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Home > Underwriting > Title News > Fourteen Volume Eleven

SERIES: Fourteen VOLUME: Eleven DATED: November, 1999


A recently decided Appellate Division case involving an illegal deck extension examined the "governmental regulation" policy exclusion (i.e. exclusion number "1") and determined that certificate of occupancy / zoning matters are outside the scope of title insurance coverages (Wolf v. Commonwealth Land Title Insurance Company,[Appellate Division 1st Department, decided April 6, 1999]). The decision of the Court is as follows:

"Plaintiffs - Sellers commenced this breach of contract action to recover the cost of removing an illegal deck / extension to their premises under a title insurance policy issued by defendant. The deck / extension purportedly violated the certificate of occupancy and / or zoning regulation which resulted in a prospective buyer's cancellation of a contract of sale for the premises. Plaintiffs claim that defendant title company failed to disclose the existence of such violations in the title report. Civil Court denied both plaintiffs' and defendant's motions for summary judgment, finding triable issues as to whether plaintiffs' claims fell within a governmental regulation policy exclusion. Defendant title company appeals.

The issue presented by the parties in this case is 'strictly a legal one, relating to the appropriate construction of an insurance policy and whether coverage is afforded under facts which are not in dispute' (Stainless, Inc. v. Employers Fire Ins. Co., 69 A.D. 2d 27, 32, affd 49 N.Y. 2d 924). In the absence of an ambiguity giving rise to mixed questions of law and fact, it is the court's obligation to determine the rights or obligations of parties under insurance contracts based on the specific language of the policies (see, State of New York v. Home Indem. Co., 66 N.Y. 2d 669, 671).

The policy here at issue unambiguously excluded from its coverage terms any loss from:

'[a]ny laws, regulations or ordinances (including, but not limited to zoning, building, and environmental protection) as to the use, occupancy, subdivision or improvement of the premises, adopted or imposed by any governmental body, or the effect of any non-compliance with, or any violation thereof' (Schedule B[3] of standard policy).

The violation of a zoning regulation is not an encumbrance on the title and does not render title unmarketable. '[M]arketability of title is concerned with impairments on title to a property, i.e., the right to unencumbered ownership and possession, not with legal public regulation of the use of the property' (Voorheesville Rod & Gun Club v. Tompkins Co., 82 N.Y. 2d 564, 571). Since zoning laws regulate the manner in which the property can be used and do not impair title, the damages claimed by plaintiffs do not fall within the scope of the title insurance policy (see generally, Logan v. Barretto, ____ A.D. 2d ____, 675 N.Y.S. 2d 102 [2d Dept]; Chu v. Chicago Title Insurance Company, 89 A.D. 2d 574; 14 Warren's Weed, New York Real Property, Title Insurance § 4.04 [3] [a] [4th ed] at 77-78). We further note that plaintiffs did not allege that they ever entered into a special agreement with defendant to ascertain that the structure in issue was in conformity with the certificate of occupancy. Accordingly, defendant's motion for summary judgment dismissing the complaint should have been granted."


The New York State Insurance Department has recently approved a variety of new endorsement forms for immediate use in New York State. These new forms are the: (1) TIRSA Residential Contract Vendee Endorsement; (2) TIRSA Commercial Contract Vendee Endorsement; (3) TIRSA Option Endorsement; and (4) TIRSA Access Endorsement. Additionally, the Insurance Department has approved minor amendments to a number of existing endorsements which also are effective immediately but do not expand or reduce existing endorsement coverages. These amended endorsements are the (1) TIRSA Junior Loan Endorsement 1; (2) TIRSA Junior Loan Endorsement 2 and (3) ALTA 9 Endorsement (Restrictions, Encroachments, Minerals) .

The TIRSA Residential Contract Vendee Endorsement offers coverage that insures that the insured has a valid and enforceable interest as a contract vendee in connection with a contract which has been recorded in the appropriate county clerk's office and is issued in connection with the purchase of 1 - 4 family residences, individual residential condominium units or individual residential cooperative units. The TIRSA Commercial Contract Vendee Endorsement, which is utilized in all instances other than those involving 1 - 4 family residences, individual residential condominium units or individual residential cooperative units, insures that a contract vendee has a valid and enforceable interest as contract vendee under a contract of sale which has been recorded in the clerk's office in the county in which the land is located. The coverages under both endorsements are based upon the priority and enforceability of such contracts under Real Property Law Section 294 (recording executory contracts and powers of attorney). It should be noted that both endorsements contain exceptions from coverage for certain enumerated matters.

The newly adopted TIRSA Option Endorsement insures that an insured has a valid and enforceable interest as an optionee under an option to purchase an interest in identified real property when the option is contained in a lease or other agreement which has been recorded in the appropriate county clerk's office in the county in which the land which is the subject of the option is located. The coverages under the TIRSA Option Endorsement are based upon Real Property Law Section 294 (7) which provides for the priority and enforceability of such recorded options.

The newly adopted TIRSA Access Endorsement is issued in conjunction with ALTA loan policies only and provides coverage that specifically "insures the insured against loss which the insured shall sustain in the event that the described land does not abut upon a physically opened public street known as _______".

All of these newly approved (and revised) endorsement forms are available for immediate issuance in connection with Monroe policies.

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