New York Insurance Department Approves Title Insurance Changes

In the event the Exchanger, having begun an exchange, cannot locate desirable property or is unable to purchase sufficient replacement property to fully defer their gain, the Exchanger would normally receive all of the remaining exchange funds at the end of the exchange period, which will trigger a gain recognition event. Instead, using the “1031 Fall-Back” option, the Exchanger, through the Qualified Intermediary prior to the expiration of the exchange period, can choose to receive return of their exchange funds in payments over a period of years.

The Insurance Department has approved changes to the Rate Manual and owner’s and loan policies. A few of the changes correct clerical inconsistencies and clarify procedures. However, some of the limiting language in the Standard New York endorsements has been removed, thereby aligning New York title insurance coverage more closely with the coverage provided in ALTA policies. The following are some of the more noteworthy changes:

1. The ALTA owner’s and loan policies provide coverage for certain items depicted on surveys at “Covered Risks” par. 2 (c). The Standard New York endorsements eliminate that coverage entirely for owner’s policies and eliminate that coverage for loan policies where the property is improved by other than a 1-4 family dwelling or vacant land. This modification to the ALTA policies is depicted in par. 1 of the endorsements. That language has been removed.
2. The ALTA loan policy provides mechanics lien coverage at “Covered Risks” par. 11. The Standard New York Endorsement (Loan), par. 3, modified that coverage and now that language has been removed.
3. Under the Title Insurance Rate Manual at sec. 1(K), a policy may only be issued to the named owner of the estate to be insured. This prevented the issuance of one policy to both a named owner (typically a nominee) and a beneficial owner. Now, the language has been amended to permit the issuance of a policy to the named owner and a beneficial owner where there exists a written nominee agreement.

The changes take effect on November 1, 2008. The revised forms should be available for viewing beginning Nov. 1 on the Chicago Title Insurance website’s Form Library page