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New
Rate Manual Approved
The Commissioner
of Banking & Insurance has recently approved the adoption of a new Rate
Manual submitted by the Now Jersey Land Title Insurance Rating Bureau
["NJLTIRB"], which reflects an overall increase of approximately 8.9%
over the rates and charges found in the existing NJLTIRB Manual (of April
1, 1995). The new Manual became effective on August 1, 1997; it applies
to all applications for title insurance received on or after that date.
The new Manual is similar in structure to the previous one. The primary
differences are found in the various underwriting rates (or premiums),
which, as noted above, have been increased, except for the mortgage modification
rate. In addition, as set forth below, certain miscellaneous charges are
also higher. SUMMARY OF NEW NJLTIRB RATE MANUAL (eff. Aug. 1, 1997) (Comparison
with NJLTIRB Manual elf. April 1, 1995) Rates Under Manual of April 1,
1995 shown In brackets Basic Rates [Manual ¤4.2] Cost per $1,000 of Policy
Coverage $0 - $100,000 $5.25 (4.75] $100,001 - $500,000 4.00 [3.50] $500,001
- $2,000,000 2.75 [2.25] Over $2,000,000 2.25 [2.00] Reissue Rates [Manual
¤4.3] Cost per $1,000 of Policy Coverage $0 - $100,000 $4.25 (4.00] $100,001
- $500,000 3.25 [3.00] $500,001 - $2,000,000 2.25 [2.00] Over $2,000,000
............... 2.00 [1.75] Refinance Rates [Manual ¤4.6.1 ] Cost per
$1,000 of Policy Coverage $0 - $100,000 $2.25 [2.001 $100,001 - $500,000
2.00 11.75] $500,001 - $2,000,000 1.75 [1.50] Over $2,000,000 1.25 [1.25]
Mtge. Modification Rate [Manual ¤4.6.2] Cost per $1,000 of Policy Coverage
0 - $100,000 $1.75 [1.75] $100,001 - $500,000 1.50 [1.50] $500,001 - $2,000,000
1.25 [1.25] Over $2,000,000 1.00 [1.00] Other Changes Settlement with
Disbursements [¤6.1] In Off ice $250.00 [200.00] Out of Office 275.00
[225.001 Preparation of Property Description [¤7.3] 50.00 [25.001
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Marital
Rights Reconsidered: Wamco XV Ltd.
Farrell A recent
decision of the Appellate Division will compel many real estate practitioners
and title companies to review their previously-held conceptions about
New Jersey's "marital rights" statutory scheme. At issue is the inter-relationship
among N.J.S.A. 3B:28-1; -2; -3; and -3.1. The first section, N.J.S.A.
3B:28-1, preserves inchoate estates of dower and curtesy in existence
as of May 28,1980. The next section, N.J.S.A. 38:28-2, states: All rights
of dower and curtesy are abolished as to the real property of which a
married person ... shall, on or after May 28, 1980, become seized, during
coverture, of an estate of inheritance. [Emphasis added.) This is followed
by N.J.S.A. 3B:28-3, which creates a right of joint possession in the
principal matrimonial residence: As to real property occupied jointly
by a married person with his or her spouse acquired on or after May 28,
1980, as their principal matrimonial residence, every married person shall
be entitled to joint possession thereof with his or her spouse during
their marriage, which right of possession may not be released, extinguished
or alienated without the consent of both spouses... . [Emphasis added.]
The final section of Chapter 28, N.J.S.A. 3B:28-3.1, concerns the relative
priorities of mortgages and the right of joint possession. It states:
The right of joint possession. as provided In N.J.S.A. 3B:28-3 is subject
to the lien of a mortgage, irrespective of the date when the mortgage
is recorded, provided: a. The mortgage is placed upon the matrimonial
residence prior to the time that title was acquired by the married person;
or b. The mortgage is placed upon the matrimonial residence prior to the
marriage; or c. The mortgage is a purchase money mortgage; or d. The parties
to the marriage have joined in the mortgage. [Emphasis added.] This above-quoted
language to a large extent merely restates the common-law rules governing
the priority of mortgages with respect to dower and curtesy interests.
The right of joint possession is a statutory creation which is intended
to serve as a modern replacement for the ancient concepts of dower and
curtesy. PiIone v. Blanda, 226 N.J. Super. 397 (Ch. Div. 1988). Its practical
effect (from a conveyancing standpoint) is to require the execution of
a deed, mortgage, or similar instrument by the non-title-holdi ng spouse.
