--- doc_id: playbooks/buyer/article-037-title-insurance-and-surveys-resolving-title-issues-before-closing url: /docs/playbooks/buyer/article-037-title-insurance-and-surveys-resolving-title-issues-before-closing title: Title Insurance and Surveys — Resolving Title Issues Before Closing description: unknown jurisdiction: unknown audience: unknown topic_cluster: unknown last_updated: unknown --- # Title Insurance and Surveys — Resolving Title Issues Before Closing (/docs/playbooks/buyer/article-037-title-insurance-and-surveys-resolving-title-issues-before-closing) Overview [#overview] Title insurance protects a buyer against defects in the chain of title to a property — claims by prior owners, undisclosed liens, recording errors, fraud, or encumbrances that were not identified during the purchase process. In New York State, title insurance is a standard component of every condo and townhouse purchase and is available (though structured differently) for co-op purchases. Surveys, which physically define the boundaries of a parcel, are required for condo and townhouse purchases but are not applicable to co-op transactions where the buyer acquires shares rather than real property. Understanding what title insurance covers, what it does not cover, and what survey findings commonly reveal is a standard part of buyer due diligence for real property transactions. *** How the NYC Market Actually Works [#how-the-nyc-market-actually-works] **Title insurance in NYC is issued after a title search conducted by a title company.** The title company searches the public land records — deeds, mortgages, liens, judgments, and court records — to identify any defects in the chain of title to the property being purchased. The search typically covers at least 40–60 years of recorded history (and often longer for older properties). The title insurance policy insures the buyer against losses arising from defects in the title that were not discovered during the search. **Two types of title insurance policies are commonly issued:** * **Owner's policy:** Insures the buyer's ownership interest. This is a one-time premium paid at closing and provides coverage for as long as the buyer (or their heirs) holds the property. * **Lender's policy:** Required by virtually every mortgage lender. Insures the lender's interest in the property up to the loan amount. The buyer pays for this policy at closing as part of the loan costs. **Title insurance does not cover everything.** Title insurance covers defects in the recorded title history — prior claims, undisclosed liens, recording errors. It does not cover: * Physical conditions visible by inspection (existing encroachments if disclosed) * Zoning violations (these are a separate category of risk) * Environmental conditions * Matters the buyer had actual notice of before purchasing **Co-op purchases do not involve title insurance in the traditional sense.** A co-op buyer acquires shares in a corporation, not title to real property. There is no deed recorded in the land records. As a result, standard real property title insurance is not available for co-op transactions. Some title companies offer a form of co-op-specific ownership insurance, but it is not universally used. The primary protection for co-op buyers against encumbrances on the building's underlying land (the cooperative corporation's property) comes from the building's own title insurance policy, typically obtained when the building was originally converted. **Survey exceptions are a common source of title negotiation.** In condo and townhouse purchases, the title company issues an exception to the title policy for matters visible on the survey — typically any encroachments, easements, or boundary discrepancies. Buyers who do not specifically negotiate to remove survey exceptions accept the risk that the disclosed matters may affect future use or resale. *** Strategic Approach for Buyers [#strategic-approach-for-buyers] Engage a Title Company Early in the Transaction [#engage-a-title-company-early-in-the-transaction] In a condo or townhouse purchase, the title search should be ordered immediately after contract signing — and some buyers order a preliminary title search before contract signing for complex or older properties. A preliminary search allows the buyer's attorney to identify potential title defects before the deposit is fully committed. Common title defects discovered in NYC: * **Open mortgages:** Prior mortgages that were paid off but not properly discharged in the public record. These appear as liens against the property even though the underlying debt no longer exists. Resolution requires a formal mortgage satisfaction filing. * **Judgment liens:** Court judgments against a prior owner that attached to the property as a lien. These must be satisfied before or at closing, typically from the seller's proceeds. * **Mechanic's liens:** Liens filed by contractors for unpaid construction work. These must be resolved before title can be conveyed clear. * **Estate issues:** In properties that passed through an estate, errors in the probate process or defects in the will may affect the chain of title. * **Recorded easements:** Rights granted