Cooperative Apartment Lien Searches

Over the past several years, the prices for New York area cooperative apartments have soared. With such higher values comes a commensurately greater impact in the event of a title loss, and yet, until recently, title insurance products offering protection comparable to that which is available for real estate have been limited.
Historically, cooperative apartment buyers and their lenders instead have relied on the assurances of competent due diligence backed up by the malpractice insurance of their attorneys. But in the new pricing stratosphere where ordinary two bedroom co-ops are trading in the several-million-dollar range, attorneys, too, are faced with greater potential risk for even the smallest error.

Traditionally, lenders and buyers have required title insurance protection for loans on and acquisitions of real estate and condominiums. Because a cooperative apartment is not real estate but a purchase of an interest in personal property in the form of stock in a corporation (that either owns a fee or leasehold interest in an apartment house) together with a long-term lease of a particular apartment, many lawyers have not obtained title insurance protection for their clients on the purchase or financing of a cooperative apartment unless there was a particular, known risk. Liens for security interests against cooperative units are perfected by Uniform Commercial Code filings against the owner’s name, indexed in certain counties, such as in the city of New York, in the land records in the county in which the cooperative building is located.

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