A New York appellate court recently ruled in a case involving Fidelity National Title Insurance Company and Sky Abstract Corp., impacting the title insurance industry and mortgage recording practices. The court's decision, issued on August 27, 2026, addressed the responsibilities of title insurance agencies and their obligations to timely record mortgages.
The dispute began when Fidelity National Title Insurance Company (Fidelity) filed a lawsuit against Sky Abstract Corp. (Sky) and Joseph Kunstlinger, who guaranteed Sky's obligations to Fidelity. The case arose from Sky's failure to record a mortgage on a property in Brooklyn, which led to significant financial losses for Fidelity.
Fidelity had retained Sky to issue a title insurance policy and record the mortgage for a property sold to Greenpoint Mortgage Funding Inc. However, Sky did not record the mortgage until several months after issuing the policy. During this delay, the property was sold to Alexander Aber, who obtained a mortgage from JPMorgan Chase Bank. Chase recorded its mortgage promptly, and when Aber defaulted, Chase initiated foreclosure proceedings.
Fidelity ultimately paid Greenpoint for the loss of its first priority position due to the delay in recording the mortgage. In response, Fidelity sued Sky and Kunstlinger. Kunstlinger then filed third-party claims against Nationwide Court Services, alleging that they were responsible for the failure to record the mortgage.
The New York Appellate Division reviewed the case and issued its ruling regarding Kunstlinger's claims against Nationwide. The court affirmed the lower court's decision to dismiss these claims, stating that Kunstlinger did not establish the necessary relationship to support a claim for common-law indemnification.
The court noted, "The key element of a common-law cause of action for indemnification is not a duty running from the indemnitor to the injured party, but rather is a separate duty owed the indemnitee by the indemnitor." This means that Kunstlinger needed to show a direct relationship between himself and Nationwide to successfully claim indemnification.
In its decision, the court emphasized that Kunstlinger's allegations failed to demonstrate such a relationship. Although he claimed that Sky provided Nationwide with the mortgage for recording, the court found that this did not establish the necessary connection for a common-law indemnity claim.
The ruling is significant for the title insurance industry, as it clarifies the responsibilities of title insurance agencies and their obligations to record mortgages promptly. The court's decision underscores the importance of adhering to recording timelines to prevent complications in property transactions.
Going forward, this ruling may influence how title insurance companies manage their relationships with recording agencies. It may also affect how indemnification claims are approached in similar cases, as parties may need to establish clearer connections to support their claims.
While the court's ruling dismisses Kunstlinger's claims against Nationwide, it does not prevent further legal actions related to this case. Kunstlinger may still have options to appeal the decision or pursue related claims against other parties involved in the mortgage transaction.
As the case continues to unfold, it highlights the complexities of title insurance and the importance of timely mortgage recording in protecting the interests of all parties involved in real estate transactions.