy.

The decision highlights the fact that title insurance policies are contracts. Thus, coverage is limited to the terms of the policy. All interested parties should be aware of possible effects of property transfers on title coverage when issuing or securing policies One should not assume that when property is transferred between related entities that the title policy is also transferred, even if the parties involved are identical.

FACTUAL BACKGROUND

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