Title Insurance Policies
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Title Insurance Policies

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Review of the current form of title insurance policy

Review of the current form of title insurance policy

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Title Insurance Policies Title Insurance Policies Presentation Transcript

  • THE NEW AND IMPROVED ALTA 2006 TITLE POLICY FOR OWNER AND LOAN POLICIES To be issued by all title insurance companies as a replacement for the 1992 ALTA policy
  • THREE NEW POLICIES
    • 1. The 2006 ALTA Owner’s Policy
    • 2. The 2006 ALTA Loan Policy
    • 3. The 2006 ALTA Short Form Residential Loan Policy
    • All of the above policies have been adopted by American Land Title Association (ALTA) as of July 17, 2007.
  • Outgoing Policy Forms
    • The 1992 ALTA policy forms and related endorsements may still be available upon request.
  • Why change the policy?
    • The last form was originally known as the 1987 forms, but then amended in 1992 by the addition of the Creditor’s Rights exclusion.
    • A major goal in creating the revised form was to eliminate terms considered to be EXCLUSIONS TO THE EXCLUSIONS.
  • Covered Risks
    • The COVERED RISKS section of the 2006 policies replace the old “insuring clauses” section of the prior form of policy.
    • The significant changes to coverages are as follows:
  • Covered Risks
    • Section 1.
    • Title being vested other than as stated in Schedule A.
    • (the word “Title” is defined later in the policy to mean the estate or interest described in Schedule A)
  • Covered Risks
    • Section 2:
    • Any defect in or lien or encumbrance on the title, including insurance against loss from a defect in Title caused by:
    • Fraud, forgery, undue influence, duress, incompetency, incapacity or impersonation,
    • Failure of any person or Entity to have authorized a transfer or conveyance;
    • A document affecting title not properly created, executed,…notarized or delivered.
    • Failure to perform those acts necessary to create a document by electronic means authorized by law.
    • A document executed under a falsified expired or otherwise invalid power of attorney.
    • Taxes due or payable but unpaid (carve out here in the GAP coverage regarding future taxes or insurance after closing and prior to recording of the documents)
  • Covered Risks
    • Section 2:
    • Any defect in or lien or encumbrance on the title, including insurance against loss from a defect in Title caused by:
    • Fraud, forgery, undue influence, duress, incompetency, incapacity or impersonation,
    • Failure of any person or Entity to have authorized a transfer or conveyance;
    • A document affecting title not properly created, executed,…notarized or delivered.
    • Failure to perform those acts necessary to create a document by electronic means authorized by law.
    • A document executed under a falsified expired or otherwise invalid power of attorney.
    • Taxes due or payable but unpaid (carve out here in the GAP coverage regarding future taxes or insurance after closing and prior to recording of the documents)
    :
  • Covered Risks
    • Section 2:
    • Any defect in or lien or encumbrance on the title, including insurance against loss from a defect in Title caused by:
    • Fraud, forgery, undue influence, duress, incompetency, incapacity or impersonation,
    • Failure of any person or Entity to have authorized a transfer or conveyance;
    • A document affecting title not properly created, executed,…notarized or delivered.
    • Failure to perform those acts necessary to create a document by electronic means authorized by law.
    • A document executed under a falsified expired or otherwise invalid power of attorney.
    • Taxes due or payable but unpaid (carve out here in the GAP coverage regarding future taxes or insurance after closing and prior to recording of the documents)
  • Covered Risks
    • Section 2:
    • Any defect in or lien or encumbrance on the title, including insurance against loss from a defect in Title caused by:
    • Fraud, forgery, undue influence, duress, incompetency, incapacity or impersonation,
    • Failure of any person or Entity to have authorized a transfer or conveyance;
    • A document affecting title not properly created, executed,…notarized or delivered.
    • Failure to perform those acts necessary to create a document by electronic means authorized by law.
    • A document executed under a falsified expired or otherwise invalid power of attorney.
    • Taxes due or payable but unpaid (carve out here in the GAP coverage regarding future taxes or insurance after closing and prior to recording of the documents)
  • Covered Risks
    • Section 2:
    • Any defect in or lien or encumbrance on the title, including insurance against loss from a defect in Title caused by:
    • Fraud, forgery, undue influence, duress, incompetency, incapacity or impersonation,
    • Failure of any person or Entity to have authorized a transfer or conveyance;
    • A document affecting title not properly created, executed,…notarized or delivered.
