Closing questions
Do co-ops have title insurance?
A NYC co-op purchase transfers shares, not real property, so no owner’s policy issues. What the lien search and UCC search do in place of a title policy.
Do co-ops have title insurance?
Quick Answer
Title insurance insures an interest in real property. A cooperative apartment is not one. The corporation owns the building and the purchaser owns shares allocated to a unit, together with a proprietary lease that grants the right to occupy it. Because the interest is personal property, the machinery of deeds, recording and policies does not attach to it.
What replaces the policy is a set of searches run against the corporation and the seller rather than against a block and lot. The co-op lien search reports maintenance arrears, assessments, judgments and liens that could follow the shares, and the UCC search reports financing statements filed against the shares, including a prior loan nobody remembered to terminate.
Some underwriters offer a co-op leasehold policy, and it is sometimes taken on unusual files. It is not the market default in New York City, and it does not turn a share transfer into a recorded interest. Whether it is worth ordering is a judgment call on the specific building and the specific chain of transfers.
The practical consequence for a purchaser is that diligence has to be done rather than insured around. A missed UCC filing does not become someone else’s problem after closing, so the searches, the payoff letters and the termination statements have to be clean at the table instead of clean afterwards.
What protects a co-op buyer if the searches miss something?
The searches themselves, the seller’s contract representations, and the closing mechanics: an old loan is cleared by a payoff letter and a termination statement handed over at the table. There is no policy standing behind the result the way an owner’s policy stands behind a deed, which is the reason the searches are read carefully.
Does a condo buyer get the same title insurance as a house buyer?
Yes in substance. A condominium unit is real property conveyed by deed and recorded in ACRIS, so an owner’s policy issues on the unit and its undivided interest in the common elements. The exceptions differ, because the declaration, the bylaws and the common charge lien provisions appear on Schedule B.
What else should you read before closing?
In the glossary
- Co-op lien searchThe search performed on a co-op purchase covering UCC filings, judgments, liens and unpaid building charges tied to the shares and to the selling s...
- UCC searchA search of UCC filings for security interests in personal property, run against the seller and, on entity deals, against the entity itself.
- Title insuranceInsurance against loss from title defects that existed before the policy date. New York premiums come from a filed rate schedule, so the figure is ...
- Owner's policyTitle insurance protecting the buyer's ownership interest, issued for the purchase price with a single premium. Coverage continues while the insure...
- Stock certificate (co-op)The certificate evidencing the shares allocated to a co-op apartment. Shares and the proprietary lease travel together and cannot be sold separatel...
- Proprietary leaseThe occupancy lease a co-op corporation grants a shareholder for a specific unit. It is assigned at closing together with the stock certificate for...
Questions this raises
- Who pays the flip tax in a New York co-op sale?A flip tax usually comes off the seller’s proceeds, but plenty of New York buildings shift it to the purchaser. Why the rider has to name the payin...
- Why will a co-op lender not close without a recognition agreement?A co-op loan is secured by shares rather than a recorded mortgage, so no lender funds until the building signs an agreement respecting its interest.
- Can a co-op board reject a buyer?A NYC co-op board can decline a purchaser without giving a reason, subject only to fair-housing law. What that means for a contract and a mortgage ...
- What is title insurance?Title insurance covers defects in a property's past: old liens, recording errors, forged deeds, undisclosed heirs. How the coverage works in New York.
- What is the difference between an owner's policy and a lender's policy?An owner's policy insures the buyer for the purchase price. A lender's policy insures the bank for the loan amount. How the two differ on a New Yor...
Building types
- Standard co-opThe ordinary New York City cooperative: you buy shares in a corporation and receive a proprietary lease to occupy a specific apartment.
- Standard condoA New York City condominium unit: real property conveyed by deed, recorded in ACRIS, with an undivided interest in the common elements.
- CondopA building split into two condominium units, one commercial and one residential, where the residential unit is owned by a cooperative corporation.
The statute itself
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