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, surfaces after the buyer owns the property. Whether the owner’s policy pays depends on three things: whether the problem falls within a covered risk, whether Schedule B or an exclusion takes it back out, and whether the insured did what the policy conditions require once the problem appeared.

This guide walks through eight common problems and how the policy treats each. It applies statewide, in New York City, Westchester County and the rest of New York State. Section numbers refer to the 2021 ALTA Owner’s Policy, the form on which New York’s TIRSA forms are based since October 1, 2024. Older policies usually use the 2006 form, with similar but not identical numbering, so check your own jacket and endorsements. For how the policy is put together, see title insurance policy explained; for how a claim is filed and handled, see the title insurance claim process.

The scenarios are hypotheticals; the court decisions cited are real New York appellate cases.

The scenarios at a glance

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

“CR” means Covered Risk. “Usual starting point” is where the analysis begins, not where it ends.

1. A forged deed in the chain of title

What happens. Years before you bought, a deed in the chain was forged: someone impersonated an owner, or signed under a fake power of attorney. A descendant of the true owner now claims the property.

How the policy treats it. Covered Risk 1 insures against title being vested other than as stated in Schedule A, and Covered Risk 2.a covers defects caused by “forgery, fraud, undue influence,” impersonation, unauthorized transfers, documents not properly executed or notarized, and documents signed under a “falsified, expired, or otherwise invalid power of attorney.” The insurer must defend the insured against the claim at its own cost (Condition 5.a).

What decides the outcome. A forged deed is void and passes no title, even to a later good-faith buyer (Faison v Lewis, 25 NY3d 220 (2015)), so the insured cannot rely on having paid value without notice. The insurer’s main defense is Exclusion 3.a, which removes matters the insured claimant created, suffered, assumed or agreed to. In Greenpoint Mtge. Funding, Inc. v Stewart Tit. Ins. Co., 49 AD3d 687 (2d Dept 2008), a lender whose mortgage rested on a forged deed was an insured, but the court reversed summary judgment in its favor and found a triable issue on whether it had enabled the forgery through the closing agent it chose, applying the principle that “the loss should fall on the one who enabled the fraud to be committed.” The case involved a loan policy; the owner’s exclusion reads the same way. If the forgery is proved and the insured played no part, the insurer either clears title (Condition 9.a) or pays the 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 and then borrows against it.

How the policy treats it. The owner’s policy insures title “as of the Date of Policy.” Exclusion 3.d removes matters “attaching or created subsequent to the Date of Policy,” except as Covered Risks 9 and 10 provide. Covered Risk 10 reaches only the gap between the Date of Policy and the recording of your deed. A forgery recorded years later falls outside the standard form.

What decides the outcome. Because the forged deed is void under Faison, your title survives, 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 recorded mortgage or judgment

What happens. After closing, a lender you never heard of starts foreclosing on a mortgage the seller gave in 2015 and never paid off. Or a creditor of the seller enforces a judgment that was docketed before your closing.

How the policy treats it. A recorded mortgage or a docketed judgment lien against the seller is a lien on the title on the Date of Policy, so it falls within Covered Risk 2. Unless Schedule B lists it as an exception, it is covered. The claim rests on the policy, not on the search: title insurance is a contract of indemnity, not a title report or legal opinion (Condition 8).

What decides the outcome. The insurer normally resolves this by paying off or negotiating the lien, which counts as full performance (Conditions 7 and 9.a). Disputes arise over what the insured knew. In JBGR, LLC v Chicago Tit. Ins. Co., 128 AD3d 900 (2d Dept 2015), the title report missed a recorded declaration limiting development, and 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 the principal’s knowledge could be imputed to the buyers under Exclusion 3.a. Exclusion 3.b, for matters the insured knew of and did not disclose, turns on actual knowledge (Condition 1.i) and applies only to matters not recorded in the Public Records at the Date of Policy, so it does not reach a recorded mortgage. On catching them before closing, see a lien or judgment found in the title search.

4. An unpaid tax or water charge

What happens. Months after closing, the new owner receives a bill showing property tax or water and sewer charges from before the sale.

How the policy treats it. Covered Risk 2.b covers the lien of real estate taxes or assessments “due or payable, but unpaid” on the Date of Policy. Exclusion 6 removes taxes that become due afterward. In New York City, taxes, assessments, sewer rents and water rents are liens until paid (NYC Admin. Code § 11-301). In Westchester, each town, city and village collects its own taxes (Westchester County Tax Commission), and lien dates vary by taxing jurisdiction (RPTL 902 sets January 1 for county-levied taxes).

What decides the outcome. Timing and Schedule B. New York reports carry standard exceptions for taxes and water charges as shown in the tax search and for water used since the last meter reading (Stewart NY guidelines, § VII). An arrear 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 it 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.

How the policy treats it. Covered Risk 2.c covers boundary line overlaps and “an encroachment of an improvement across the boundary lines of the Land,” but only where the matter “would have been disclosed by an accurate and complete land title survey.” The outcome then depends almost entirely on Schedule B.

