What a New York Title Insurance Policy Covers: Covered Risks, Exclusions, Exceptions and Conditions

An owner’s title policy in New York insures the buyer against loss from title problems that existed on the date of the policy: someone else owning the property, a lien or defect nobody caught, a forged document in the chain of title, unmarketable title, or no legal access. It does not cover building and zoning rules unless a government notice was recorded in the land records, problems the owner created or knew about and kept quiet, events after closing, or anything listed as an exception in Schedule B. Everything else turns on the policy’s conditions, which define the terms, set who is insured, and control how a claim is paid.

The policy forms are the same statewide, in New York City, Westchester County and the rest of New York State. This guide walks through each part of an owner’s policy. For the basics, see what title insurance is; for the two policy types side by side, see owner’s vs lender’s title insurance.

Which form your policy is on

New York title policies must be on forms filed with the Department of Financial Services (Insurance Law § 6409(a)). Since October 1, 2024, the TIRSA Rate Manual (Seventh Revision) has used the 2021 American Land Title Association (ALTA) Owner’s Policy (Stewart bulletin NY000711). A policy issued before then is most likely on the 2006 ALTA form, which numbers several provisions differently.

Section numbers below refer to the 2021 ALTA Owner’s Policy, on which New York’s TIRSA forms are based. New York owner’s policies are normally issued with the Standard New York Endorsement, which the TIRSA Rate Manual lists among no-charge endorsements (Section 33(A)). Your own coverage is the jacket, Schedules A and B, and every endorsement attached, read together (Condition 14).

The insuring clause: coverage as of the Date of Policy

The insurer agrees to pay loss up to the Amount of Insurance from the Covered Risks, subject to the Exclusions, the Schedule B exceptions and the Conditions. It insures “as of the Date of Policy,” and coverage after that date exists only where Covered Risks 9 and 10 say so. Title insurance looks backward at what was wrong on closing day, not forward.

An unnumbered paragraph after the Covered Risks adds defense: the insurer pays the costs and attorneys’ fees of defending covered claims, to the extent the Conditions provide.

Covered Risks

The 2021 owner’s form has ten Covered Risks, in three groups.

Ownership and title quality (Covered Risks 1 to 4)

  • 1. Title vested in someone else. Someone other than the insured owns the property, for example an heir omitted from an estate sale.
  • 2. Defects, liens and encumbrances. The broadest risk. Covered Risk 2.a lists causes of a defect, including “forgery, fraud, undue influence, duress, incompetency, incapacity, or impersonation,” an invalid power of attorney, improper execution or recording, and a defective court proceeding. Covered Risk 2.b covers the lien of real estate taxes or assessments imposed by a governmental authority that were “due or payable, but unpaid” at the Date of Policy. Covered Risk 2.c covers encroachments, boundary overlaps and similar matters, but only those an accurate and complete survey would have disclosed.
  • 3. Unmarketable title. A defect that would let a later buyer, tenant or lender walk away from a contract requiring marketable title.
  • 4. No right of access to and from the land.

Recorded government action (Covered Risks 5 to 8)

Covered Risk 5 covers a violation or enforcement of a law, ordinance, permit or regulation about use, improvements, subdivision or environmental protection, but only to the extent described in an Enforcement Notice. Covered Risks 6 (forfeiture, police, regulatory and national security powers) and 8 (PACA-PSA trusts, a federal claim by unpaid produce and livestock sellers) use the same limit. Covered Risk 7 (eminent domain) covers a taking described in an Enforcement Notice, and also one that has already occurred and binds a buyer for value without Knowledge. Condition 1.e defines an Enforcement Notice as a document recorded in the Public Records. A violation sitting in a building department database is not one (see below).

Transfers and timing (Covered Risks 9 and 10)

  • 9. Prior transfers set aside. Covers loss if an earlier transfer in the chain is avoided as fraudulent or preferential under bankruptcy or creditors’ rights law, or if the insured’s own deed becomes a preferential transfer because it was not recorded on time.
  • 10. The gap. Covers matters within Covered Risks 1 to 9 that are recorded after the Date of Policy but before the insured’s deed is recorded.

