A New York real estate closing can be just days away when an unexpected title problem puts the transaction on hold. Unreleased mortgages, judgments and liens, unpaid taxes, deed errors, ownership disputes, and boundary issues are among the problems that can delay a sale. While some issues can be resolved through lender documentation, payments, or corrective filings, others may require additional legal steps before the closing can proceed.
At Avenue Law Firm, Manhattan real estate attorney Peter Zinkovetsky helps buyers and sellers address title issues that could delay their transactions. Our team examines title reports, identifies outstanding requirements, and works with the parties involved to resolve potential problems. We assist clients with real estate closings throughout Manhattan and New York City.
For guidance with an upcoming NYC real estate closing, contact Avenue Law Firm at (212) 729-4090 to schedule a consultation.
How Do Title Problems Surface Before a New York Closing?
Title problems often come to light when the title company searches public records and prepares a title report before closing. This process can uncover liens, ownership discrepancies, and other issues that need to be addressed before the property changes hands. Our guide on how long a title search takes explains the timing involved.
The title report outlines these findings and identifies any conditions affecting insurance coverage. In a standard American Land Title Association (ALTA) title commitment, Schedule A contains the property details and proposed coverage, while Schedule B separates requirements from exceptions. Part I lists conditions that must be satisfied before coverage is issued, and Part II identifies matters excepted from coverage.
For instance, an outstanding mortgage can require a payoff and arrangements for recording a satisfaction after closing. A recorded utility easement, however, can remain as an exception if the buyer’s contract and lender permit the transaction to proceed. The following table outlines common title problems and how they can be resolved.
| Title Problem | What It Is | Typical Cure Path |
|---|---|---|
| Unreleased mortgage | A paid loan that remains on record | Recorded satisfaction or acceptable lender documentation |
| Judgment or lien | A claim against the owner or property | Payoff, lien release, or proof of a different debtor |
| Unpaid taxes and charges | Outstanding property taxes or municipal charges | Payment at or before closing |
| Open permit or violation | Unresolved building permit or code issue | Permit closeout, sign-off, or correction |
| Name or entity mismatch | Inconsistent ownership or identification records | Affidavit of identity, entity documents, or corrective deed |
| Deed error | Mistake or defect in a recorded deed | Corrective or confirmatory deed |
| Probate or ownership gap | Unclear ownership following a death or prior transfer | Proof of inheritance, estate documents, or court action |
| Boundary or easement issue | Survey discrepancy, encroachment, or access right | Boundary agreement, easement agreement, or corrected description |
Key Takeaway: Unresolved title requirements can delay a closing until the title company accepts the necessary documentation or other arrangements.
Unreleased Mortgages
A mortgage that was paid off years ago can still appear as an open lien on a title report if the lender never recorded a satisfaction. This can happen when a lender merges with another bank, closes its operations, or loses documentation during a loan servicing transfer.
Resolving an old mortgage typically requires a recorded satisfaction or other documentation accepted by the title insurer. If the original lender no longer exists, locating its successor and obtaining the necessary records can take additional time.
A seller’s current mortgage can be paid from the sale proceeds at closing, with arrangements to record the satisfaction afterward. However, an unreleased mortgage from a previous refinance or prior owner can delay the transaction until the title company accepts the documentation needed to clear the issue.
Judgments and Liens Can Block a Clean Transfer
Court judgments, tax warrants, mechanic’s liens, and other claims can create liens against real property and complicate a sale. In Manhattan, money judgments are docketed with the New York County Clerk, and title companies search these records to identify claims affecting the seller or property.
One issue arises when a judgment belongs to someone with a name similar to the seller’s. The judgment can appear on the title report even though the seller is not the debtor, requiring additional documentation to establish the difference.
If the lien belongs to the seller, it can be resolved through payment from the sale proceeds or a negotiated payoff with the creditor. For a judgment involving another person, the seller can provide an affidavit of identity or other supporting documents to establish that the debt is not theirs. The title company determines whether the documentation is sufficient to clear the issue.
Real Estate Attorney in Manhattan – Avenue Law Firm
Peter Zinkovetsky, Esq.
Peter Zinkovetsky is the founder and Managing Partner of Avenue Law Firm, where he focuses on New York real estate transactions and property-related legal matters. Admitted to the New York Bar in 2011, he represents local and international clients in real estate matters. He earned his Juris Doctor from New York Law School and a Bachelor of Business Administration in Finance from Pace University.
Peter has been recognized by Super Lawyers as a Rising Star for eight consecutive years and was included in the New York Real Estate Journal’s 2018 Ones to Watch list. He also teaches continuing legal education courses, writes about real estate law, and has been featured in publications including Forbes, The Real Deal, and the New York Post.
Unpaid Taxes and Charges
Unpaid property taxes and municipal charges can appear in title reports or related municipal searches, creating issues that must be addressed before closing. These outstanding balances are often paid from the seller’s proceeds, with the amount determined through current payoff figures.
