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Title Insurance Policy Does Not Cover Higher-Than-Anticipated Common Charges

A title insurance policy provides vital protection to a purchaser of real property, including a condominium unit.  However, as with any insurance policy, title coverage extends only to the specific types of losses covered by the policy and does not cover every possible scenario of something going wrong with a purchase.  For example, the purchaser of a condominium unit who allegedly was misled as to the amount of the unit’s monthly common charges does not have a claim against the title policy for the additional charges.  Josefi v. Regal Walk Condominium, Index No. TS-300013-17 (Civil Ct. Richmond Co. Mar. 13, 2018).

The plaintiffs in this case purchased a condominium unit in a transaction that they subsequently decided was “ill-advised.”  Plaintiffs were allegedly told prior to and at the closing that their common charges would be a specific amount, but after the closing, they learned that the actual amount was higher.  Plaintiffs filed a lawsuit for damages against various parties including the title underwriter, which moved to dismiss the action against it on the ground that the matter fell beyond the scope of the insuring provisions of the policy.

The court observed that “it is a well-settled principle that the title insurer’s obligation to indemnify is defined by the policy itself and limited to the loss in value of the title as a result of title defects against which the policy insures.”  Moreover, “title insurance only provides indemnification for any diminution in the value of the property sustained as a result of defects in a title insured by the policy.”  The title insurer established that, as a matter of law, the alleged discrepancy in the amount of common charges did not fall within the category of loss for which the insurance policy provided coverage.  Ganfer Shore Leeds & Zauderer, LLP represented the successful defendant in this case.