    • Failure to perform those acts necessary to create a document by electronic means authorized by law.
    • A document executed under a falsified expired or otherwise invalid power of attorney.
    • Taxes due or payable but unpaid (carve out here in the GAP coverage regarding future taxes or insurance after closing and prior to recording of the documents)
  • Covered Risks
    • Section 2:
    • Any defect in or lien or encumbrance on the title, including insurance against loss from a defect in Title caused by:
    • Fraud, forgery, undue influence, duress, incompetency, incapacity or impersonation,
    • Failure of any person or Entity to have authorized a transfer or conveyance;
    • A document affecting title not properly created, executed,…notarized or delivered.
    • Failure to perform those acts necessary to create a document by electronic means authorized by law.
    • A document executed under a falsified expired or otherwise invalid power of attorney.
    • Taxes due or payable but unpaid (carve out here in the GAP coverage regarding future taxes or insurance after closing and prior to recording of the documents)
  • Covered Risks
    • Section 2:
    • Any defect in or lien or encumbrance on the title, including insurance against loss from a defect in Title caused by:
    • Fraud, forgery, undue influence, duress, incompetency, incapacity or impersonation,
    • Failure of any person or Entity to have authorized a transfer or conveyance;
    • A document affecting title not properly created, executed,…notarized or delivered.
    • Failure to perform those acts necessary to create a document by electronic means authorized by law.
    • A document executed under a falsified expired or otherwise invalid power of attorney.
    • Taxes due or payable but unpaid (carve out here in the GAP coverage regarding future taxes or insurance after closing and prior to recording of the documents)
  • Survey coverage
    • A covered risk includes:
    • 2.c: Any encroachment, encumbrance, violation, variation or adverse circumstance affecting the Title that would be disclosed by an accurate and complete land survey of the Land. The term “encroachment” includes only existing improvements.
    • Note that an ALTA 9 allows for coverage over damage to future improvements but only as to parties enforcing surface mineral rights, not as to encroachments. You may be able to convince the title company to amend the ALTA 9 to eliminate the word “existing” and thereby receive coverage over future improvements.
  • Covered Risks
    • 3. Unmarketable Title:
    • The definition of this term has been expanded in the 2006 Policy to include coverage when a lessee is released from an obligation to lease or a lender is released from an obligation to lend due to a contractual condition requiring the delivery of marketable title.
  • Covered Risks
    • 4. No right of Access (same coverage)
    • 5. The violation or enforcement of any law, ordinance, permit or governmental regulation (including zoning and building)…if notice setting forth the violation had been provided in the public record, and was not shown on Schedule B as an exception.
    • 6. Enforcement based on police power if notice of the enforcement action had been provided in the public record, and was not shown on Schedule B as an exception
    • 7. Exercise of right of eminent domain if a notice of the exercise had been provided in the public record, and was not shown on Schedule B as an exception.
    • 8. Any taking that has occurred and is binding on the rights of Purchaser for value and without Knowledge.
  • Covered Risks
    • 4. No right of Access (same coverage)
    • 5. The violation or enforcement of any law, ordinance, permit or governmental regulation (including zoning and building)…if notice setting forth the violation had been provided in the public record, and was not shown on Schedule B as an exception.
    • 6. Enforcement based on police power if notice of the enforcement action had been provided in the public record, and was not shown on Schedule B as an exception
    • 7. Exercise of right of eminent domain if a notice of the exercise had been provided in the public record, and was not shown on Schedule B as an exception.
    • 8. Any taking that has occurred and is binding on the rights of Purchaser for value and without Knowledge.
  • Covered Risks
    • 4. No right of Access (same coverage)
    • 5. The violation or enforcement of any law, ordinance, permit or governmental regulation (including zoning and building)…if notice setting forth the violation had been provided in the public record, and was not shown on Schedule B as an exception.
    • 6. Enforcement based on police power if notice of the enforcement action had been provided in the public record, and was not shown on Schedule B as an exception
    • 7. Exercise of right of eminent domain if a notice of the exercise had been provided in the public record, and was not shown on Schedule B as an exception.
    • 8. Any taking that has occurred and is binding on the rights of Purchaser for value and without Knowledge.
  • Covered Risks
    • 4. No right of Access (same coverage)
    • 5. The violation or enforcement of any law, ordinance, permit or governmental regulation (including zoning and building)…if notice setting forth the violation had been provided in the public record, and was not shown on Schedule B as an exception.
