Title Insurance Claim Examples in New York: Forgery, Missed Liens, Boundaries and More

Most title insurance claims start the same way. A problem that existed before closing, missed by the search or invisible in the land records, shows up after you own the property. Whether your owner’s policy pays depends on three things:

whether the problem is one of the policy’s covered risks
whether Schedule B (the policy’s list of exceptions) or an exclusion takes it back out
whether you did what the policy requires once the problem appeared

This guide walks through eight common problems. It applies statewide, in New York City, Westchester County and the rest of New York State. References such as “Covered Risk 2” or “Exclusion 3.d” point to the matching part of the 2021 ALTA Owner’s Policy, which New York’s TIRSA forms have been based on since October 1, 2024. Older policies usually use the 2006 form, with similar but not identical numbering, so check your own policy and its endorsements.

For how the policy is put together, see title insurance policy explained. For how a claim is filed, see the title insurance claim process. The scenarios below are hypothetical; the court decisions linked are real New York appeals court cases.

The examples at a glance

Problem	Where in the policy	Usual starting point
Forged deed in the history	Covered Risks 1, 2.a	Covered
Deed theft after closing	Exclusion 3.d	Not covered
Missed mortgage or judgment	Covered Risk 2	Covered
Unpaid tax or water charge	Covered Risk 2.b; Exclusion 6	Covered if due at closing
Encroachment, with survey	Schedule B survey reading	Excepted as listed
Encroachment, no survey	Survey exception	Usually excepted
Unrecorded easement	Possession exception	Usually excepted
Missing heir, bad probate	Covered Risks 1, 2.a	Covered
Building violation	Exclusion 1.a; Covered Risk 5	Not covered

“Usual starting point” is where the analysis begins, not where it ends.

1. A forged deed in the property’s history

What happens. Years before you bought, a deed was forged. Someone pretended to be an owner, or signed under a fake power of attorney. A descendant of the real owner now claims the property.

What the policy says. Covered Risk 1 covers someone else owning the property. Covered Risk 2.a covers defects caused by forgery, fraud, undue influence, impersonation or unauthorized transfers. It also covers documents not properly signed or notarized, and documents signed under a “falsified, expired, or otherwise invalid power of attorney.” The insurer must defend you against the claim at its own cost (Condition 5.a).

What decides it. In New York a forged deed is void and passes no ownership, even to a later buyer who acted in good faith (2015 Court of Appeals decision). So you can’t rely on having paid without knowing. The insurer’s main defense is Exclusion 3.a, for problems you created, allowed or agreed to. If the forgery is proved and you played no part, the insurer either clears the title (Condition 9.a) or pays your loss (Conditions 7 and 8).

2. Deed theft after you bought

What happens. You own the property. A stranger records a forged deed from you to a shell company, then borrows against it.

What the policy says. The policy insures your title “as of the Date of Policy,” normally your closing date. Exclusion 3.d removes problems “attaching or created subsequent to the Date of Policy,” except as Covered Risks 9 and 10 provide. Covered Risk 10 only reaches the short gap between the policy date and the recording of your deed. A forgery recorded years later is outside the standard policy.

What decides it. Because a forged deed is void, you still own the property. But the cost of clearing the record may fall on you. Whether the TIRSA Owner’s Extended Protection Policy or the 2025 ALTA 49 and 49.1 endorsements fill this gap depends on the form actually issued, and availability in New York varies. See deed theft in NYC for ACRIS checks and free recording alerts.

3. A missed mortgage or judgment

What happens. After closing, a lender you never heard of starts foreclosing on a mortgage the seller took out in 2015 and never paid off. Or a creditor of the seller enforces a court judgment that was entered in the county records (docketed) before your closing.

What the policy says. A recorded mortgage or a docketed judgment against the seller was a lien on the title on the policy date, so it falls under Covered Risk 2. Unless Schedule B lists it, it is covered. The claim rests on the policy, not the search: title insurance is a promise to pay for loss, not a title report or legal opinion (Condition 8).

