Title Insurance

If you're financing a condo, the lending institution is going to make you buy lender's title -- I think it's worth considering owner's title as well. If you're paying cash, I would recommend owner's title.

Co-ops not really the same deal because of the share arrangement. Here you can see someone has cooked up something to be like title insurance, but it's not really the same thing.

http://www.nytimes.com/2006/12/24/realestate/24home.html

ali r.
DG Neary Realty

It will be required by the banks on a condo. Not on coops.

coops are not real estate

why are coops not real estate ?

Because communists don't believe in private property.

(Real answer: they are shares in a corporation that owns real estate, not real estate per se.)

its like a reit...you still take part in the rise or decline of RE prices in general.

Sure, the value of a coop is tied to the value of the underlying real estate, just like in a reit. But a share of a coop, just like a share of a reit, is not itself real estate.

When you own a coop you own SHARES in the COOPERATIVE.
When you own a condo you own Actual Real Estate.

You can see this play out many ways, For example Condo owners pay their real estate taxes directly to the city, while coop owners just pay maintenance fees and then are told their share of allocatbable real estate taxes of building's real estate taxes.

So would title insurance the a con of buying a condo?

Title insurance Is to protect the buyer against an defect in title. Does that mean there isn't a similar risk?

For a co op purchase. For example on an estate sale another heir or a lien against the apt for non payment that was missed during the search?

“I think every co-op buyer should at least consider buying leasehold title insurance,” a special form of title insurance, said Mark Borten, a Manhattan co-op lawyer.

Mr. Borten explained that since co-op shareholders do not take “title” to their apartment — but instead, own the shares and proprietary lease associated with their apartments — traditional title insurance would not cover the shareholder’s ownership interest in the shares.

As a result, in the early 1990s, the Title Insurance Rate Service Association (or Tirsa) created an endorsement to the standard title insurance policy that would cover co-ops.

John Martin, general counsel for the All New York Title Agency, in White Plains, said the Tirsa endorsement is known in the industry as “leasehold title insurance.” Basically, the leasehold endorsement insures the shareholder’s interest created by the proprietary lease. (The co-op corporation typically has a standard title policy on the building.)

In addition, Mr. Martin said, the Tirsa endorsement provides shareholders with protection in the event that the lien search conducted before the closing failed to uncover a valid existing lien against the seller of the apartment. And while title abstract companies are usually good at identifying such liens, there is one type of lien that affects co-ops that might be difficult to identify.

Federal tax liens, Mr. Martin said, create a lien on real estate only if they are filed where the real estate is located. So if a tax lien is filed against a person in New Jersey, the lien will not affect real estate owned by the taxpayer in New York unless a lien is filed there as well.

But shares in a co-op are considered personal property, and a federal tax lien filed anywhere the taxpayer has a residence creates a lien on the taxpayer’s personal property wherever it is located. Thus, the standard search for liens in New York might easily miss a tax lien filed elsewhere.

Mr. Martin said that while the Tirsa endorsement would cover such liens, only a small percentage of co-op owners purchase such insurance. “For some reason, the Tirsa endorsement never caught on,” he said.

That may change, however, now that the First American Title Insurance Company of New York has introduced a title policy for co-op shareholders.

Michael Berry, chief counsel for First American, said his company received approval earlier this year from the State Insurance Department to sell its Eagle 9 U.C.C. Co-operative Interest Insurance policy for co-op buyers. “This is not a real estate policy with an endorsement for co-ops,” he said. “It is a policy designed to insure the shareholder’s interest in the cooperative.”

The Eagle 9 policy insures for loss and legal expenses resulting from, among other things, claims made by creditors with claims against previous owners of the shares, claims that occur if a co-op is transferred when the seller is in bankruptcy, and claims from an heir or beneficiary of a deceased seller.

In addition, Mr. Berry said, when an Eagle 9 policy is used, an endorsement protecting the co-op corporation can be purchased. Moreover, he said, the Eagle 9 is significantly less expensive than the Tirsa policy.

http://www.nytimes.com/2006/12/24/realestate/24home.html

There shouldn't be another heir or a federal lien that shows up in another state.

Since people wonder what I do all day, these are two pieces of paper that are produced by seller/seller's agent in the case of a co-op estate sale. To prevent the appearance of another heir, the Letters Testamentary are updated by surrogate's court if they are more than 180 days old. To prevent a Federal lien showing up from out of the blue, seller produces an IRS letter that says that there aren't any Federal liens.

ali r.
DG Neary Realty

Eagle 9 Protection is extremely limited. It actually will only help if there is a break in the assignment chain with respect to the sale before the current sale. Oh, and Riversider, it's spelled "Berey"