The title company requires delinquent balances to be paid or otherwise resolved before approving the closing. The purchase contract also determines how property taxes and other charges are divided between the buyer and seller for the applicable billing period.
Disputed balances, newly identified charges, or collection proceedings can delay the transaction, especially when discovered close to closing day. Checking municipal records early gives the parties time to confirm outstanding amounts, resolve discrepancies, and provide any proof of payment required by the title company.
Open Permits and Code Violations
Open building permits and code violations can delay a Manhattan real estate closing even when they do not directly affect property ownership or title. The New York City Department of Buildings maintains permit and violation records, while the Department of Housing Preservation and Development (HPD) tracks housing maintenance violations for residential buildings.
These issues can affect a closing when the purchase contract requires the seller to resolve them, the lender imposes additional conditions, or an outstanding violation results in a lien. Addressing them can involve obtaining sign-offs, closing out permits, or correcting violations before the transaction proceeds.
Engineers or architects handle the technical work, while the attorney determines how the outstanding issues affect the closing. This includes reviewing the seller’s contractual obligations, negotiating escrow arrangements when appropriate, and determining whether the buyer can proceed with the unresolved condition.
Name and Entity Mismatches
Differences between the seller’s name on the deed, purchase contract, and identification documents can raise questions about ownership or signing authority. The title company requires supporting documentation to confirm that the correct person or entity is transferring the property.
Why Do Individual Name Differences Cause Problems?
Even small differences, such as a missing middle initial, a misspelled name, or a name change after marriage or divorce, can create uncertainty about the seller’s identity. To resolve these discrepancies, the title company can require an affidavit of identity supported by a marriage certificate, court order, or other relevant documents. If the recorded deed contains an error, a corrective deed can be necessary.
What If the Seller Is an LLC or Corporation?
When an LLC or corporation owns the property, the title company must verify the entity’s legal name and confirm that the person signing has authority to complete the sale. This involves examining the entity’s organizational records and applicable authorization documents.
For an LLC, these documents can include articles of organization, an operating agreement, and member or manager consent. A corporation can instead provide incorporation records, corporate resolutions, or other proof of signing authority, depending on its structure and the transaction.
Deed Errors
Errors in a recorded deed can raise questions about property ownership and delay a real estate closing. Under New York General Obligations Law § 5-703(1), transferring an interest in real property requires a signed deed or other written instrument, unless the transfer occurs by operation of law. The title company examines the chain of ownership to identify defects that need to be addressed before closing.
Common deed problems include:
- Legal description errors: The lot, block, or property boundaries are incorrectly described in the deed.
- Wrong grantee: The deed identifies the wrong person or incorrectly states how ownership is held.
- Signature or recording defects: A required party did not sign the deed, or an improper acknowledgment creates problems with recording the transfer.
- Defective prior transfers: An earlier deed was signed by someone who lacked authority to transfer the property.
These problems can be resolved through a corrective or confirmatory deed signed by the appropriate parties. If a previous owner has died or cannot be located, resolving the defect can require an estate proceeding or court action.
A quitclaim deed is another type of conveyance, but it only transfers whatever ownership interest the signer holds without guaranteeing valid title. It cannot correct an ownership defect if the signer never held that interest. For more information, see our guide on what a quitclaim deed is in New York.
Key Takeaway: A deed error is typically addressed with a corrective or confirmatory deed, signed and recorded by the proper parties. A quitclaim deed alone may not resolve the underlying defect, so check who must sign before relying on one.
Probate Gaps and Ownership Questions Can Stall a Sale
When a property owner dies, questions about inheritance and the authority to sell can delay a closing. The title company needs documentation confirming who owns the property and who has the legal right to transfer it.
What If a Past Owner’s Estate Was Never Probated?
In New York, real estate can pass directly to heirs upon the owner’s death without a formal estate proceeding. However, when an estate was never probated, missing ownership records or disputes among heirs can complicate the sale.
If the deceased owner left no will, New York’s intestacy laws determine who inherits the property. To confirm ownership, the title company can require death certificates, proof of family relationships, and other documents establishing the heirs’ interests before approving the transfer.
Who Can Sign for the Estate?
An executor or administrator selling property on behalf of an estate must have the appropriate legal authority. The title company examines letters issued by the Surrogate’s Court and any restrictions on the representative’s power to sell. When heirs inherit property directly, they can transfer their ownership interests without an estate representative, provided they have the necessary authority and documentation.
If ownership remains disputed or the required documents cannot establish clear title, resolving the issue can require court action. Our guide on the suit to quiet title explains how these disputes are addressed.
Boundary and Easement Issues
Boundary disputes and easement issues can arise when a survey reveals differences between the property’s physical boundaries and its recorded deed description. For example, a fence or structure could extend onto a neighboring property, or a shared driveway could cross a property line without a documented access agreement.
