Charles Jones' Blog


Check out our new blog with guest author Joseph A. Grabas, CTP, NTP. The title is “Expedite Title Production with Title Plants” and includes a historical perspective as well as current benefits access to title plants can provide.

Want to expedite your title production? Utilizing a title plant can do
just that.

Robust Database Technology has arrived on the doorstep of the New Jersey
Land Title Industry, after years of wandering through a post-modernist
malaise.  “Paper” Back Title Plants have been replaced by a technology that has been available west of the Mississippi for decades.  In 1664, the Wild West began at the Jersey shoreline and steadily expanded towards the setting sun, but advanced database technology in the title industry has rebounded back from the Pacific Coast and is now a reality in New Jersey today!

Some history…

The concept of a Title Plant was facilitated by the passage of the Land
Ordinance Act of 1785.  Within this Act was a system of surveying originally proposed by Thomas Jefferson, who saw flaws in the metes and bounds system generally in use in the 13 original colonies, which located properties by reference to a “large black birch with three blazes” or “the point in the stream where two men once fought” or “Beginning at a large crustaceous.”  This new system, referred to as the Public Land Survey System (PLSS), instead relied upon a grid consisting of intersections of principal meridians and baselines.

What does this have to do with Title Plants?  It allowed the creation of land record indexes based upon geographic location rather than alphabetic name ownership.  New Jersey’s earliest recording statutes required an alphabetical index in well bound books.  In 1889 when Los Angeles County established one of the earliest title plants in the country, New Jersey had already indexed 225 years of land records chronologically by the names of the owners.

A 1967 publication of The American Land Title Association’s TitleNews included an article titled, “Creation and Maintenance of a Title Plant”. Even then, there was concern over the time it took to clear title, as well as interest in the benefits a private title plant could provide. The article reads in part, “The increasing time consumption in tracing titles through these name indexes gave the impetus to the private plant. Private plants are not mere copies of the public records, but a re-organization of them ... the title searcher in the
private plant quite often looks in but two places - a single tract or location index, and a single name index. Contrast this with the public records where there may be as many as twenty places or more where a search must be made.”[1]

In many western states a certified Title Plant is required by law as a
prerequisite to all title insurance operations. By the late 1960s, just a
couple of decades after the ENIAC computer was put to work calculating
artillery trajectories in WWII,  that same technology was being put to use out West, helping title plants go digital.[2]

Meanwhile, back in New Jersey the majority of title searchers created and used paper “Back Title Plants.”  These
were generally index card-based systems that each contained the “Back Title” to a particular tract of land which usually coincided with a Filed Map, Subdivision or Condominium regime.  So, if a title searcher were to conduct research on a particular lot that appears on one of those maps, by referencing the card, they could get the Grants, Easements and Restrictions affecting the entire subdivision.  Then the search could begin at that point and be brought forward.

Yet there were attempts at creating a Western style title plant in New Jersey.  One example was the Chelsea Title Plant in Atlantic County.  It was an exact copy of all the documents contained in the Atlantic County Clerk’s Office and was updated daily.  The difference being that it was indexed geographically.  According to George Piccola, longtime expert Title Searcher and past frequent user, “the Chelsea Title Plant was close to being a perfect source of title information for a non-computer era.”

He added, “All the premises were indexed by Municipalities, with each Municipality being further broken down into a book per Block, with each Lot being a separate page with all sales transactions per lot, essentially a "Chain of Title" per each Lot in each Block in each Municipality. These listings for each Lot per Block per Municipality were recorded from 1920 to 1970, when it stopped.  Basically, a complete analysis for each
Lot/Block/Town per County. They also had separate books for each transaction out of each developer by Lot/Block/Town per County.”  Unfortunately, that plant has been lost to time.

The other example of a type of Title Plant that is still in use today can be found in the Hudson County Register’s Office.  It is referred to as the County Block System and is authorized by N.J.S.A 46:24-7. 
Hudson County is the only county that ever implemented this system.

It is an invaluable tool for title searchers working in that county
because it provides a geographical index of the land records up through 1984.  Every Block in Hudson County was assigned a County Block in addition to a Municipal Tax Block.  As each land title document was recorded one gentleman (The County Block Guy) would examine them and determine which County Block the property described was located in. 
He would assign the County Block number and then enter that document
Book and Page under the corresponding County Block and Lot found in the County Block books.  So, a title searcher can go to the County Block Book and immediately get the entire chain of title for a specific property, all in one place.  Of course the title searcher would still have to search every property owner shown in the chain of title in the Grantor Index to make sure that the County Block Guy didn’t make a mistake or that there weren’t any documents recorded that did not have a proper description, but still affected the title, e.g., judgments, liens, agreements, etc.  Eventually the County Block Guy retired, and the system was no longer updated.