    • 6. Enforcement based on police power if notice of the enforcement action had been provided in the public record, and was not shown on Schedule B as an exception
    • 7. Exercise of right of eminent domain if a notice of the exercise had been provided in the public record, and was not shown on Schedule B as an exception.
    • 8. Any taking that has occurred and is binding on the rights of Purchaser for value and without Knowledge.
  • Covered Risks
    • 4. No right of Access (same coverage)
    • 5. The violation or enforcement of any law, ordinance, permit or governmental regulation (including zoning and building)…if notice setting forth the violation had been provided in the public record, and was not shown on Schedule B as an exception.
    • 6. Enforcement based on police power if notice of the enforcement action had been provided in the public record, and was not shown on Schedule B as an exception
    • 7. Exercise of right of eminent domain if a notice of the exercise had been provided in the public record, and was not shown on Schedule B as an exception.
    • 8. Any taking that has occurred and is binding on the rights of Purchaser for value and without Knowledge.
  • Covered Risks
    • 9. The invalidity or unenforceability of the lien of the insured mortgage upon the title.
    • No substantive change from 1992 policy, other than adding coverage over failure to perform the acts necessary to create a document by electronic means authorized by law.
    • 10. The lack of priority of the lien of the insured mortgage on the Title over any other lien or encumbrance.
    • No substantive change from 1992 policy.
  • Covered Risks
    • 11. (Mechanic’s Lien coverage)
    • No substantive changes from 1992 Policy.
    • 12. The invalidity or unenforceability of any assignment of the Insured Mortgage…
    • No substantive changes from 1992 Policy.
  • Covered Risks
    • 13. The invalidity, unenforceability, lack of priority or avoidance of the lien of the insured Mortgage upon the Title:
      • Resulting from a …transfer of interest…occurring prior to the transaction creating the lien…creating the…fraudulent or preferential transfer under federal bankruptcy, state insolvency, or similar creditor’s rights laws.
      • Resulting from a preferential transfer by reason of the failure of the recording in the Public records to be timely or to impart notice to a BFP, judgment or lien creditor.
      • This is new creditor’s rights coverage addressing transactions occurring prior to the transaction creating the interest being insured. For coverage over the subject transaction, you will need the Creditor’s Rights Endorsement, ALTA Form 21-06.
  • Covered Risk
    • 14. The GAP
    • Any defect in or lien or encumbrance on the Title or other matter included in Covered Risks 1 through 13 that has been created or attached or has been filed or recorded in the Public Records subsequent to the Date of Policy and prior to the recording of the Insured Mortgage in the Public Records.
    • This is an expansion of the prior coverage to automatically provide coverage over the GAP after your receipt of the marked-up commitment at closing. However, the coverage will not include any tax or assessment obligations that arise in the gap that remain unpaid. But, typically there is a schedule B item that is not removed at closing: “subject to taxes and assessments that constitute a lien but are not yet due and payable”. Otherwise, make sure the mark-up shows taxes paid in full.
  • GENERAL EXCEPTIONS
    • The standard general exceptions will no longer take exception for matters that may be disclosed by an accurate survey of the premises.
    • The ALTA policy will no longer have a survey requirement. However, the local agents may add back that requirement as a Schedule B exception based on the circumstances.
  • CONDITIONS FOR ALL POLICIES (formerly known as Conditions and Stipulations)
    • 1. Definition of Terms
    • 2. Continuation of Insurance
    • 3. Notice of Claim to be given by Insured Claimant
    • 4. Proof of Loss
    • 5. Defense and Prosecution
    • 6. Duty of Insured Claimant to Cooperate
    • 7. Options to Pay or Otherwise Settle Claims
    • 8. Determination and Extent of Liability
    • 9. Limitation of Liability
    • 10. Reduction of Insurance
    • 11. Payment of Loss
    • 12. Rights of Recovery upon Payment or Settlement
    • 13. Arbitration
    • 14. Liability Limited to Policy
  • CONDITIONS FOR ALL POLICIES
    • 1. Definition of Terms
    • Definition of “Insured” has been expanded to include the following:
    • The owner of the indebtedness and each successor in ownership of the indebtedness, whether the owner or successor owns the indebtedness for its own account or as a trustee or other fiduciary.
  • Definition of “Insured” continued
    • The person or Entity who has “control” of the “transferable record” (as such terms are defined by applicable electronic transactions law)
    • Successors to an insured by dissolution, merger, consolidation, distribution, or reorganization.