The New York addition: statutory liens

The current Standard New York Endorsement (Owner’s Policy, 03/08/2024, printed in Part VI of the TIRSA Rate Manual) adds Covered Risk 11: any statutory lien “arising under Article 2 of the New York Lien Law” for services, labor or materials furnished before the policy date that has gained or may gain priority over the insured’s estate. It also replaces Exclusion 6 with a gap exclusion for real estate taxes, assessments, water charges and sewer rents between the Date of Policy and recording of the deed. The version written for the 2006 ALTA owner’s form covered any statutory lien, not only Lien Law liens. That reaches mechanic’s liens for work done before closing and filed afterward, which the base form would otherwise exclude as matters attaching after the Date of Policy (Exclusion 3.d). That endorsement also stated that it controls over any inconsistent policy provision. In 380 Kings Highway, LLC v. Fidelity National Title Insurance Co., 2011 NY Slip Op 52223(U) (Sup. Ct. Kings County), the court applied that clause to hold a policy covered an NYC emergency repair lien for pre-closing work despite a Schedule B exception for such liens (decision). The current form keeps the “this endorsement controls” clause, but because its Covered Risk 11 is limited to Lien Law Article 2 liens, a lien created by another statute, such as the emergency repair lien in that case, falls outside its wording.

Exclusions from Coverage

Exclusions apply to every policy; only endorsements change them.

Exclusion Removes
1 Land use and building laws
2 Eminent domain
3.a Matters insured created
3.b Matters insured knew, hid
3.c No loss suffered
3.d Matters after policy date
3.e No value paid
4 Insured’s own deed avoided
5 PACA-PSA trusts
6 Taxes due after policy date
7 Square footage, acreage

Several exclusions give coverage back. Exclusion 1 does not limit Covered Risks 5 and 6, so a recorded Enforcement Notice is covered even though the law behind it is excluded. Exclusion 2 yields 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 turns on “Knowledge,” which Condition 1.i defines as actual knowledge, not constructive notice from the public records. A buyer who knew of a neighbor’s unrecorded claim to the driveway and did not disclose it in writing before closing has no coverage for it.

Schedule A

Schedule A identifies the policy: the Amount of Insurance, the Date of Policy, the insured (Item 1), the estate insured, such as fee simple (Item 2), the party in whom title is vested (Item 3) and the legal description (Item 4). Under TIRSA Rate Manual Section 5 the amount is at least the contract price or 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 grantee.

Schedule B exceptions

Schedule B lists matters excepted from this policy only: recorded easements and covenants, survey matters when no survey was provided, rights of tenants in possession, and specific liens or rights found in the search. An exception removes coverage for that matter entirely. How exceptions are written, and how to clear them before closing, is covered in title search and title report.

Conditions

Definitions that decide claims

Condition 1 does much of the work. “Public Records” (1.m) means the land recording system that gives constructive notice to a buyer, and it expressly excludes environmental, planning, permitting, zoning, licensing, building, health and public safety records. That is why an open NYC Department of Buildings violation, which lives in DOB’s own system rather than at the City Register or County Clerk, is not an Enforcement Notice and is not covered (DOB violation found after closing). “Land” (1.j) includes improvements that are real property on the Date of Policy but not adjoining streets.

Who is insured

Condition 1.g starts with the insured named in Schedule A and adds:

  • heirs, devisees, survivors and personal representatives who take by operation of law;
  • successors by merger, dissolution or conversion of an entity;
  • a grantee that is an “Affiliate,” meaning an entity wholly owned by the insured, wholly owning it, or under the same full ownership;
  • a trustee or beneficiary of a trust the insured created 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 the original insured (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. Under Condition 2, coverage continues as long as the insured holds an interest in the land, holds a purchase money mortgage from a buyer, or remains liable on warranties in the deed. It does not pass to a later buyer, who needs a new policy, but the seller stays covered if that buyer sues on the deed’s warranties.

