What does title insurance cover?

The covered risks share one trait: they were already true on the day you took title, even if nobody knew. A satisfaction that was signed but never recorded leaves an open mortgage on the record. A judgment docketed against a prior owner attaches to real property in the county where it was entered.

Forgery, undue influence and defective acknowledgment sit in the same category. So does a deed out of an estate where an heir was never identified. New York estates that pass through several generations of family transfers are a common source of these claims.

The policy also pays the cost of defending the covered claim, which is often the larger number. Clearing a docketed judgment that belongs to a different person with the same name takes affidavits, court records and sometimes a proceeding, and that work is covered when the risk is insured.

What it does not cover is anything on Schedule B, anything you created or agreed to, and anything about the physical condition of the building. Open permits, code violations and boundary encroachments may or may not be insured depending on the exceptions and endorsements on your specific policy.

Coverage stops at the policy amount unless an inflation or market value endorsement applies, so a property that has appreciated well beyond the purchase price is insured at the older number. That is worth checking on a long hold, and your attorney can tell you which endorsements were attached to your policy at closing.