In 1978, the American Land Title Association devoted an entire issue of
its Title News to the questions of automation and computerization.[3]  It is a fascinating look back on how business leaders in the title industry were thinking about the benefits of the impending computer age.  Even though the internet
would not be invented for another 5 years and not functionally available until 1990, when Tim Berners-Lee invented the World Wide Web, the title industry was already considering how to leverage the power of technology to expedite title production.  But New Jersey would have to wait until 2003, before that technology would be employed in this State, to
create a robust land title database that would allow for both geographic and name search capabilities.

In 2003, DataTrace® began collecting data and documents in New Jersey, including records dating back to the early 1980s as part of its private data collection, hosted by DataTrace System (DTS). It currently includes almost 38.5 Million records and images covering 15 of the 21 counties in New Jersey.  Click here for a list.

The primary difference between online data provided by government
entities and what the DataTrace Title Plant offers, is the indexing of records geographically and the clear listing index (i.e., chain of title) returned when searching the plant itself.  Instruments in DTS are cross-indexed by trained land title professionals three ways – in contrast to the county’s single-indexing approach (alphabetical name index) – which helps the DTS users locate and capture relevant information and documents in a fraction of the time required to search the County Land Records.  A DTS search completed in minutes could take hours in the Record Room or the County Online Search systems, sifting through numerous unrelated documents by name.

Charles Jones LLC uses the DTS Title Plant to expedite its own County
Search Services, while also providing direct access to title operations doing business in New Jersey. Searches can be conveniently done anytime and anywhere.

The New Jersey land title industry may have been a few decades late to
the party, but there is no excuse for not embracing the available technology today.  You must be a 21st
Century Thinker!  Put down the sledge hammer and pick up a jack hammer, put down the buggy whip and get in your electric car, throw away your typewriter and fire up your computer and consider how Title Plant technology can offer you a competitive edge, lower your costs, increase your performance and responsiveness and expedite your Title Production. 

Be a 21st Century Thinker.


[1]
For a further historic discussion of Mid-West title plants go to https://www.alta.org/title-news/1967/v46i03.pdf

[2]DataTrace®
Information Services Blog, The Evolution
of Title Plants -
https://www.datatracetitle.com/blog/title-tuesdays-evolution-title-plants

[3] https://www.alta.org/title-news/1978/v57i08.pdf


...to interrupt the normal course or unity of: - Merriam-Webster.

The idea of having the business you own, work for, or manage in the cross hairs of a disruption can cause anxiety. What is standard or cutting-edge today can quickly become obsolete tomorrow.

An article in Forbes suggests a new approach to dealing with disruption: “… all companies -- Fortune 250 or not -- should be figuring out how to become the kind of company that disrupts the market. “In other words, the message shouldn’t be ‘how to avoid becoming Blockbuster’, it should be ‘how to become Netflix’”[1].

Easier said than done, right?

A 2018 post on Wired (in partnership with Accenture) provides some insight as to how. The post suggests that new research “…shows that more businesses need to be more confident with change. Understanding the predictable patterns of disruption will help achieve that. With this foresight at the centre of future strategy, companies can start to lead change, instead of following it."[2].

Disruption is just another word for change. We have all been through it, and it can be uncomfortable. But refusing to change can lead to more disruption for you and for your business. The truth is we have been here before, as has our industry, and our country.

Consider how you used to order due diligence searches before the Internet or title software. How did this change the way you did business? How was your staff impacted? Did responsibilities change?

Think back in history to the industrial age that took place from mid 1770’s to around 1900. Through automation and machinery, the status quo was not just disrupted, but in many cases wholly replaced. But thanks to American ingenuity, these changes also created other, new jobs.

Any period of change or disruption requires an equal period of adjustment, uncertainty and yes, anxiety. It can be scary.

What are you doing today in your business to be prepared for such a disruption? At Charles Jones, we are positioning ourselves for the inevitable change by rethinking the settlement process and how to complete orders faster without sacrificing accuracy.

What about you?