    • Successors to an Insured by its conversion to another kind of Entity
  • Definition of “Insured” continued
    • A Grantee of an Insured under a deed delivered without payment of actual valuable consideration conveying the title:
      • if the stock, shares, memberships or other equity interests of the grantee are wholly-owned by the named insured;
      • if the grantee wholly owns the named insured; or
      • If the grantee is wholly-owned by an affiliated Entity of the named insured provided the affiliated Entity and the named insured are both wholly-owned by the same person or Entity.
      • Reserving however, all rights and defenses as to any successor that the insurer would have had against any predecessor Insured, unless the successor acquired the Indebtedness as a purchaser for value without Knowledge of the asserted defect, lien, encumbrance or other matter insured against by the policy.
      • A Non-Imputation Endorsement is typically used to eliminate the above carve-out of coverage. An Affidavit is typically required by the insurer, be signed by the new insured party. The endorsement and a form of the Affidavit required by Chicago Title Company is being provided in KRC.
  • Definition of “Insured” continued
    • A Grantee of an Insured under a deed delivered without payment of actual valuable consideration conveying the title:
      • if the stock, shares, memberships or other equity interests of the grantee are wholly-owned by the named insured;
      • if the grantee wholly owns the named insured; or
      • If the grantee is wholly-owned by an affiliated Entity of the named insured provided the affiliated Entity and the named insured are both wholly-owned by the same person or Entity.
      • Reserving however, all rights and defenses as to any successor that the insurer would have had against any predecessor Insured, unless the successor acquired the Indebtedness as a purchaser for value without Knowledge of the asserted defect, lien, encumbrance or other matter insured against by the policy .
      • A Non-Imputation Endorsement is typically used to eliminate the above carve-out of coverage. An Affidavit is typically required by the insurer, to be signed by the new insured party. The endorsement and a form of the Affidavit required by Chicago Title Company is being provided in KRC.
  • Definition of Terms - Continued
    • Definition of “Indebtedness”.
    • The sum of:
    • a. The amount of principal disbursed as of the date of the policy;
    • b. the amount of principal disbursed subsequent to the date of the policy;
    • c. the construction loan advances made subsequent to the date of the policy;
    • d. interest on the loan
    • e. prepayment premiums and other fees and penalties
    • f. expenses of foreclosure
    • g. protective advances
    • However, the insured lender MUST ask for a Future Advance Endorsement to receive coverage over advances made subsequent to the date of the policy unless it is a construction loan with pending disbursement endorsements being issued.
  • CONDITIONS FOR ALL POLICIES
    • 2. Continuation of Insurance:
    • The policy continues in force after conveyance by an insured so long as:
    • a. The insured retains an estate or interest in the Land; or
    • b. The insured sells the property and takes back a purchase money mortgage from the purchaser (however, if the insured then assigns his interest in the mortgage to a third party, coverage does not continue to such third party); or
    • c. The insured has liability by reason of warranties in any transfer or conveyance of the title.
  • CONDITIONS FOR ALL POLICIES
    • 3. Notice of Claim to be Given by Insured Claimant.
    • Prompt notice is required in writing upon the occurrence of the following:
    • a. Litigation in which any third party asserts a claim covered by this policy adverse to the Insured (limited to only those stated causes of action alleging matters insured against by the policy);
    • b. Knowledge (actual knowledge, not imputed or constructive) of any claim of title or interest that is adverse to the title or lien of the insured mortgage, and that which might cause loss of damage for which the title company may be liable; or
    • c. If the title is rejected as Unmarketable Title (an alleged or apparent matter that would permit a prospective purchaser, lessee or lender to be released from the obligation to purchase, lease or lend if there is a contractual condition requiring the delivery of marketable title).
  • CONDITIONS FOR ALL POLICIES
    • 3. Notice of Claim to be Given by Insured Claimant.
    • Prompt notice is required in writing upon the occurrence of the following:
    • a. Litigation in which any third party asserts a claim covered by this policy adverse to the Insured (limited to only those stated causes of action alleging matters insured against by the policy);
    • b. Knowledge (actual knowledge, not imputed or constructive) of any claim of title or interest that is adverse to the title or lien of the insured mortgage, and that which might cause loss or damage for which the title company may be liable; or
    • c. If the title is rejected as Unmarketable Title (an alleged or apparent matter that would permit a prospective purchaser, lessee or lender to be released from the obligation to purchase, lease or lend if there is a contractual condition requiring the delivery of marketable title).
