In New York property transactions, title companies act as neutral parties that are dedicated to facilitating a secure and legally valid exchange of ownership. One of their essential duties is to carry out a thorough title examination, which confirms the seller’s legal authority to transfer the property and uncovers any issues like liens or competing claims.
Once a property’s title is deemed marketable, title insurance is issued to guard the buyer and lender against future legal or financial complications tied to the ownership of the property. Title companies may also oversee escrow arrangements, holding money and documents in trust until all terms of the contract are met.
When it’s time to close the deal, they will also help finalize the paperwork, handle the distribution of funds, and ensure any necessary documents are filed with the appropriate county office. They also prepare a detailed closing statement that lays out all the associated fees and expenses.
Oversight of title insurance providers and companies in New York is handled by the Department of Financial Services (“DFS”). This means that these companies are subject to strict regulations concerning licensing, rate-setting, and business practices. Title companies must comply with provisions found in the New York Codes, Rules and Regulations, especially those under Title 11. That law outlines obligations around transparency, affiliations, and consumer protection.
Common Legal Issues With New York Title Companies
Examples of common legal issues with New York title companies in New York most often arise from unresolved title defects or procedural errors that are made during closing. Once again, these matters fall under the oversight of the New York State Department of Financial Services, which enforces regulations outlined in Title 11 of the New York Codes, Rules and Regulations, including Part 206, governing title insurance agents and their conduct.
Examples of the most common title related legal issues in New York include:
- Unpaid liens: Outstanding obligations, such as property taxes or contractor fees may remain attached to the property and threaten the validity of the sale
- Ownership disputes: Conflicting claims, especially those involving missing heirs, contested wills, or prior marital arrangements can often delay or derail closings
- Document errors: Mistakes in deeds, such as incorrect legal descriptions or missing signatures, may render them unenforceable
- Forgery and fraud: Illegitimate transfers, forged documents, or identity theft can expose buyers and lenders to serious legal risks
- Boundary disagreements: Inaccurate surveys or unclear property lines can lead to disputes with adjacent owners
- Insurance policy oversights: If a title policy fails to disclose known encumbrances or exceptions, the insurer may be liable for resulting losses
It is important to once again note that title companies in New York are required to follow rigorous procedures to prevent these issues. Failure to comply with DFS regulations can result in disciplinary action against the title companies, including fines, license suspension, or revocation.
If you’re facing a title related concern in New York, it is recommended to set up a legal consultation in New York with title dispute lawyers that are families with both local laws and DFS protocols. They can help you navigate the complexities of title insurance and any defects in the title while also protecting your interests.
Find My Lawyer Now!
What Legal Remedies Are Available When Suing a Title Company in New York?
When an individual chooses to initiate legal proceedings against a title insurance provider in New York, there are several potential claims and remedies that may be available depending on the specific circumstances of the case.
All of these legal actions typically stem from issues related to the administration of title insurance policies or errors made during the closing process. It is important to note that legal remedies in New York are governed by various statutes and regulations, including the New York Insurance Law, General Business Law, and relevant provisions of the Civil Practice Law and Rules (“CPLR”).
Examples of common legal theories under which a title company in New York may be sued include, but are not limited to:
Negligence
Under New York law, negligence arises when a party fails to exercise reasonable care, resulting in harm to another. In order to hold a title company liable for negligence, a claimant must demonstrate all of the following:
- That the title company owed a duty of care
- That the duty was breached, such as by failing to detect a recorded encumbrance
- That the breach directly caused the claimant’s harm
- That actual damages were incurred as a result
Title professionals in New York are expected to perform their duties with diligence and care. A failure to meet these standards may expose them to liability under general tort principles.
Breach of Contract
A breach of contract in New York occurs when one party fails to fulfill obligations outlined in a valid agreement. It is important to note that a title insurance policy is considered a binding contract.
In order to prevail in a breach of contract claim, the plaintiff must establish all of the following legal elements:
- The existence of a valid and enforceable contract
- That the plaintiff fulfilled their obligations under the agreement
- That the title company failed to perform, such as by denying a legitimate claim
- That the breach resulted in measurable financial harm
Successful claims involving breach of contract may entitle the insured to recover direct losses and, under CPLR Section 5001 and related provisions, potentially interest and legal fees.
Unfair Claims Settlement Practices
Title insurers may also be held accountable under New York Insurance Law Section 2601 for engaging in unfair or deceptive claims handling and insurance bad faith. In order to succeed in such a claim, the plaintiff must prove all of the following:
- That a covered claim was submitted
- That the insurer failed to investigate or resolve the claim within a reasonable timeframe
- That the delay or denial lacked justification or violated regulatory standards
Legal remedies for these claims may include recovery of policy benefits, statutory interest, and attorney’s fees, depending on the nature and severity of the violation.
Deceptive Business Practices
In New York, deceptive business conduct is prohibited under General Business Law (“GBL”) Section 349, which protects consumers from misleading or unfair acts in commerce. This may include misrepresenting coverage, failing to disclose material facts, or engaging in bait-and-switch tactics.
In order to succeed in a deceptive business practice claim under GBL Section 349, a consumer must prove all of the following:
- That they qualify as a consumer under the statute
- That the title company engaged in deceptive or misleading conduct
- That the conduct caused actual harm
If proven, the claimant may recover actual damages, and in cases of willful misconduct, courts may award treble damages up to $10,000.
Punitive Damages
Punitive damages in New York are damages that are awarded to penalize defendants for egregious behavior and deter future misconduct. These are typically reserved for cases involving fraud, malice, or reckless disregard for others’ rights.
In order to obtain punitive damages, a plaintiff must demonstrate all of the following:
- That the defendant acted with gross negligence, fraud, or malice
- That actual damages were sustained
- That the misconduct was morally reprehensible and went beyond mere breach of duty
It is important to note that New York courts apply a high evidentiary standard, often requiring clear and convincing proof of the defendant’s culpability. As such, a lawyer is often needed in order to meet the high standard of proof.
Do I Need a New York Real Estate Lawyer for a Title Company Lawsuit?
If you are having any issues related to a title company in New York, then it is recommended to meet with an experienced New York real estate lawyer as soon as possible. LegalMatch can assist you in setting up a consultation with a local attorney who handles cases similar to yours.
An attorney will be able to help you determine your best course of legal action. This means they can assist you in navigating your administrative avenues of legal relief or even file a private civil lawsuit against the title company.
They can also help you gather the evidence necessary to support your claim through formal discovery. Throughout your case, they can also help you negotiate a settlement with the title company. However, if settlement is not possible, then they can file a lawsuit and represent you in court, as needed.
