Escrow & Title
A NJ property sold at a foreclosure sale requires the purchaser to be aware that:
AAll liens are automatically extinguished by the sale
BNot all liens may be extinguished—the foreclosure only eliminates liens junior to the foreclosing lender's lien; senior liens survive✓ Correct
CTitle insurance is not available for foreclosure purchases
DThe buyer automatically receives an owner's title policy
Explanation
A foreclosure sale only eliminates liens junior to the foreclosing lender's mortgage. Senior liens (such as prior mortgages or property tax liens) survive the foreclosure and encumber title received by the foreclosure purchaser.
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Key Terms to Know
Title Insurance
Insurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Chain of TitleThe sequential record of all transfers of ownership for a piece of property from the original patent holder to the present owner.
Right of First RefusalA contractual right giving a party the opportunity to match any offer received before the owner can accept it from a third party.
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