  • CONDITIONS FOR ALL POLICIES
    • 3. Notice of Claim to be Given by Insured Claimant.
    • Prompt notice is required in writing upon the occurrence of the following:
    • a. Litigation in which any third party asserts a claim covered by this policy adverse to the Insured (limited to only those stated causes of action alleging matters insured against by the policy);
    • b. Knowledge (actual knowledge, not imputed or constructive) of any claim of title or interest that is adverse to the title or lien of the insured mortgage, and that which might cause loss or damage for which the title company may be liable; or
    • c. If the title is rejected as Unmarketable Title (an alleged or apparent matter that would permit a prospective purchaser, lessee or lender to be released from the obligation to purchase, lease or lend if there is a contractual condition requiring the delivery of marketable title).
  • CONDITIONS FOR ALL POLICIES
    • 3. Notice of Claim to be Given by Insured Claimant.
    • Prompt notice is required in writing upon the occurrence of the following:
    • a. Litigation in which any third party asserts a claim covered by this policy adverse to the Insured (limited to only those stated causes of action alleging matters insured against by the policy);
    • b. Knowledge (actual knowledge, not imputed or constructive) of any claim of title or interest that is adverse to the title or lien of the insured mortgage, and that which might cause loss of damage for which the title company may be liable; or
    • c. If the title is rejected as Unmarketable Title (an alleged or apparent matter that would permit a prospective purchaser, lessee or lender to be released from the obligation to purchase, lease or lend if there is a contractual condition requiring the delivery of marketable title).
  • Warning Regarding Notice of Claim
    • THE POLICY WILL IDENTIFY THE ADDRESS LOCATION REQUIRED BY THE INSURER FOR PROVIDING NOTICE OF A CLAIM UNDER THE POLICY.
    • THE ADDRESS WILL BE SHOWN ON THE LAST PARAGRAPH OF THE “CONDITIONS” SECTION OF THE POLICY JACKET
    • NOTICE TO THE LOCAL AGENT AND NOT THE ABOVE ADDRESS MAY BE DEEMED TO CAUSE PREJUDICE BY THE FAILURE OF THE INSURED CLAIMANT TO PROVIDE PROMPT NOTICE, WHEREIN THE LIABILITY IS REDUCED TO THE EXTENT OF THE PREJUDICE
  • CONDITIONS FOR ALL POLICIES
    • 4. Proof of Loss
    • A sworn proof of loss is no longer automatically required , and failure to provide
    • the proof of loss no longer allows the insurer to terminate the policy.
    • Instead, the insurer must first attempt to determine the loss, and then
    • may require the insured claimant to provide a signed proof of loss, but
    • it no longer needs to be sworn to by the insured claimant.
    • If requested, the proof of loss must describe the defect, lien, encumbrance or other matter insured against that constitutes the basis of the loss or damage, and shall state, to the extent possible, the basis of calculating the amount of the loss or damage. (same as 1992 requirement, but not sworn)
  • CONDITIONS FOR ALL POLICIES
    • 5. Defense and Prosecution of Actions.
    • No substantive change to 1992 policy.
    • Upon written request by the insured, the insurer, at its own cost and without reasonable delay, shall provide for the defense of an insured in litigation in which any third party asserts a claim covered by the policy adverse to the insured (However, the insurer may at its option choose to pay, settle or buy out the insured’s interest).
  • CONDITIONS FOR ALL POLICIES
    • 6. Duty of Insured Claimant to Cooperate.
    • Whenever requested by the insurer, the insured shall give the insurer all reasonable aid in securing evidence, obtaining witnesses, prosecuting or defending the action or proceeding, or effecting settlement and any other lawful act that in the opinion of the insurer may be necessary or desirable to establish the title or lien of insured or any other matter as insured.
    • The insurer may reasonably require the insured claimant to submit to examination under oath by any authorized representative of the insured and to produce for examination, inspection and copying, all records, in whatever medium maintained, including…e-mails, discs, tapes and videos…, and the insured must grant permission to the authorized representative of the insured to examine the records in the custody or control of third parties that reasonably pertain to the loss or damage.
    • CHANGE FROM 1992 POLICY: No sworn statement of loss by insured is required, but now insured claimant must submit to examination under oath, and provide all records including e-mails.
  • CONDITIONS FOR ALL POLICIES
    • 6. Duty of Insured Claimant to Cooperate.