 

 


Joe O'Gorman
Senior Product Manager

 

 

 

 

 

 

 

[1] Why It's Important To Make Your Company The Disruptor, Not The Disrupted, 6/4/2018.

https://www.forbes.com/sites/forbestechcouncil/2018/06/04/why-its-important-to-make-your-company-the-disruptor-not-the-disrupted/#25e83cb731a6

[2] The future of all industry is disruption – and that’s a good thing.

https://www.wired.co.uk/article/the-future-of-all-industry-is-disruption-and-thats-a-good-thing


New Jersey municipal taxes aren’t as simple as they may initially seem. They are nuanced and can contain hidden pitfalls that may impact your real estate closing. They can lead to deficient escrow funds, redemption issues, missed liens/registration fees or issues with private agreements between sellers and municipalities. The first step to understanding tax issues that may negatively impact your closing is to educate yourself and your team on how to identify and address them. No one likes surprises at the closing table and/or after escrow has been settled. This article hopes to provide a baseline understanding so you can avoid some of the potential landmines that exist in the NJ real estate tax world.

6% Year-End Penalty:

While it is only relevant at the very end of the year, the 6% Year-End Penalty could be felt in January and influence the amount due to a municipality for a simple tax delinquency or a lien redemption. This is how it would play out: a settlement agent receives a redemption amount from a municipality calculated to December 28th, the date of the scheduled closing. The funds are immediately mailed but, the municipality does not receive them until January 2nd. The settlement agent is notified that the redemption is deficient because of the additional 6% year-end-penalty because the redemption was received after the end of the year. The municipality is within its rights to demand payment even though this year-end penalty was not actually due on December 28th. Some New Jersey municipalities have a year-end penalty which isn’t due until the first day of the New Year given certain requirements, which include:

  • There must be delinquency for over $10K, which is only for a single year (the delinquency cannot spread over more than one year).
  • In some instances, a third-party lienholder may be entitled to the 6% year-end penalty if they meet the eligibility guidelines. If this lienholder pays in excess of $10k for delinquencies, they are then eligible to collect this year-end penalty.

Some Municipalities must calculate their redemption worksheets to their Governing Body meeting dates or another date (with a valid reason) of which the settlement agent is unaware. It is recommended you contact the municipality and confirm no Governing Body approval is required for the redemption.

Vacant Property Registration:

The Vacant Property Registration fees continue to be a challenge for title professionals in New Jersey. While there is no statutory allowance that provides for these registration fees to become a lien, they have become an issue at closing for some Settlement Agents. Keith Bonchi, Esquire, Legal Counsel for the Tax Collector’s and Treasurers Association of New Jersey, maintains that Vacant Property Registration fees are not a lienable charge (Visit https://www.charlesjones.com/blog/ uploads/2017/09/K-Bonchi-vacantprop-reg-fees-for-TCTANJ.pdf to view his legal opinion). They are, however, treated like landlord registration fees or other non-lienable charges a municipality could levy but not include in a tax sale. Most tax information providers continue to report these same vacant property registration fees on searches, when made available.

 

Vacant Property Maintenance and Cut/Clean Fees:

While the Vacant Property Maintenance and Cut/Clean Fees title is like the Vacant Property Registration fees noted above, they are handled differently in the Tax Collection process. These are lienable charges in New Jersey and are covered by various State statutes.

P.I.L.O.T.:

Payments in lieu of taxes (P.I.L.O.T.) are inherently unique by design. They are a contractual agreement between the landowner/developer and the municipality. Billing and payment information is reported on your Tax Search. However, the title examiner should fully review the specific P.I.L.O.T. contract as part of their title examination to ascertain if it is still in place and whether it can be assigned to the new owner. Most underwriters have specific requirements and exceptions which are recommended when land is the subject of a P.I.L.O.T. contract.

Abatements:

Abatements are a reduction in an assessed value with a specific phase in time assigned to the parcel. Like P.I.L.O.T.’s, these are agreements/ contracts between the property owner and the municipality. While your Tax Search should indicate the existence and status of the abatement, these agreements/contracts should also be examined to ascertain duration and assignability to the new owner(s).

By understanding these issues, you will be in a better position to serve your customer and avoid related post-closing headaches. If you have a question, or concern about a municipal tax issue not covered by this article, please feel free to reach out to me and to then discuss with your underwriter.

***

 

The above information is for informational purposes only and is not intended to provide legal advice.

By Cynthia A. McBride

Cynthia A. McBride, a New Jersey State Certified Tax Collector for over 30 years, employs a lifetime of tax collection expertise as the Government Relations Specialist for Charles Jones LLC. She also serves as Tax Collector for the City of Lambertville and has served as an Adjunct Professor for the Tax Collection Program at Rutgers Center for Government Services.

Article previous appeared in the Summer 2019 Issue of the New Jersey Land Title Association’s the Advocate.


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