In most cases, this does not present a problem; but occasionally it does.
Particularly troublesome are cases where the spouses are estranged and
the non-title-holding spouse has left the [former] marital residence.
From a practical standpoint, it is difficult to secure the co-operation
of the non-title- holding spouse under such circumstances. Nevertheless,
it would be a mistake to assume that one should no longer be concerned
with the right of joint possession. In Arnold v. Anvil Realty Investment,
Inc., 233 N.J. Super. 481 (App. Div. 1989), title to the marital residence
was hold by the wife in her own name. During the pendency of a divorce
action, the husband voluntarily vacated the residence, which the wife
then sold. The Court held that the husband was entitled to damages, because
the wife's sale of the home deprived him of a property right; Le., the
joint right of possession. It seems that a final judgment of divorce is
needed to terminate the right of joint possession (as is the case with
dower and curtesy). If the husband and wife are separated, and subsequently
reconcile, it may be held that the renewed right of possession takes priority
over real estate interests (such as mortgages) created in the interim.
It is also important to bear in mind that the joint right of possession
did not completely replace dower and curtesy. Many practitioners wrongly
assume that dower and curtesy were "abolished" by the enactment of N.J.S.A.
3B:28-2. However, when the statute is read together with 3B:28-1, it is
apparent that the Legislature intended to abolish dower and curtesy only
prospectively. Thus, 3B:28-2 has no effect on [inchoate] estates of dower
or curtesy that existed as of May 28,1980. See Gladstone v. Burk, 233
N.J. Super. 228 (App. Div. 1989). On the other hand, most attorneys and
title companies have interpreted 3B:28-2 to mean that no new inchoate
dower and curtesy estates may be created after May 28,1980. See Handbook
of N.J. Title Practice, ¤7609 (1995 Rev'n). This interpretation, incidentally,
is supported by the holding in the Wamco XV opinion (discussed below).
At first glance, one might assume that the non-title-holding spouse would,
in all cases, enjoy either a right of joint possession (if the realty
was acquired on or after May 28, 1980), or a dower or curtesy right (if
the realty was acquired prior thereto). Unfortunately, this may not always
be the case. Let us assume that John Smith, a single man, acquires title
to Blackacre in 1975, and marries Mary Smith in 1985. Mary apparently
does not enjoy a joint right of possession, because the realty was acquired
prior to May 28,1980, and 3B:28-3 (by its terms) applies only to realty
acquired on or after that date. Neither can she claim an inchoate dower
right, for the reasons discussed above. See Handbook, ¤¤7609, 7612 & 7613.
This legislative "black hole" brings us to Wamco XV Ltd. v. Farrell, 301
N.J. Super. 73 (App. Div. 1997). In Wamco XV, Raymond and Mary Katherine
Farrell purchased a home in 1978, holding title astenants-by-the-entireties.
But in March of 1990, they divorced. As part of the divorce settlement,
Mary Katherine conveyed her interest in the home to Raymond, leaving him
the sole title-holder. Shortly thereafter, Raymond married Lynn Farrell,
and they occupied the realty as their marital residence. Lynn did not,
however, become a co-owner of the home. In July of 1991, Raymond obtained
a business loan from Equibank, which was subsequently assigned to Wamco
XV Ltd. The loan was secured by a mortgage on the marital residence, but
it was executed only by Raymond. Equibank was aware that Lynn was not
willing to execute the mortgage. A default subsequently occurred, and
a foreclosure action was commenced, in which Wamco attempted to foreclose
Lynn's interest in the premises as well as Raymond's. Lynn argued that
because she had not executed the mortgage, Wamco could not divest her
right of joint possession. Wamco pointed out that, by its terms, N.J.S.A.
3B:28-3 applies only to property acquired on or after May 28, 1980. As
noted above, Raymond had purchased the property (with his first wife)
in 1978. The Chancery Division (in an unreported decision) entered judgment
in favor of Lynn. On appeal, the Appellate Division affirmed, in an opinion
by Judge Landau. It based its decision largely on N.J.S.A. 3B:28-3.1.
Since Wamco failed to fall within any of the categories set forth therein,
the lien of its mortgage would be inferior to Lynn's right of joint possession.