What decides it. The insurer usually pays off or negotiates the lien, which counts as doing its job (Conditions 7 and 9.a). Disputes arise over what you knew. Exclusion 3.b, for problems you knew of and didn’t disclose, depends on what you actually knew (Condition 1.i). It also applies only to things not recorded in the public records on the policy date, so it does not reach a recorded mortgage. In one 2015 case, the insurer argued the buyers knew of a missed recorded document; the court let the claim go forward (details below). On catching these before closing, see a lien or judgment found in the title search.

4. An unpaid tax or water charge

What happens. Months after closing, you receive a bill for property taxes or water and sewer charges from before the sale.

What the policy says. Covered Risk 2.b covers taxes or assessments “due or payable, but unpaid” on the policy date. Exclusion 6 removes taxes that come due later. New York policies normally carry the Standard New York Endorsement, which replaces Exclusion 6 with a narrower one: taxes, assessments, water charges and sewer rents that become liens between the policy date and the recording of your deed. Charges that become liens after that are outside the policy anyway, because it covers only problems that existed at closing (Exclusion 3.d).

Where the lien comes from depends on location:

New York City. Taxes, assessments, sewer rents and water rents are liens until paid (city law).
Westchester. Each town, city and village collects its own taxes (Westchester County Tax Commission), and lien dates vary. State law sets January 1 as the lien date for county taxes (state tax law).

What decides it. Timing and Schedule B. New York title reports carry standard exceptions for taxes and water charges as shown in the tax search, and for water used since the last meter reading (one underwriter’s New York guidelines). An unpaid bill that existed at closing but that the tax search missed is usually covered. Water used after the last reading, or a tax not yet due, is not. Buyer and seller handle those through closing adjustments (see title search and title report).

5. A boundary or encroachment problem

What happens. A neighbor’s survey shows your driveway, fence or garage crossing the property line, or the neighbor’s structure crossing onto your lot. The neighbor demands removal or sues.

What the policy says. Covered Risk 2.c covers boundary overlaps and “an encroachment of an improvement across the boundary lines of the Land.” But only if the problem “would have been disclosed by an accurate and complete land title survey.” The outcome then depends almost entirely on Schedule B.

If you had a survey. In New York, the title company “reads” your survey into Schedule B, listing each fence, wall or driveway variation it shows. Those listed items are excepted. The reading narrows the general survey exception to what it lists (underwriter guidelines). Whether an unlisted problem is covered depends on the reading’s exact wording and Covered Risk 2.c. In a 2022 case, a listed driveway encroachment defeated the owner’s claim when the neighbor objected.

If you had no survey. The report carries a general survey exception, often worded as any state of facts an accurate survey might show. That exception takes back Covered Risk 2.c. In a 2010 case, a dispute over where lots sat fell within the policy’s exceptions, and the insurer had no duty to defend.

What decides it. Whether a survey was read, what the reading says, and whether you knew of the encroachment (Exclusions 3.a and 3.b). Differences in acreage or square footage are excluded regardless (Exclusion 7).

6. An unrecorded easement

What happens. A neighbor claims a right of way across your yard from years of use (a prescriptive easement). Or the neighbor claims part of your land outright by adverse possession, gaining ownership through long, open use. Nothing was ever recorded.

What the policy says. An easement burdens the title, so in principle Covered Risk 2 applies. In practice, unrecorded rights usually fall within two standard Schedule B exceptions: rights of tenants or people in possession, and the survey exception.

What decides it. Courts apply the possession exception as written. In a 2021 case, a neighbor’s adverse possession claim fell within an exception for “the rights of persons in possession,” so the insurer had no duty to defend. In a 2023 case, a buyer who knew before closing that someone else was collecting rents at the property had its claim dismissed. The possession exception applied, and the buyer’s knowledge brought the knowledge exclusion (Exclusion 3.b) into play.

7. A missing heir or a flawed estate sale in the history

What happens. A prior owner died, and the estate sold the property. Later a child who was never notified, or a beneficiary under a will that was never probated, claims a share. Or the executor had no authority to sell.

What the policy says. Covered Risk 1 (someone else owns it) applies. So does Covered Risk 2.a, which covers a transfer the owner never authorized and a “defective judicial or administrative proceeding.” These hidden risks are covered unless Schedule B excepts them.

