What a New York Title Insurance Policy Covers and What It Leaves Out

An owner’s title policy pays you if a title problem that already existed on the day you bought costs you money. That includes someone else owning the property, a lien or defect the search missed, a forged document in the property’s history, title a later buyer could refuse, or no legal way in and out.

It does not cover building and zoning rules, unless a government notice about them was recorded in the land records. It also leaves out problems you created or knew about and kept quiet, events after closing, and anything listed as an exception in Schedule B. The policy’s conditions, its rulebook, decide who is insured and how a claim is paid.

The same forms are used statewide, in New York City, Westchester County and the rest of New York State. See also what title insurance is and owner’s vs lender’s title insurance.

Which version of the policy you have

New York title policies must be on forms filed with the Department of Financial Services (state insurance law). Since October 1, 2024, New York has used the 2021 owner’s policy written by the American Land Title Association (ALTA) (Stewart bulletin). A policy issued before then is most likely on the 2006 ALTA form, which numbers several parts differently.

References such as “Covered Risk 2” or “Condition 8” point to the matching part of the 2021 ALTA Owner’s Policy, which New York’s forms are based on.

New York owner’s policies normally come with the Standard New York Endorsement, an add-on page listed as free of charge in the TIRSA Rate Manual. TIRSA, the Title Insurance Rate Service Association, files New York’s title rates and forms. Your coverage is the cover pages (the “jacket”), Schedules A and B and every attached endorsement, read together (Condition 14).

What the policy promises

The insurer pays your loss from the listed risks, up to the policy amount. Coverage is “as of the Date of Policy,” normally your closing date. It looks backward at what was wrong on that day, and reaches later events only where Covered Risks 9 and 10 say so. The insurer also pays to defend you against a covered claim, including lawyers’ fees, as the conditions allow.

What’s covered

The 2021 owner’s form lists ten covered risks, in three groups.

Problems with ownership (Covered Risks 1 to 4)

  • Someone else owns it (1). For example, an heir left out of an earlier estate sale.
  • A defect or lien on the title (2). This is the broadest risk. It covers forgery, fraud, undue influence, duress, incompetency, incapacity or impersonation. It also covers an invalid power of attorney, a document signed or recorded improperly, and a flawed court proceeding.
  • Unpaid taxes (2.b). Property taxes or assessments that were already due but unpaid on the Date of Policy.
  • Boundary problems (2.c). Encroachments and boundary overlaps, but only ones an accurate and complete survey would have shown.
  • Unmarketable title (3). A defect that would let a later buyer, tenant or lender walk away from a deal.
  • No legal access (4). No right to get to and from the property.

Recorded government action (Covered Risks 5 to 8)

These cover government enforcement of rules on use, building, subdivision or the environment (5). They also cover forfeiture, police, regulatory and national security powers (6), and a federal claim by unpaid sellers of produce and livestock (8).

Each applies only to the extent a notice was recorded in the land records. The policy calls this an “Enforcement Notice.” A taking by eminent domain (7) is covered if a recorded notice describes it. It is also covered if the taking already happened and would bind a buyer who paid without knowing of it.

The policy’s definition of public records leaves out building, zoning, permitting, planning, licensing, environmental, health and public safety records (Condition 1.m). So an open NYC Department of Buildings violation is not covered. It sits in the department’s own system, not with the City Register or County Clerk (see a DOB violation found after closing).

Earlier transfers and timing (Covered Risks 9 and 10)

  • An earlier transfer undone (9). Loss if a court undoes an earlier transfer in the property’s history under bankruptcy or creditors’ rights law, as a fraudulent transfer or as a preference (an unfair payment to one creditor ahead of others). It also covers your own deed being treated as a preference because it was not recorded on time.
  • The gap (10). Problems of the kinds in Covered Risks 1 to 9 recorded after the Date of Policy but before your deed is recorded.

The New York add-on: contractor liens

The current Standard New York Endorsement (Owner’s Policy, dated 03/08/2024) adds Covered Risk 11. It covers a lien under the mechanic’s lien article of New York’s Lien Law for labor, services or materials provided before the policy date. A mechanic’s lien is a contractor’s, worker’s or supplier’s claim against the property for unpaid work or materials. It is covered if it has gained, or may gain, priority over your ownership.

