Leasehold Policy?

Google "leasehold policy" - it seems to protect renters or possibly owners in landlease buildings (?), so don't understand why you would need this in addition to the standard title insurance

Not a land lease, but it is a coop, so the unit is technically a lease. I did the google search, and the results seem to be leasehold policy companies explaining why it is a good idea to buy one. I just want to know if anyone else who has recently purchased in a coop has bought a leasehold policy. Or if any brokers consider this to now be standard or becoming standard. I have no reason the believe that the title is bad or high risk at all. I know the seller recently refinanced about 2 years ago, and also was able to buy a new place. I wouldn't think they would be able to do that if they had some outstanding tax lien or title problem.

I am not a legal expert, but have bought in coops in the past. I really have never heard of the necessity for this. Can you ask the seller if they had that kind of insurance, or if they know people in the building who do (did?).

I must say, it does sound like upsell to me, though I don't know what the lawyer gets out of it.

"Can you ask the seller if they had that kind of insurance, or if they know people in the building ...."

I don't know anything about all this, but wouldn't that be pointless? If the seller has a hidden lien that didn't show up in the title insurance due diligence, why would they want to attract added scrutiny? Even if clean, the seller has incentive to direct you to not spend the $1800.

As a rule of thumb, getting advice from a person who has a financial interest different than you in a transaction is a bad idea IMO.

Is this the equivalent of co-op title insurance? We were encouraged by our attorney to buy it since we were buying in a small building, where records are not professionally managed, and declined it.

Then, on the day before closing, we learned that our seller had enormous (six-figure) tax liens, which had to be paid out of closing funds he would receive. We were lucky to close. He walked away with maybe $10k after all of the debts were paid.

In hindsight, I now kind of wish we had bought title insurance, just in case there was something on that search that didn't show up. Two years later, we still get letters addressed to the former owner from the IRS, the State of New York, and various other agencies that look like collection letters. I just hope it's all for debts owed after the closing date....

Another unpleasant surprise for us was that this guy had thousands of dollars in claims under his co-op insurance for "off premise theft" incidents. When we went to get an HO6 policy, we discovered that many carriers would not even insure our unit because the address had been associated with so many losses. Didn't matter that they were off-premise or that both of us had clean insurance histories. We had no indication of this from the "diligence" that our (terrible, would never use again) attorney did.

I think that in most cases, you wouldn't need it, but you're purchasing the insurance to protect yourself against those same eventualities.

We purchased in a small co-op and no one advised us to do this. That said, I wouldn't ask the seller about the need for insurance. I agree here with Inonada that their interests aren't aligned with yours and so they likely wouldn't disclose issues which could impede the closing.

The fact that the seller was able to both refinance and buy a place means that the banks weren't able to find anything--I doubt that you would be able to find anything either with independent investigation. Are you only considering buying this insurance because of your attorney? Or were there other red flags?

Only considering buying because my attorney advised it. He said there is nothing about this specific deal that raised red flags. He is advising all of his clients that buy in coops to buy this insurance because of a few very large liens that have survived closing.

Wouldn't your attorney be able to determine if there are liens on the property?

That is what the title search is for. That has been done obviously. What he is saying is that there have been a few recent incidents of tax liens not showing up during the normal title search. When that happens, the title search provider is responsible for 100K of potential losses due to errors and omissions. If it is more than that...you are SOL. He is suggesting to buy this insurance to cover me beyond the 100K. It seems like an up sell to me, but I wanted to ask if others what they thought.

Are you paying cash?

No

so the risk you need to cover is owner's side of title, right?

Because presumably to the extent that you're financing, title issues are the lender's problem, and they're going to make you buy lender's title whether you like it or not...