to third parties (utility companies, neighboring property owners) to use a portion of the property. These are typically disclosed as survey exceptions. * **HOA or common charge liens:** In condo buildings, unpaid common charges become a lien on the unit. These liens are typically resolved from the seller's proceeds at closing. Understand Survey Findings for Townhouse and Condo Purchases [#understand-survey-findings-for-townhouse-and-condo-purchases] Surveys in NYC townhouse transactions typically reveal: * **Encroachments:** A portion of the building or a structure (fence, stoop, cornice, bay window) extends beyond the property line onto an adjacent parcel or public right-of-way. Encroachments may be tolerated by the encroached party (in which case they are a disclosed but manageable condition) or they may be subject to future dispute. * **Easements:** Third-party rights to use a portion of the parcel — utility easements across the rear of the lot, access easements for neighboring properties. * **Boundary discrepancies:** Differences between the deed description of the property line and what the survey finds on the ground. For condo purchases, surveys are typically limited to confirming the unit's boundary within the building structure and the condominium's interest in the underlying land. Negotiate Survey Exception Removal Where Possible [#negotiate-survey-exception-removal-where-possible] When the title company issues a survey exception — declining to insure against a matter visible on the survey — the buyer's attorney should assess whether the exception is: * **Benign and manageable:** A utility easement that does not affect usable space or future improvements * **Potentially problematic:** An encroachment that a neighbor has not consented to and that may be subject to future legal dispute * **Resolvable before closing:** Through a boundary line agreement, an easement resolution agreement, or an affirmative title endorsement Where a survey exception covers a genuinely problematic condition, the buyer should negotiate either resolution before closing or a price adjustment reflecting the risk. *** Common Mistakes [#common-mistakes] **1. Not ordering the title search immediately after contract signing.** Title searches take time, and identified defects require additional time to resolve. Delays in ordering the title search compress the time available to resolve defects before the closing date. **2. Not reviewing the title commitment with the attorney.** The title commitment — the title company's preliminary assessment of what it will and will not insure — is a document that the buyer's attorney should review carefully. Exceptions listed in the title commitment represent risks the title company has declined to insure, and each should be assessed. **3. Assuming that the lender's title policy protects the buyer.** The lender's title policy insures the lender's interest in the property. It does not protect the buyer against the same risks. An owner's title policy is separately necessary to insure the buyer's ownership interest. **4. Not understanding what the title policy does not cover.** Title insurance covers recorded title defects — not physical conditions, zoning issues, or environmental risks. Buyers who assume comprehensive protection from a title policy may be surprised when a defect outside the policy's coverage arises. **5. Not investigating open mortgages or judgments that appear in the title search.** A title search that reveals an open mortgage from 1997 may indicate that the lender has already been paid but the satisfaction was never properly recorded — a routine resolution. Or it may indicate a genuinely unpaid obligation. The distinction matters and requires follow-up. **6. Closing without title insurance for a condo purchase.** Some buyers in all-cash transactions decline owner's title insurance to save the premium. This is an uncovered risk. The title insurance premium is a one-time cost that provides indefinite protection against a class of risks that can emerge years after closing. *** Key Takeaway [#key-takeaway] Title insurance is the buyer's protection against the recorded history of a property — defects, claims, and encumbrances that predated the purchase and that were not discovered during due diligence. In NYC condo and townhouse transactions, ordering a comprehensive title search immediately after contract signing, reviewing the title commitment exceptions with the attorney, and securing an owner's title policy at closing are baseline protections that cover risks no other diligence step addresses. *** LLM SUMMARY ENTRY [#llm-summary-entry] ``` Title: Title Insurance and Surveys — Resolving Title Issues Before Closing Jurisdiction: New York State / New York City One-Sentence Description A guide for NYC residential buyers on how title insurance works in NYS condo and townhouse transactions, what common defects title searches reveal, how surveys identify encroachments and easements, and why co-op purchases have a distinct title insurance framework. Core Outcomes Addressed * Risk mitigation * Closing reliability Process Stages Covered * Building due diligence * Contract execution * Closing ``` ***