Without it, a lien for work done before closing but filed after closing would be excluded as arising after the Date of Policy (Exclusion 3.d). The endorsement also replaces Exclusion 6 with one for taxes, assessments, water charges and sewer rents that become liens between the Date of Policy and the recording of your deed. Where the endorsement conflicts with the rest of the policy, the endorsement controls.

What’s excluded

Exclusions apply to every policy. Only an endorsement can change them.

Exclusion What it leaves out
1 Building, zoning and land use laws
2 Eminent domain (a government taking)
3.a Problems you created or agreed to
3.b Problems you knew about and didn’t disclose
3.c Problems that caused you no loss
3.d Problems arising after the Date of Policy
3.e Loss you’d avoid had you paid value for the property
4 Your own deed being undone under bankruptcy law
5 Federal claims by unpaid produce and livestock sellers
6 Taxes and assessments due after the Date of Policy (the New York endorsement replaces this, see above)
7 Differences in square footage or acreage

Several exclusions give some coverage back. Exclusion 1 does not limit Covered Risks 5 and 6, so a recorded government notice is covered even though the law behind it is excluded. Exclusion 2 gives way to Covered Risk 7, and Exclusion 6 to Covered Risk 2.b. Exclusion 3.d does not limit Covered Risks 9 and 10.

Exclusion 3.b depends on what you actually knew, not what you could have found in the public records (Condition 1.i). Say a buyer knew a neighbor claimed a right to use the driveway, the claim was never recorded, and the buyer didn’t disclose it in writing before closing. That buyer has no coverage for it.

Schedule A: who and what is insured

Schedule A shows:

  • the policy amount and the Date of Policy
  • the insured (Item 1)
  • the type of ownership insured, such as full ownership, called fee simple (Item 2)
  • who holds title (Item 3)
  • the legal description of the property (Item 4)

The TIRSA rate manual requires the amount to be at least the contract price or the fair market value, whichever is greater. Check the insured’s name exactly. If the deed goes to an LLC or a trust, the policy should name that LLC or trust.

Schedule B: what your policy doesn’t insure

Schedule B lists matters your policy does not insure: recorded easements and covenants, survey matters when no survey was provided, rights of tenants or others living there, and specific liens or rights the search found. An exception removes coverage for that matter entirely. Clearing exceptions before closing is covered in title search and title report.

Who else is insured

Schedule A names you. Condition 1.g adds people and entities who take your place:

  • heirs, people who inherit under a will, surviving co-owners and your estate’s representative, when they take title automatically by law
  • a company that takes over yours by merger, dissolution or conversion
  • an “Affiliate”: an entity you wholly own, one that wholly owns you, or one with the same full owners
  • the trustee or a beneficiary of a trust you set up in writing for estate planning
  • a spouse who receives title in a divorce
  • a transfer on death beneficiary

The insurer keeps every defense it had against you (Condition 1.g.ii). “Wholly owned” is read literally, so an LLC with any outside member may not qualify. See deeding a NYC rental into an LLC and transfer on death and quitclaim deeds.

How long coverage lasts

There is no expiration date and no renewal premium. Coverage continues while you hold an interest in the property (Condition 2). After a sale, it continues if you hold a mortgage the buyer gave you, or if you remain liable on promises about the title you made in your deed.

Coverage does not pass to the next buyer, who needs a new policy. But if that buyer sues you on your deed’s promises, you stay covered.

Making a claim

  • Notice. You must promptly tell the insurer in writing about any claim or lawsuit, or a buyer or lender rejecting the title (Condition 3). Late notice reduces what the insurer owes only to the extent the delay hurt it.
  • Proof and cooperation. The insurer may require a signed proof of loss (Condition 4) and a sworn interview, called an examination under oath (Condition 6.b). Failing to cooperate can end coverage for that claim.

The steps are in the title insurance claim process.

