Title Insurance NYC - What Do Buyers Need?

Title Insurance NYC - What Do Buyers Need?

Whether you are diligently researching the potential closings costs you will pay in NYC or simply familiarizing yourself with terms mentioned by your real estate attorney, one of the fees you are likely to encounter is title insurance.

 

What is title insurance?

Title insurance is a type of indemnity insurance that is fairly common in the United States. The main purpose of this insurance is to protect against financial loss from any defects in the title of real property that may result in the loss of ownership. Title insurance is required if the real property is being purchased with a mortgage.

 

There are two forms of title insurance – lender’s insurance and owner’s insurance. Lender’s insurance is required to be purchased by the borrower to protect the lender in the event the seller was not legally able to transfer title of ownership. This lender’s title insurance policy only protects the lender against loss. An owner’s title insurance policy is taken out by the seller at the buyer’s request to protect the buyer’s equity in the property. Very often these two policies are bundled so everyone is protected.

 

Title Insurance NYC Condo

 

Does title insurance apply for all NYC apartments?

When purchasing a condo, single family home, or multi-family home in NYC and you are planning to get a mortgage you will be required to get title insurance. This cost can vary depending on the title insurance provider but most real estate attorneys will estimate 0.45% of the purchase price.

 

The title insurance NYC buyers are required to take will feel like another closing cost to add to your list, but it protects buyers and lenders against claims on the title of your property prior to you owning the condo or home. For example, unpaid property taxes or liens against a property are two potential issues that title insurance protects you (and your bank) against. While not an insignificant cost, a mortgage company probably won’t lend you money without it.

 

You can estimate what you can expect to pay in title insurance with our NYC Closing Costs Calculator.

 

And what about co-ops?

When purchasing in a co-op, you are actually buying shares in the corporation that owns the co-op and these shares provide you with a proprietary lease. This means you are not buying what is classified as real property like you would be with a condo or home. Therefore, you will not be required to purchase title insurance if you are using mortgage financing to purchase a co-op.

 

During the co-op due diligence process, your real estate attorney will review the financials of the co-op and read the minutes of the co-op board meetings to look out for any costly capital improvement projects. In addition, your attorney will request a co-op lien search which searches for UCC filings, judgements and liens against the co-op corporation. So there is still a level of investigation that goes in to a co-op purchase even if it is not real property.

 

While less common and not required, there are insurance policy options available for buyers in co-ops called leasehold title insurance. This is an added layer of protection if you like to feel more secure.

 

As always, the Prevu Team is here to help if you have any questions. You can reach us at prevuteam@prevuapp.com or (646) 603-6868.

Categories: Buyer

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