    • Whenever requested by the insurer, the insured shall give the insurer all reasonable aid in securing evidence, obtaining witnesses, prosecuting or defending the action or proceeding, or effecting settlement and any other lawful act that in the opinion of the insurer may be necessary or desirable to establish the title or lien of insured or any other matter as insured.
    • The insurer may reasonably require the insured claimant to submit to examination under oath by any authorized representative of the insured and to produce for examination, inspection and copying, all records, in whatever medium maintained, including…e-mails, discs, tapes and videos…, and the insured must grant permission to the authorized representative of the insured to examine the records in the custody or control of third parties that reasonably pertain to the loss or damage.
    • CHANGE FROM 1992 POLICY: No sworn proof of loss by insured is required, but now insured claimant must submit to examination under oath, and provide all records including e-mails.
  • CONDITIONS FOR ALL POLICIES
    • 7. Options to Pay or Otherwise Settle Claims; Termination of Liability
    • No significant changes from 1992 policy.
    • In case of a claim under the policy, the insurer has the option to pay or tender payment of the amount of the insurance, together with any costs, attorneys’ fees and expenses incurred by the insured claimant that were authorized by the insurer.
  • CONDITIONS FOR ALL POLICIES
    • 8. Determination and Extent of Liability
    • Two new expansions of coverage.
    • If the insurer takes the defense and is unsuccessful in establishing title in the insured, then:
    • a. the amount of insurance is increased by an additional 10%; and
    • b. The insured can have the loss determined as of the date the claim was made or as of the date it is settled and paid.
  • CONDITIONS FOR ALL POLICIES
    • Elimination of Co-Insurance Provision
    • In the 1992 policy, when the owner purchased insurance in an amount less than 80% of the full consideration paid for the land, or when the insured subsequently constructed improvements that increased the value of the land by 20% over the amount of insurance purchased, then the insured owner was considered a co-insurer and recovery was based on a prorata calculation.
    • This provision is now removed.
  • CONDITIONS FOR ALL POLICIES
    • Elimination of Apportionment Provision
    • In the 1992 policy, when the policy included two or more parcels that were not used as a single site, and a claim arose against one of the parcels, then the insured could limit the insured’s maximum recovery by prorating based on the value of each parcel as of the date of the policy.
    • This provision is now removed.
  • CONDITIONS FOR ALL POLICIES
    • 9. Limitation of Liability
    • No significant change from 1992 policy.
    • In the event of any litigation, either by the insurer or with the consent of the insurer, the insurer shall have no liability for loss or damage until there has been a final determination and disposition of all appeals.
  • CONDITIONS FOR ALL POLICIES
    • 10. Reduction of Insurance; Reduction or Termination of Liability.
    • 1992 Policy: All payments under this policy shall reduce the amount of insurance pro tanto.
    • 2006 Policy: All payments under this policy shall reduce the Amount of Insurance by the amount of the payment.
    • The effect of this change is the elimination of the need for a Last Dollar Endorsement. In the past, if the loan amount was greater than the amount of insurance coverage because of additional collateral, then as payments are made by the borrower to reduce the principal, the policy coverage would be reduced. The insurer would argue that it was the first $ that was covered. So the Last Dollar endorsement was needed to switch from first $ to last $.
    • Now, only claim payments serve to reduce the Amount of Insurance.
  • CONDITIONS FOR ALL POLICIES
    • 11. Payment of Loss
    • The 1992 policy required, as a condition to insured’s payment obligations, to produce the policy or proof of it being lost or destroyed.
    • Now, no such requirement exists since the title company should be able to keep its own records.
  • CONDITIONS FOR ALL POLICIES
    • 12. Rights of Recovery upon Payment or Settlement.
    • When a claim has been settled, the insurer is automatically subrogated and entitled to the rights of the insured claimant without the need for any further document. However, if requested by the insurer, the insured claimant must execute this subrogation, but that obligation is deferred if the claimant received only a payment on account of the claim that does not fully cover the loss.
  • CONDITIONS FOR ALL POLICIES
    • 13. Arbitration
    • The policy has been revised to increase from $1 million to $2 million the Amount of Insurance threshold up to which arbitration can be invoked unilaterally by either the insured or the insurer. Over this threshold, arbitration is used only when agreed by both insured and insurer.
    • The Waiver of Arbitration Endorsement is available.
