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Title Insurance protects a buyer's ownership interest in real property

Updated: Nov 13, 2023

Q. I am purchasing a condominium in a 55+ community. My attorney says I need title insurance; my lender says it is optional. What should I do?

A. My advice is…to listen to your attorney.

Title insurance is an important protection for every purchaser of real property in New York State. It insures you against any and all claims of ownership (“title”) made by anyone else concerning your particular condominium. Upon the signing of the real estate contract of sale by both the Seller and you, your attorney likely ordered a title report to review numerous issues, including ownership of the individual unit, the presence of any liens against the unit, and the general status (or absence) of judgments against the Seller or you.

Hopefully, the report was “clean” and there were no outstanding liens or judgments recorded against the unit. Even if there are liens or judgments, your attorney will make sure they are omitted and paid prior to or at closing. However, receipt even of a “clean” report does not equal affirmation that no other claims exist against your future ownership interest or eliminate the threat of future litigation concerning the unit. Doesn’t it make sense to insure your ownership interest against any as yet unknown claims?

New York State regulates title insurance fees and title insurance rates. Yes, depending upon the purchase price of the unit, title insurance may cost a few thousand dollars (or more). But, if you are purchasing real property on Long Island, you are likely spending a great deal of money on a major asset, for some people the biggest asset they will ever own. The title insurance premium is very small compared to your investment in your condominium unit.

Are there ever claims against title insurance policies? Yes. In fact, there was a claim against my own title insurance policy and I was very glad to have that coverage.

I strongly suggest that you listen to your attorney’s advice. Your attorney is experienced in these matters and is looking out for your interests and protection. However, if you decide not to purchase the insurance, do not be surprised if the attorney presents a letter for your signature prior to closing which protects the lawyer from a later malpractice action by you if there is a claim. The language might include:

I further acknowledge that should there be any title defect(s) discovered related to the Property, now or in the future, perceived or real, I would have no claim against (Name of attorney), or (Name of law firm), whatsoever, and hereby hold them harmless, and indemnify them, against any and all actions or claims related to the Property.

If you are later sued in connection with the unit, you will also have no recourse against your lender. Title insurance is only one of the closing costs over and above the purchase price. Be sure to be insured.

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