What decides it. Whether the estate papers the title company relied on were valid and complete, and whether Schedule B carved out the estate matter. Those papers might be letters testamentary or of administration (the court’s appointment of an executor or administrator), a court order, or affidavits of heirship. The insurer may sue to confirm your title, a quiet title action, whether or not it admits the claim is covered (Condition 5.b). For the estate side, see real estate in probate and buying or selling from an estate.

8. A building violation or open permit

What happens. After closing, you find an open Department of Buildings (DOB) violation, or an unclosed permit from the prior owner’s renovation.

What the policy says. Exclusion 1.a removes loss from laws “including those relating to building and zoning.” Covered Risk 5 gives coverage back only for a violation described in a notice recorded in the land records. The policy’s definition of public records leaves out building and permit systems (Condition 1). DOB violations do not qualify.

What decides it. Whether the item is a condition of the building or a money lien. A violation is not covered. In New York City, an unpaid ECB (city violation) penalty that was converted to a tax lien, or a judgment docketed against the seller before closing, may be. See a DOB violation found after closing.

What decides the outcome in all eight

Schedule B controls. A specific exception takes the problem out of coverage, and courts enforce clear exceptions as written.
Your own conduct. Exclusion 3.a covers problems you created or agreed to. Exclusion 3.b covers unrecorded problems you knew of and didn’t disclose. Both depend on what you did and actually knew, not on what the records showed.
Prompt notice. Late notice reduces what the insurer owes to the extent the delay hurt it (Condition 3).
No settling without consent. The insurer doesn’t owe for anything you agree to pay in a settlement without its written consent first (Condition 9.c). In a 2015 case, settling without consent barred the claim.
Cooperation. Failing to cooperate or produce records can end coverage for the problem (Condition 6).
You must still have an interest. Coverage continues only while you own an interest in the property or remain liable on promises in your deed (Condition 2). In a 2025 case, an owner who lost the property to foreclosure before claiming had nothing left to insure.
How loss is measured. The insurer pays the lower of the policy amount or the drop in value the problem causes, generally measured when you discover it, with defense costs on top (Condition 8). If the insurer fixes the problem, including by lawsuit, it has done its job (Condition 9.a).

For what the owner and the lender can each recover, see owner’s vs lender’s title insurance.

Details for attorneys and title professionals

Forgery and who enabled it. In a 2008 appeals case (decision), a lender whose mortgage rested on a forged deed was an insured. But the court reversed a ruling in its favor and sent to trial the question whether it had enabled the forgery through the closing agent it chose. The court applied the rule that “the loss should fall on the one who enabled the fraud to be committed.” That case involved a loan policy; the owner’s exclusion reads the same way.

Knowledge of a missed document. In the 2015 case in example 3, the title report missed a recorded declaration limiting development. The insurer argued the buyers knew of it because a principal of one buyer had signed it years earlier. The court refused to dismiss the claim, because the insurer had not clearly shown that knowledge could be charged to the buyers under Exclusion 3.a.

Survey cases. In the 2022 case, the policy excepted “driveway encroachments north of the property line as shown on a certain survey,” and the neighbor dispute fell within that exception. In the 2010 case, the court relied on a specific exception for variations in the number and location of units. It said a general exception for “any state of facts a current certified survey would show” reinforced that result. With the loss clearly excepted, there was no duty to defend.

Possession cases. In the 2021 case, the court found “no possible factual or legal basis” for indemnity, so there was no duty to defend. In the 2023 case, a man holding an unrecorded deed was in possession, placing tenants and collecting rents. The possession exception applied. Because the buyer knew before closing that he was collecting rents, the court held it should have asked, bringing Exclusion 3.b into play.

Losing your interest before you claim. The 2025 case was decided on March 12, 2025, by a New York appeals court (the Appellate Division, Second Department). The owner’s title had been wiped out by a foreclosure before it made its claim, so it had no insurable interest left.

Official sources

Korvane Title is preparing to launch in New York. It is not licensed as a title insurance agent and does not accept title orders. Content on this site is general information, not legal advice.