Bulletin: CO000025

Date:
April 07, 1999
To:
All Colorado Issuing Offices
RE:
Written Disclosure Regarding (1) GAP Protection and (2) the Availability of Mechanic's Lien Coverage

Dear Associates:

Colorado Title Insurance Regulation 3-5-1 (VII) (L) requires that you notify in writing every prospective insured in an owner's title insurance policy for a single family residence (including a condominium or townhouse unit) of (i) the general requirements for the deletion of the exception relating to unfiled mechanic's or materialmen's liens, except when said coverage is extended to the insured under the terms of the policy and (ii) of the circumstances described in Title Insurance Regulation 3-5-1 (VII) (C) under which circumstances the title insurer is responsible for all matters which appear of record prior to the time of recording ("Gap Coverage").

This Bulletin is being issued in order to establish a standard form of disclosure statement to prospective insureds of the matters required under Colorado Title Insurance Regulation 3-5-1 (VII)(L) relating to the availability of mechanic's lien coverage and the existence of mandatory coverage for Gap Protection. Both of these disclosure statements are to be placed on title commitments prepared by issuing offices within Colorado for transactions involving the issuance of an owner's policy for a single family residence.

The disclosure relating to the existence of the mandatory coverage of Gap Protection as described in title insurance Regulation 3-5-1 (VII) (C)should be in the following form:

Note: Colorado Division of Insurance Regulations 3-5-1, Paragraph C of Article VII requires that "Every title entity shall be responsible for all matters which appear of record prior to the time of recording whenever the title entity conducts the closing and is responsible for recording or filing of legal documents resulting from the transaction which was closed." Provided that (name of agency) conducts the closing of the insured transaction and is responsible for recording the legal documents from the transaction, exception number (exception number) will not appear on the Owner's Title Policy and the Lender's Policy when issued.

The disclosure relating to the availability of Mechanic's liens should be in the following form:

Note: Affirmative Mechanic's Lien Protection for the Owner may be available (typically by deletion of Exception No. 4 of Schedule B, Section 2 of the Commitment from the Owner's Policy to be issued) upon compliance with the following conditions:

A. The land described in Schedule A of this commitment must be a single family residence, which includes a condominium or townhouse unit.

B. No labor or materials have been furnished by mechanics or materialmen for purposes of construction on the land described in Schedule A of this Commitment within the past 6 months.

C. The Company must receive an appropriate affidavit indemnifying the Company against unfiled mechanic's and materialmen's liens.

D. The Company must receive payment of the appropriate premium.

E. If there has been construction, improvements or major repairs undertaken on the property to be purchased, within six months prior to the Date of the Commitment, the requirements to obtain coverage for unrecorded liens will include: disclosure of certain construction information; financial information as to the seller, the builder and/or the contractor; payment of the appropriate premium; fully executed Indemnity Agreements satisfactory to the company; and, any additional requirements as may be necessary after an examination of the aforesaid information by the Company.

No coverage will be given under any circumstances for labor or material for which the insured has contracted for or agreed to pay.

NOTHING HEREIN CONTAINED WILL BE DEEMED TO OBLIGATE THE COMPANY TO PROVIDE ANY OF THE COVERAGES REFERRED TO HEREIN UNLESS THE ABOVE CONDITIONS ARE FULLY SATISFIED.

Again both of these disclosure "notes" must be placed on title commitments prepared by issuing offices within Colorado for transactions involving the issuance of an owner's policy for a single family residence.

If you have any questions in regard to this please feel free to contact the Colorado District office.

THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER  AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.