  • CONDITIONS FOR ALL POLICIES
    • 14. Liability Limited to this Policy
    • No significant changes from the 1992 Policy.
    • If an endorsement isn’t signed, then it must be expressly incorporated by Schedule A of the policy.
  • Schedule A of the 2006 Policies
    • The ALTA review committee has created an option Section 6 to Schedule A which would identify a list of common ALTA endorsements for a check-off inclusion to the policy. This optional Section 6 is not currently being used locally, but may begin to appear in the future.
  • Endorsements
    • The ALTA endorsement forms were all revised to include defined terms provided in the policies. There are additional state endorsements that are available.
    • All of the ALTA Endorsements will soon be available on KRC.
    • State endorsements issued by Chicago Title will soon be available on KRC.
  • New Endorsements
    • There are a few new endorsements made available under the 2006 Owner’s and Loan policies. a. Manufactured Housing
    • b. Restrictions, Encroachments, Minerals
    • c. Location
    • d. Future Advance
  • Manufactured Housing Endorsement
    • ALTA 7.1-06 Manufactured Housing Unit – Conversion - Loan
    • Revises the term “Land” under the policy to include the manufactured housing unit located on the Land at Date of Policy, and insures against loss or damage if, at Date of Policy:
    • a. The unit is not located on the Land.
    • b. The unit is not “real property” under the law of the state where the Land is located.
    • c. The owner of the Land is not the owner of the unit.
    • d. Any lien is attached to the unit as personal property.
    • e. The lien of the insured mortgage is not enforceable against the Land in a single foreclosure proceeding.
    • The Owner’s Policy version is 7.2-06 and it includes all except “e”.
  • Restrictions, Encroachments, Minerals
    • The ALTA 9 Endorsement has now become three different endorsements, one for the Loan policy, and two versions for the Owner’s policy.
      • ALTA 9.3-06 Restrictions, Encroachments, Minerals – Loan Policy
      • ALTA 9.4-06 Restrictions, Encroachments, Minerals –Owner’s Policy – Unimproved Land
      • ALTA 9.5-06 Restrictions, Encroachments, Minerals – Owner’s Policy – Improved Land
  • ALTA 9 New Protection
    • In each of the three versions, an additional insuring provision has been added to afford coverage for damage to “improvements”, including lawns, shrubbery or trees, located on the Land on or after Date of Policy resulting from the future exercise of any right of surface entry to extract or develop minerals that have been severed from the underlying title and are excepted by a Schedule B exception.
    • However, there was no change from the prior endorsement wherein coverage remains for damage only to “existing improvements” , including lawns, shrubbery, or trees, located or encroaching on that portion of the Land subject to any easement excepted in Schedule B.
  • ALTA 9 Owner’s Versions
    • Unimproved Land version:
    • Coverage over damage to improvements (excluding lawns, shrubbery or trees) constructed on the Land after Date of Policy resulting from the future exercise of any right to use the surface of the Land for extraction or development of minerals…
    • Improved Land version:
    • Coverage over damage to improvements (excluding lawns, shrubbery or trees) located on the Land on or after Date of Policy resulting from the future exercise of any right to use the surface of the Land for extraction or development of minerals…
  • Location Endorsements
    • ALTA Form 22-06 Location: This deals with the type of improvement that is located on the land and the applicable street address.
      • Coverage over loss or damage by reason of the failure of a ( description of improvement ) known as ( street address ) to be located on the Land at Date of Policy.
  • Location Endorsement - Map
    • ALTA Form 22.1-06 Location and Map
      • Coverage against loss or damage by reason of the failure of ( description of improvement ) known as ( street address ) to be located on the Land at Date of Policy.
      • Coverage against loss or damage by reason of failure of the map attached to this policy to correctly show the location and dimensions of the Land according to the Public Records.
      • Since a survey is no longer required for coverage over survey matters, this allows a way to provide additional coverage when your client doesn’t want to pay for a survey, but you want to make sure that the building is actually located on the property .
  • Future Advance Endorsements
    • There are 4 different types of Future Advance Endorsements:
    • a. Form 14-06 – Priority
    • b. Form 14.1-06 – Knowledge
    • c. Form 14.2-06 – Letter of Credit
    • d. Form 14.3-06 – Reverse Mortgage
  • Future Advance Endorsement
    • We should be asking for Form 14-06 (Future Advance – Priority).
    • We may receive Form 14.1-06 (Future Advance – Knowledge).
    • Difference: Section 4.d is added to Form 14.1