Understanding the Notice of Settlement in NJ

By Marc Shaw

Navigating the legal landscape can be a complex process, especially when it involves settlements. In New Jersey, the Notice of Settlement is a crucial component that ensures transparency and protection for all parties involved in a real estate transaction. This statutory tool protects bona fide purchasers and mortgagees from liens or adverse interests that may arise during the recording gap.

What Is A NOS? 

A Notice of Settlement (NOS) is a legal document filed with the county clerk’s office in New Jersey designed to protect the parties involved in a real estate transaction. A NOS provides public notice that a contract for the sale or mortgage of real property has been executed and that a closing is imminent. Essentially, it serves as a way to notify interested parties of an upcoming transaction, thus preventing any subsequent claims or liens on the property that could jeopardize the deal.

How It Works

Once you record the NOS, your instrument will have priority if a lien or judgment is recorded after the notice but before you record the deed or mortgage described in your NOS. It’s important to note that the notice only protects against matters you do not have knowledge of. For instance, if your pre-closing rundown reveals a construction lien claim filed after your NOS, you cannot ignore the lien claim simply because it was found on record. Think of the notice as a shield against unknown claims rather than a sword to cut off other interests.

Once filed, the NOS is effective for 60 days and can be extended for an additional 60 days by filing a second notice before the first expires. This 60-day period is an extension of the previous 45-day period that existed prior to May 1, 2012.

When Should You Record A Notice of Settlement?

The goal is to include the NOS in your pre-closing rundown to cover the time before your deed or mortgage is recorded. Some agents file the NOS when they send their commitment to their customers, which works well if you can close and record within 60 days. If you approach the end of the first 60-day period, a second NOS should be filed.

The Notice of Settlement is a simple yet effective way to protect both your customer and your agency from intervening matters due to recording delays. If you need assistance navigating title insurance in New Jersey, contact World Wide Land Transfer.