Of course, that statute - - by its terms - - applies only to properties
affected by 3B:28-3; Le., those acquired prior to May 28, 1980. Thus,
4 would seem that - on its face - N.J.S.A. 3B:28-3.1 is not relevant to
the case at bar. In response to that contention, the Court pointed out
that the prior version of N.J.S.A. 3B:28-2 & -3 (3A:35-5) did not limit
the right of joint possession to properties acquired after a specific
date. This was added later, apparently in order to coincide with the date
of abolition of dower and curtesy (May 28, 1980) . It therefore agreed
with the Chancery Division's reasoning that the date was not inserted
into the ... statute in order to "work a dramatic change in the prior
statute". ... Reading [N.J.S.A. 3B:28-3] together with [N.J.S.A. 3B:28-3.1]
together, it is evident that the Legislature did not intend to single
out for disparate treatment only those spouses who occupied a marital
residence prior to the date it was mortgaged, solely because the residence
was acquired before May 28, 1980. ... The May 1980 date was obviously
selected to coincide with the date of the abolition of dower and curtesy
as to marital property other than the marital residence, not to deprive
a small group of spouses of both dower/curtesy rights and joint possession
right in their residence during marriage. 301 N.J. Super. at 77-78. The
Appellate Division went on to state that the prevailing rule of statutory
construction requires that statutes be "read sensibly rather than literally",
and that one must "assume that the Legislature intended a reasonable approach",
which approach the statute should be construed to carry out. Id. at 78.
In other words, a statute must be construed on the basis of presumed legislative
intent. It is the court's duty to determine what result the Legislature
presumably would have intended in a given case, had it understood the
ramifications of its own [poorly-worded] enactment. On the one hand, it
is difficult to quarrel intellectually with the Court's analysis of legislative
intent. It is doubtful that any member of the Legislature consciously
intended to create a "black hole", into which would fall a few married
couples who had neither a dower/ curtesy nor a joint possessory right.
On the other hand, the result ignores another hallowed principle of statutory
construction: the "plain-meaning" rule. See,e.g.,Lopez v. Santiago, 125
N.J. Super. 268,270 (App. Div. 1973) ("Where the language of a statute
is plain there is no need for interpretation."). N.J.S.A. 3B:28-3 states
in the clearest terms imaginable that the joint right of possession applies
only to property acquired on or after May 28,1980. At the time the mortgage
loan was made, the lender knew that Lynn would not execute the mortgage.
But it also believed - based upon the text of the statute - that N.J.S.A.
3B:28-3.1 had no applicability to the transaction. It presumably based
its decision to accept delivery of the mortgage -executed by Raymond alone
- on the statutory text. Indeed, the Wamco XV Court acknowledged that
Lynn did not enjoy an inchoate dower interest in the property, because
"... she was married after the abolition of dower". 301 N.J. Super. at
78. Thus, the only reason to have had her execute the mortgage would have
been to comply with 3B:28-3.1, which, for the reasons discussed above,
was inapplicable, based upon a literal reading thereof. Perhaps the most
troubling aspect of the decision in Wamco XV is the method used by the
court to support its "equitable" conclusion. The same result could have
been reached using an analysis which preserved the statutory scheme, as
noted by Judge Landau in a footnote: Even 0 Wamco were correct in arguing
that N.J.S.A. 38:28-3 requires the residence to be acquired after May
28, 1980, the property interest quitclaimed in 1990 to Ray as part of
the divorce agreement by his first wife was arguably necessary to complete
the transaction. 301 N.J. Super. at 78 (footnote). In other words, even
assuming arguendo that Wamco was correct as to the one-half interest in
the realty that Raymond acquired in 1978, he did not acquire title to
the other one-half until 1990, when he was divorced from his first wife.
Thus, the court could have based its decision upon a finding that Lynn
was entitled to a joint right of possession in so much of the realty as
was acquired in 1990. Such a holding would have been consistent with a
literal reading of N.J.S.A. 3B:28-3. And, as a practical matter, it would
have achieved the same result as the Appellate Division's decision, but
without the need for aggressive judicial "Interpretation" of the sort
found in the opinion. Most lawyers (and even most judges) would probably
agree that judicial editing of a statutory text to remove a specific date
inserted by the Legislature should be undertaken Šif at all -only where
no reasonable alternative exists. Here, as demonstrated above, such an
alternative did exist, but the Court chose to relegate it to a footnote.