With a survey. In New York the title company reads the buyer’s survey into Schedule B, listing each fence, wall or driveway variation it shows. Those listed items are excepted. The reading limits the general survey exception to what it lists (Stewart NY guidelines, § IX), so whether an unlisted matter is covered turns on the reading’s exact wording and Covered Risk 2.c. In Pierot v Chicago Tit. Ins. Co. (2d Dept Feb. 16, 2022, No. 2018-13287), the policy excepted “driveway encroachments north of the property line as shown on a certain survey,” and the court held the neighbor dispute fell within that exception.

Without a 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 Green Harbour Homeowners’ Assn., Inc. v Chicago Tit. Ins. Co., 74 AD3d 1655 (3d Dept 2010), a dispute over where lots were located fell within a specific exception for variations in the number and location of units, which the court said was reinforced by a general exception for “any state of facts a current certified survey would show.” With the loss unambiguously excepted, the insurer had no duty to defend.

What decides the outcome. Whether a survey was read, what the reading says, and whether the insured knew of the encroachment (Exclusion 3.a and 3.b). Acreage and square footage differences are excluded regardless (Exclusion 7).

6. An unrecorded easement

What happens. A neighbor claims a right of way across your yard by long use (a prescriptive easement), or claims part of your land outright by adverse possession. Nothing about it was ever recorded.

How the policy treats it. An easement is an encumbrance, so in principle it falls within Covered Risk 2. In practice, unrecorded rights usually fall within two standard Schedule B exceptions: rights of tenants or persons in possession, and the survey exception.

What decides the outcome. Courts read the possession exception as written. In Melamed v First Am. Tit. Ins. Co., 190 AD3d 724 (2d Dept 2021), a neighbor’s adverse possession claim fell within an exception for “the rights of persons in possession,” and because there was “no possible factual or legal basis” for indemnity, the insurer had no duty to defend. In Zucker Real Estate Corp. v Old Republic Natl. Tit. Ins. Co., 213 AD3d 594 (1st Dept 2023), a man holding an unrecorded deed was in possession, placing tenants and collecting rents. The possession exception applied, and because the buyer knew before closing that he was collecting rents, the court held it should have inquired, bringing Exclusion 3.b into play.

7. A missing heir or an improperly probated estate in the chain

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 an interest. Or the executor lacked authority to sell.

How the policy treats it. Covered Risk 1 (title vested in someone else) and Covered Risk 2.a, which covers a transfer the owner never authorized and a “defective judicial or administrative proceeding,” both apply. These off-record risks are covered unless Schedule B excepts them.

What decides the outcome. Whether the estate paperwork the title company relied on (letters testamentary or of administration, a court order, or affidavits of heirship) was valid and complete, and whether Schedule B carved out the estate matter. The insurer may bring a quiet title action under RPAPL Article 15 to establish the insured’s title, whether or not it admits liability (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, the owner finds an open DOB violation or an unclosed alteration permit from the prior owner’s renovation.

How the policy treats it. Exclusion 1.a removes loss from laws and regulations “including those relating to building and zoning.” Covered Risk 5 gives coverage back only for a violation described in an Enforcement Notice recorded in the Public Records, and the policy’s definition of Public Records excludes building and permitting systems (Condition 1). DOB violations do not qualify.

What decides the outcome. Whether the item is a condition matter or a money lien. A violation is not covered; in New York City, a converted ECB tax lien or a judgment docketed against the seller before closing may be. See a DOB violation found after closing.

What decides the outcome across all eight

Schedule B controls. A specific exception takes the matter out of coverage, and courts enforce clear exceptions as written (Pierot, Melamed, Zucker).
The insured’s own conduct. Exclusion 3.a (created, assumed or agreed to) and 3.b (known, unrecorded and not disclosed) turn on what the insured did and actually knew, not on record notice.
Prompt notice. Late notice reduces the insurer’s liability to the extent it prejudiced the insurer (Condition 3).
No settlement without consent. The insurer is not liable for liability the insured voluntarily assumes in a settlement without its prior written consent (Condition 9.c). In Bartolomeo v Fidelity Natl. Tit. Ins. Co. of N.Y., 134 AD3d 1063 (2d Dept 2015), settling without consent barred the claim.
Cooperation. Failure to cooperate or to produce records can end coverage for the matter (Condition 6).
Continuing interest. Coverage continues only while the insured keeps an interest in the land or remains liable on warranties (Condition 2). In 53 Spencer Realty, LLC v Fidelity Natl. Title Ins. Co. (2d Dept Mar. 12, 2025), an owner whose title was extinguished by foreclosure before it claimed had no insurable interest left.
How loss is measured. Liability is capped at the lesser of the Amount of Insurance and the drop in value caused by the covered matter, generally valued when the insured discovers it, with defense costs paid on top (Condition 8). If the insurer cures the defect, including by litigation, it has fully performed (Condition 9.a).

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

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.