The Title Search
Because New York is an “as-is” state, once you purchase a property, you’re getting whatever you bought. While there are different types of deeds that allow the seller to transfer property to you, as a purchaser, you’re concerned with the person who orders the title search.
As the purchaser, you want to make sure that what you’re getting from the seller is good, which means that the title allows you to trade that title and transfer it to a third party when it’s time to do so. A title search investigates all the records in the county clerk’s office in the particular county in which the property is located to make sure that there are no breaks in the chain of title.
This means the person selling it to you got the title from the person before them, who got it from the person before them, who got it from the person before them, etcetera. There’s no break between those various people from the first owner of the property up until you purchase the property.
Liens & Judgments
The title company is going to check to make sure that there are no liens or judgments against the property. You don’t want to buy a property and find out that John Doe, who owned the property three owners before you had a judgment for $100,000 which is still on that property.
You want to make sure that there are no judgments on any property you are purchasing. The only way to do that is to make the title search company liable for their search, which is why you purchase title insurance.
In the State of New York, title insurance is both for the lender and also the buyer. If you’re getting financing, you are going to find that almost every lender is going to require title insurance. You as a purchaser are not required to have title insurance. However, at Fier Law Office, we require our clients to obtain title insurance as part of the attorney-client agreement.
This is because title insurance is more important than the deed as it is the one thing that will save you if there’s a title issue when you go to sell the property. The title insurance policy is what is going to save you.
Title insurance is for the sale price of the property. As an example, if you’re buying the property for $500,000 with a $300,000 loan, you insure the lender for that $300,000. You also insure yourself for the $500,000. That way if there’s a loss on this property, you are insured for what you paid for the property.
Market Value Rider
In New York State, you can buy a market value rider, which would give you title insurance up to whatever the value of the property is after the time you discover the error.
For example, consider that you bought a property for $500,000. It’s now 10 years later when you go to sell and you find that there’s a title issue: You bought the property from an estate, and there was a beneficiary of the estate who was never properly served notice for the sale. Consequently, there’s a total loss – but now the property is worth $800,000. In this case, the market value rider would say that you’re entitled to $800,000.
Not many people purchase the market value rider. We at Fier Law Office would advise you on purchasing that additional insurance. Because it would help protect you, we would highly recommend that you purchase the additional insurance if you’re buying from an estate, a matrimonial action, or a foreclosure proceeding.
Otherwise, the chances of there being a total loss are very unlikely. In those unlikely cases, you would have to decide whether you want to spend that additional money on additional insurance. In these cases, it’s certainly totally up to you, and it’s an option at every single closing.
Just keep in mind: when you go to try to sell the property, if you don’t have a clear title analysis and the new person buying your property finds something on your title, you’re not going to be able to sell that property.
Out Of Possession
In New York, the most common title issues have to do with “out of possessions.” This is where you get the survey of a property which shows the fences on the property. If those fences encroach upon your property more than 12 inches, that means that the neighbor on the other side of that fence may have a claim to that property over the fence line.
Therefore, if the fence line encroaches more than 12 inches, it won’t be insured. If it’s not insured, and if you don’t have title insurance, you will not be able to sell your property without getting an agreement from your neighbor saying, “I don’t have any claim to that property.”
Once the title report on the property is done, we work to fix any issues that may arise such as:
- Judgments & Liens
- Name Discrepancies
- Errors & Mistakes
- Out Of Possession Issues
- Necessary Affidavits
- And more…
With the guidance of a skilled attorney for Real Estate Law Cases, you can have the peace of mind that comes with knowing that we’ll make it look easy.