From an underwriting standpoint, as noted above, most title insurers routinely
require that a deed, mortgage or other instrument to be insured be executed
by the non-title-holding spouse. Prior to the decision in Wamco XV it
was occasionally possible to have a title company relax this requirement
where it was believed that the nontitle- holding spouse enjoyed neither
a dower/curtesy interest nor a joint possessory right. See Handbook, ¤¤7615.
But in light of Wamco XV, it is difficult to imagine a situation where
the title company would willing to do so. In short, the practical effect
of the Wamco XV opinion is to underscore the importance of having both
spouses execute deeds, mortgages or similar instruments off acting the
marital residence
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Condominiums:
Common Elements
In discussing condominium
regimes, confusion often arises regarding the difference between common
elements and limited common elements. This is often compounded by a misunderstanding
as to who "owns" the common elements and limited common elements; Le.,
in what entity title thereto is vested. At the outset, it must be noted
that a condominium regime is a creature of statute. The Condominium Act,
N.J.S.A. 46:8B-1 et seq., is the sole basis for the creation of condominiums.
There is no such thing as a common-law condominium! Under the Act, the
phrase common elements is defined, in off act, by N.J.S.A. 46:8B-3(d)
to include every part of the regime which does not lie within a condominium
unit. The phrase limited common elements is defined in N.J.S.A. 8B-3(k)
as follows: ... those common elements which are for the use of one or
more specified units to the exclusion of other units. The term unit means
"... any part of the condominium designed or intended for any type of
independent use ... ... N.J.S.A. 46:8B3(o). The "unit" includes the owner's
proportionate undivided interest in the common and limited common elements.
Id. How is the title to the common elements vested? They are owned by
all unit owners as tenants-in-oommon. When a unit is sold, the purchaser
receives the fee simple title to the unit, together with an undivided
percentage interest in the common elements as an appurtenance thereto.
N.J.S.A. 46:8B-3(o); -6. The association does not own the common elements,
but rather administers them for the benefit of the unit owners. Id.; N.J.S.A.
46:813-12 of seq. The same is true with regard to the title to the limited
common elements, because they are part of the common elements. N.J.S.A.
46:8B-3(o). However, as the definition set forth above indicates, certain
unit owners are entitled to the exclusive use of limited common elements,
as set forth in the Master Deed and By Laws. The recent decision of the
Appellate Division in Ellen heath Condo. Ass'n v. Pearlman, 294 N.J. Super.
381 (App. Div. 1996), demonstrates the principles discussed above. Each
unit in the regime was served by a separate fuel storage tank. The tank
which served the unit owned by the Pearlmans leaked, and the Association
was compelled to expend funds to correct the problem. It filed suit against
the Pearlmans to recover its costs in connection therewith. The Pearlmans
argued that the tank formed part of the common elements, and thus they
were not responsible for the cleanup costs. The Court agreed with the
Association, finding that the underground tank was part of the Pearlmans'
"unit". The panel noted that the definition of "common elements" excludes
"... any improvement ... specifically reserved or limited to a particular
unit... ". N.J.S.A. 46: 88-3 (d) (11). The Appellate Division concluded
that the fuel tank was an "improvement" which formed part of the Pearlmans'
"unit". Unfortunately, the master deed and by-laws of the condominium
in this case did not specifically address the issue of ownership of the
fuel tanks. More importantly, it did not discuss the environmental consequences
of a leaking tank, which can be quite significant. The Court was therefore
compelled to interpret the relevant documents and the statute in order
to reach its conclusion.
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Licensed
Lenders Act Approved
The Legislature has
enacted the New Jersey Licensed Lenders Act, P.L. 1997, c. 157. The Act,
which will be codified in Title 17 of the Revised Statutes, generally
became effective on July 1, 1997, except for ¤ 50 and ¤4, which took effect
on January 8, 1997, the date the Governor approved the bill. The Act repeals
such statutes as the Consumer Loan Law, N.J.S.A. 17:10-1 at seq., the
Secondary Mortgage Loan Act, N.J.S.A. 17:11 A-34 at seq., and the Mortgage
Bankers and Brokers Act, N.J.S.A. 17:11 B-1 at seq., replacing them with
a unified statutory scheme. The law does not apply to State- or Federally-chartered
banks, savings banks, savings and loan associations, credit unions-or
insurance companies; nor does it affect attorneys-at-law or certified
public accountants licensed in New Jersey. The activities of licensed
lenders will be regulated by the Department of Banking and Insurance.