Notice, proof and cooperation

The insured must give prompt written notice of any claim or litigation, or of a buyer or lender rejecting the title as unmarketable (Condition 3). Late notice reduces liability to the extent it prejudiced the insurer. The insurer may require a signed proof of loss (Condition 4) and an examination under oath (Condition 6.b), and failure to cooperate can end coverage for that claim. The steps are in the title insurance claim process.

The insurer’s options

On a covered claim the insurer can:

  • defend the insured in a lawsuit, choosing counsel subject to the insured’s reasonable objection (Condition 5.a);
  • start its own action to clear title, such as a quiet title suit (Condition 5.b);
  • pay the full Amount of Insurance and end its obligations (Condition 7.a);
  • pay or settle with the third party, or pay the insured’s loss (Condition 7.b).

If the insurer removes the defect or makes title marketable, by litigation or otherwise, it has met its obligation (Condition 9.a). It is not liable for litigation until a final, non-appealable ruling against the title (9.b), and not for a settlement the insured makes without its written consent (9.c).

How much the policy pays

The policy is a contract of indemnity for actual monetary loss, not a guarantee of the search (Condition 8). It pays the lesser of the Amount of Insurance or the drop in value caused by the defect (8.a), generally measured on the date the insured discovered the problem (8.b). If the insurer pursues a 5.b action and fails to establish title, the Amount of Insurance increases by 15% (8.d). Defense costs are paid on top of the policy amount (8.e), while loss payments reduce it dollar for dollar (Condition 10). Once the loss is determined, payment is due within 30 days (Condition 12). After paying, the insurer takes over the insured’s rights against whoever caused the loss (Condition 13).

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

New York law governs a policy on New York land (Condition 16), and under the arbitration condition printed in the TIRSA manual’s owner’s form (Condition 19), either side may elect binding arbitration if the Amount of Insurance is $2,000,000 or less; above that, both must agree.

Common worries: covered, excluded or depends

The table assumes the matter is not excepted in Schedule B and the owner did not create or know of it (Exclusions 3.a and 3.b). Examples of how these play out are in title insurance claim examples.

Problem Result Section
Forged deed before closing Covered CR 2.a
Missed heir claims title Covered CR 1, 2
Missed mortgage or judgment Covered CR 2
Unpaid tax at closing Covered CR 2.b
Pre-closing mechanic’s lien Covered NY Endorsement CR 11
Lien recorded in the gap Covered CR 10
Unrecorded easement Depends; usually excepted Sch. B possession exception
Boundary or encroachment Depends CR 2.c; Sch. B
Recorded zoning notice Covered CR 5
Zoning violation, unrecorded Excluded Excl. 1.a
Open DOB violation Excluded Excl. 1.a; Cond. 1.m
Deed theft after closing Excluded Excl. 3.d
Prior sale voided in bankruptcy Covered CR 9
Tax bill after closing Excluded Excl. 6
Smaller than advertised Excluded Excl. 7

The mechanic’s lien row is covered by Covered Risk 11 of the Standard New York Endorsement, described above, for Lien Law liens for pre-closing work; a lien already filed before closing is a Covered Risk 2 matter unless Schedule B excepts it. The other “depends” rows turn on the survey. Covered Risk 2.c reaches encroachments and boundary problems an accurate survey would have shown, but a title report issued without a survey excepts survey matters in Schedule B, and a survey reading lists what the survey showed. An easement that appears on neither the record nor a survey, and that the owner did not know about, falls under Covered Risk 2 unless a Schedule B exception such as rights of parties in possession picks it up.

Deed theft after closing is the row owners most often get wrong. A forged deed recorded years later is a matter created after the Date of Policy, so the standard owner’s policy excludes it under 3.d, though the forged deed itself is void and the owner’s title survives. Pre-closing forgery is the classic covered claim. Monitoring, remedies and the newer post-policy forgery endorsements are covered in deed theft in NYC.

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.