The title closing: recording acts, chain and abstract of title, title insurance, and RESPA

Ownership, records, and closing

Title is the ownership interest; a deed conveys it. Recording places the instrument in the public records. New York follows a race-notice approach: a later purchaser for value must act in good faith without notice and record first to obtain recording-act protection. Actual knowledge, constructive notice from proper recording, and facts requiring inquiry matter. Recording does not cure a forged instrument.

Search and protection

The chain of title is the sequence of transfers. An abstract of title summarizes recorded instruments affecting the property. A title search examines ownership and matters such as mortgages, judgments, and easements. Gaps and unreleased liens need investigation and resolution.

An owner's title policy protects the owner's insured interest; a lender's policy protects the lender's insured mortgage interest. Title insurance generally addresses covered defects existing before the policy date that surface later. Coverage depends on policy terms, exclusions, and exceptions. Review the commitment and satisfy its requirements before closing; an excepted easement can remain on the property.

New York contract recording

Real Property Law § 294 permits recording an executory contract or qualifying memorandum. The memorandum identifies the parties, property, and time fixed for conveyance, and states a purchaser's right to possession if applicable. Its recording protection is time-limited, generally through the thirtieth day after the day fixed for conveyance. A memorandum is not a deed.

Federal settlement protections

RESPA, the federal Real Estate Settlement Procedures Act, governs covered mortgage transactions in New York. It addresses settlement disclosures, service-provider choice, kickbacks, and mortgage escrow accounts. Most covered closed-end consumer mortgages use a Loan Estimate and Closing Disclosure; older settlement forms remain for certain transactions. Compensation for actual services differs from payment for a referral. An affiliated-business disclosure alone does not authorize required use of the affiliate.

Under 12 U.S.C. § 2608, a seller cannot condition a sale financed with a federally related mortgage loan on the buyer purchasing title insurance from a particular company. Liability is three times the charges for that insurance.

Mortgage escrow accounts pay taxes, insurance, and other property charges; they differ from contract deposits. Section 2609 requires an initial escrow statement at closing or within 45 days after account establishment, and notice of shortages at least annually.