Recorded easements, including utility and access rights, can appear as exceptions in Schedule B of the title report. Buyers can proceed with these exceptions if the purchase contract and lender permit them. However, encroachments and unresolved boundary disputes can delay closing when the title company requires further documentation or a resolution before providing coverage.
Depending on the issue, resolving these discrepancies can involve a boundary line agreement, an easement agreement, or a corrected legal description. More serious ownership disputes can require court action before the transaction proceeds.
What Can You Do if the Title Isn’t Clear in New York?
If a title problem is identified before closing, your attorney can work with the title company, lender, and other parties to determine what is needed to resolve it. Depending on the issue, the parties can proceed with an approved arrangement, provide additional documentation, or postpone the closing until the defect is corrected.
How Long Can a Title Problem Delay a Closing?
The time needed to resolve a title problem depends on its complexity. Missing documents or mortgage satisfactions can take days or weeks to obtain, while ownership disputes, estate proceedings, and quiet title actions can take months or longer. There is no fixed timeline, especially when court involvement is required.
Can the Closing Date Be Adjourned?
Yes, the buyer and seller can agree to postpone the closing to allow more time to resolve outstanding title issues. The purchase contract’s adjournment provisions and any time-of-the-essence requirements determine how a delay affects each party’s rights and obligations.
Can Funds Be Held in Escrow to Cure Later?
Yes, certain title problems can be addressed by holding part of the seller’s proceeds in escrow until the issue is resolved. This arrangement requires approval from the relevant parties, including the title insurer and lender when applicable. However, escrow is not an option for every title defect.
Can a Buyer Cancel the Contract?
A buyer can have grounds to cancel if the seller fails to resolve a title defect within the period allowed under the contract. The right to cancel and recover the down payment depends on the contract terms, the nature of the defect, and applicable law. A title problem alone does not automatically justify cancellation.
Key Takeaway: The options for addressing an unresolved title problem depend on the purchase contract and the title company’s requirements. An attorney can help determine whether to proceed with an approved arrangement, postpone closing, or pursue cancellation when permitted.
Does Title Insurance Cover Problems Found Before Closing?
Title insurance can cover certain problems identified before closing if the insurer agrees to provide coverage. However, when a known defect remains listed as an exception in the final policy, losses arising from that issue are not covered. Exclusions, on the other hand, are broader limitations built into the policy.
Title insurance also protects against covered defects that were not discovered during the title search, including certain errors in the chain of ownership. Buyers should review the policy to determine which issues are covered and which remain their responsibility.
An attorney can examine the title commitment, explain its requirements and exceptions, and address outstanding issues before closing. Knowing the difference between a closing attorney and a real estate attorney also helps buyers and sellers understand the legal assistance involved in completing the transaction.
Speak With a Manhattan Real Estate Attorney
Unresolved title problems can delay a real estate closing and create uncertainty for buyers and sellers. Reviewing the requirements and exceptions in a title report helps identify which issues must be addressed before the transaction can proceed.
Managing Partner Peter Zinkovetsky and the attorneys at Avenue Law Firm assist buyers and sellers when title problems affect their closing plans. We help clients understand how unresolved liens, ownership disputes, and other title concerns affect their transactions, while addressing contractual obligations and options for proceeding with the closing.
If you have questions about a title report or an issue affecting your closing, contact Avenue Law Firm at (212) 729-4090 to schedule a consultation. Our office at 505 Park Avenue, #1201, in Manhattan serves buyers and sellers throughout New York City.
Frequently Asked Questions
Can I Close on a Property With a Lien on It?
Yes, a closing can proceed if the lien is paid from the seller’s proceeds and the title company accepts the arrangement. However, certain liens must be resolved before closing to meet the title insurer’s requirements and the lender’s conditions.
Who Pays to Clear a Title Problem?
The purchase contract determines who is responsible for clearing title defects. Sellers are typically required to resolve liens and other issues that prevent them from delivering the title promised under the contract. The parties can also negotiate how certain costs are handled.
How Long Does a Title Search Take?
The timeline depends on the property’s ownership history, the complexity of its records, and the title company’s workload. Properties with multiple past transfers or incomplete records can require additional research. Resolving problems discovered during the search can extend the time needed to prepare for closing.
What Is the Difference Between a Title Exception and an Exclusion?
A title exception is a specific matter listed in Schedule B of the title insurance policy that is not covered, such as a recorded easement. An exclusion is a broader limitation built into the policy that restricts coverage for certain types of risks.
Can a Title Problem Be Fixed After the Contract Is Signed?
Yes, title problems are often discovered and resolved after the purchase contract is signed. The seller can address outstanding liens, correct documentation errors, or satisfy other title requirements before closing. The time available to resolve these issues depends on the contract’s cure provisions and any agreed extensions.
