Fee Owner Policy Coverage Unrecorded Deed
This week we wanted to highlight a recent First Department decision that held, in part, that a Fee Owner’s Policy did not provide coverage for a claim related to an unrecorded Deed in favor of an occupant in possession where the Insured Owner had prior knowledge tenants were placed in the Premises and rents were being collected.
The relevant facts and a link to the case are set forth below.
The Appellate Division, First Department, affirmed the Supreme Court, New York County’s grant of the Defendant title insurer’s motion for summary judgment because the title policy excepted the “rights of tenants in possession” and the policy contained exclusions for adverse matters “assumed” by the insured and matters affecting title known to the insured but not disclosed to the insurer. Although a deed to a Milton Wilson, a non-party to the action, was not recorded when the Plaintiff purchased the property, Wilson was in possession of the premises. Further, a tax lien held by the non-party and a notice of pendency were exceptions from the coverage of the Policy. In addition, the Plaintiff was aware, prior to closing, that Wilson was “placing tenants and collecting rents’ at the premises, which should have triggered the duty to inquire of a possessor [citation omitted].” Zucker Real Estate Corp. v. Old Republic National Title Insurance Company, 2023 NY Slip Op 00973, decided February 21, 2023, is posted at https://www.nycourts.gov/reporter/3dseries/2023/2023_00973.htm
This case serves as a reminder of the importance of thoroughly vetting the rights of any known tenant or occupant to determine whether they have any title claims to the Premises before closing title.
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