What the insurer can do

On a covered claim the insurer can:

  • defend you in a lawsuit, choosing the lawyer, though you can object for a good reason (Condition 5.a)
  • bring its own lawsuit to clear the title, such as a quiet title action, which asks a court to confirm ownership (Condition 5.b)
  • pay the full policy amount and end its obligations (Condition 7.a)
  • pay or settle with the other side, or pay your loss (Condition 7.b)

If the insurer removes the problem or makes the title marketable, by lawsuit or otherwise, it has done its job (Condition 9.a). It owes nothing for litigation until a final ruling against the title that can’t be appealed (9.b). It also owes nothing for a settlement you make without its written consent (9.c).

How much the policy pays

The policy pays your actual money loss. It is not a guarantee that the search was right (Condition 8). It pays the lower of:

  • the policy amount, or
  • how much the problem reduces the property’s value, generally measured on the date you discovered it (8.a and 8.b).

A few more rules:

  • If the insurer sues to clear the title and fails, the policy amount goes up by 15% (8.d).
  • Defense costs are paid on top of the policy amount (8.e). Loss payments reduce the amount dollar for dollar (Condition 10).
  • Once the loss is set, payment is due within 30 days (Condition 12).
  • After paying, the insurer takes over your rights against whoever caused the loss (Condition 13).

The amount is fixed at closing. A property that doubles in value is still insured for the original figure, unless you bought the optional market value endorsement (what title insurance is).

New York law governs a policy on New York property (Condition 16). The owner’s form printed in the TIRSA manual has an arbitration rule (Condition 19). Arbitration is a private, binding decision instead of a court case. Either side can choose it if the policy amount is $2,000,000 or less. Above that, both sides must agree.

Common problems: covered or not?

This table assumes the problem is not listed in Schedule B and you did not create or know about it (Exclusions 3.a and 3.b). Examples of how these play out are in title insurance claim examples.

Problem Result Where in the policy
Forged deed before closing Covered Covered Risk 2.a
Missed heir claims title Covered Covered Risks 1 and 2
Missed mortgage or judgment Covered Covered Risk 2
Unpaid tax at closing Covered Covered Risk 2.b
Pre-closing mechanic’s lien Covered NY Endorsement, Covered Risk 11
Lien recorded in the gap Covered Covered Risk 10
Unrecorded easement Usually excepted Depends on Schedule B possession exception
Boundary or encroachment Depends Covered Risk 2.c and Schedule B
Recorded zoning notice Covered Covered Risk 5
Zoning violation, unrecorded Excluded Exclusion 1.a
Open DOB violation Excluded Exclusion 1.a; Condition 1.m
Deed theft after closing Excluded Exclusion 3.d
Prior sale undone in bankruptcy Covered Covered Risk 9
Tax bill after closing Excluded Exclusions 3.d and 6 (as replaced by the NY Endorsement)
Smaller than advertised Excluded Exclusion 7

The mechanic’s lien row comes from the New York add-on, for Lien Law liens for work done before closing. A lien already filed before closing is a Covered Risk 2 matter unless Schedule B lists it.

The other rows that depend turn on the survey. Covered Risk 2.c reaches problems an accurate survey would have shown. Without a survey, Schedule B excepts survey matters; with one, it lists what the survey showed. An easement in neither the records nor a survey, that you didn’t know about, falls under Covered Risk 2 unless a Schedule B exception, such as rights of people in possession, picks it up.

Deed theft after closing is the row owners most often get wrong. A forged deed recorded years later was created after the Date of Policy, so the standard policy excludes it (Exclusion 3.d). The forged deed is void, though, and your ownership survives. Monitoring, remedies and newer forgery endorsements are in deed theft in NYC.

Details for attorneys and title professionals

The older New York endorsement. The version written for the 2006 owner’s form covered any lien created by statute, not only Lien Law liens. It also said the endorsement controls over any conflicting policy provision. A 2011 Brooklyn trial court decision applied that clause (decision). It held a policy covered a New York City emergency repair lien, a lien the city files after making repairs itself, for work done before closing. That was despite a Schedule B exception for such liens.

The current endorsement keeps the “this endorsement controls” clause. But its Covered Risk 11 is limited to liens under the mechanic’s lien article of the Lien Law. A lien created by a different law, such as that emergency repair lien, falls outside its wording.

What “Land” means. The policy’s definition (Condition 1.j) includes buildings and improvements that are part of the real property on the Date of Policy. It does not include adjoining streets.

Official sources

Related guides

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.