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"C"
Variance Requirements Changed
N.J.S.A. 40:55D-70c
has been amended by the enactment of P.L. 1997, c.1 145, which alters
the criteria for the granting of so-called "C (2) " variances under the
Municipal Land Use Law ["MLUL"] The pertinent provision now reads: (2)
where in an application ... relating to a specific piece of property the
purposes of this act would be advanced by a deviation from the zoning
ordinance requirements and the benefits of the deviation would substantially
outweigh any detriment, [the Board may] grant a variance to allow departure
from regulations pursuant to [N.J.S.A. 40:55D-62] ; provided, however,
that the fact that a proposed use is an inherently beneficial use shall
not be dispositive of a decision on a variance under this subsection...
[Emphasis added.] The so-called "C" variance under the MLUL affects "...
a very narrow band of cases in which the standard would fall between the
traditional standards of 'hardship' on the one hand, and 'special reasons'
on the other". Kaufman v. Planning Bd., 110 N.J. 551, 560-561 (1988) .
In discussing the criteria for such a variance, the Kaufman court noted
that By definition, then, no ... variance should be granted when merely
the purposes of the owner will be advanced. The grant of approval must
actually benefit the community in that it represents a better zoning alternative
for the property. The focus of a ... case, then, will be not on the characteristics
of the land that, in light of current zoning requirements, create a "hardship"
on the owner warranting a relaxation of standards, but on the characteristics
of the land that present an opportunity for improved zoning and planning
that will benefit the community. Id. at 563. Although "undue hardship"
is not a requirement for a "C (2) variance, certain criteria must be met,
as set forth above. To these must now be added the limitation on the "inherently
beneficial use" concept imposed by the amendment. P.L. 1997, C. 145 became
effective on June 30, 1997.
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Probate
Act Amended
The Legislature has
enacted P.L. 1997, c. 20, off active February 24,1997, which amends N.J.S.A.
3B:3- 28 to permit the will of a non-resident decedent to be probated
in the Surrogate's Court. Prior to amendment, the statute allowed a non-resident's
will to be admitted to probate only in Superior Court. Note that the statute
is applicable only where the will has not been probated previously in
any other state or jurisdiction. In cases where a decedent dies owning
property in New Jersey, and letters testamentary or of administration
have been granted in another state or jurisdiction, a statute permits
the executor or administrator to file "authenticated" copies of the letters
with the Clerk of the Superior Court or the Surrogate of the county in
which any real estate is located. N.J.S.A. 3B:14-28. Once this is accomplished,
the executor or administrator, known as a "domiciliary foreign fiduciary"
may exercise, as to the decedent's New Jersey assets, "... all powers
he would have had if he had received letters or been appointed in this
State ... ". N.J.S.A. 3B:14-29. This useful procedure avoids the need
for ancillary probate or administration. It may also be employed by other
"fiduciaries", as the term is defined in N.J.S.A. 38:1-1, including testamentary
trustees and guardians of minors and incompetents. Under another statute,
N.J.S.A. 3B:3-27, the will of a non resident clecedent, which has been
admitted to probate in another State or jurisdiction, may be "recorded"
with the surrogate of the county in which any New Jersey real estate is
located. Exemplified copies of the will, letters testamentary and other
papers from the out-of- state probate proceeding must be filed. Once this
occurs, the will has the same effect on title to realty as if it had been
originally admitted to probate in New Jersey. The executor may then exercise
the same power over the decedent's real estate as if he had received letters
testamentary in New Jersey. While somewhat more restrictive than N.J.S.A.
3B:14-28 and -29, this statute similarly obviates the additional expenses
and delays associated with ancillary probate.
"Title Talk" is published
periodically by the Chicago Title and TICOR Title Insurance Companies,
and is distributed free of charge to their customers and friends. Steven
G. Day, Esq., Area Manager, Publisher Lawrence J. Fineberg, Esq., State
Counsel, Editor Chicago Title Insurance Company TICOR Title Insurance
Company 111 Wood Avenue South Iselin (Woodbridge Twp.) New Jersey 088
30 (732) 205-0055 -Fax: (735) 205-0330
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