Bulletin: MU2015001

Date:
February 05, 2015
To:
All Issuing Offices except Delaware, Florida, Indiana, Louisiana, New Mexico, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania and Texas
RE:
RATES AND/OR FORMS UPDATE - New and Revised ALTA Forms (04-02-14 & 12-01-14)

Dear Associates:

The American Land Title Association (ALTA) has recently adopted the forms listed below:

ALTA Endorsement 40-06 (Tax Credit - Owner's Policy) (04-02-14) insures against a reduction in a Tax Credit to an Investor that is caused solely by a defect, lien, encumbrance, or other matter insured against by the policy. The Company has no liability to the Tax Credit Investor under this endorsement until its liability and the extent of a loss insured against by the policy have been definitely fixed in accordance with the Conditions; and the Tax Credit Investor establishes the reduction in the amount of a Tax Credit.

This endorsement does not insure against loss or damage (and the Company will not pay costs, attorneys’ fees, or expenses) incurred in defending or establishing: (a) the eligibility of the Tax Credit Investor or the Land for a Tax Credit; (b) that the Tax Credit Investor or the Land is entitled to a Tax Credit; or (c) the existence, ownership, or amount of a Tax Credit. For guidelines, click here

ALTA Endorsement 40.1-06 (Tax Credit - Defined Amount - Owner’s Policy) (04-02-14) insures against loss or damage, not exceeding the Additional Amount of Insurance, sustained by the Tax Credit Investor by a reduction in a Tax Credit that is caused solely by a defect, lien, encumbrance or other matter insured against by this policy. The Company has no liability to the Tax Credit Investor under this endorsement until its liability and the extent of a loss insured against by the policy have been definitely fixed in accordance with the Conditions; and the Tax Credit Investor establishes the reduction in the amount of a Tax Credit.

This endorsement does not insure against loss or damage (and the Company will not pay costs, attorneys’ fees, or expenses) incurred in defending or establishing: (a) the eligibility of the Tax Credit Investor or the Land for a Tax Credit; (b) that the Tax Credit Investor or the Land is entitled to a Tax Credit; or (c) the existence, ownership, or amount of a Tax Credit. For guidelines, click here

ALTA Endorsement 36.7-06 (Energy Project-Fee Estate-Owner’s Policy) (12-01-14). This endorsement is one of a series of endorsements designed specifically for energy projects (e.g., wind farms, solar farms, traditional electricity generating facilities, etc.). Such projects may include fee parcels, leaseholds, and/or easements.  

ALTA Endorsement 36.7-06 will apply to an Owner’s Policy and be the “counterpart” form to the existing 36-06 and 36.2-06 where fee estates are being insured. 

ALTA Endorsement 36.8-06 (Energy Project-Fee Estate-Loan Policy) (12-01-14). This endorsement is one of a series of endorsements designed specifically for energy projects (e.g., wind farms, solar farms, traditional electricity generating facilities, etc.). Such projects may include fee parcels, leaseholds, and/or easements.  

ALTA Endorsement 36.8-06 will apply to a Loan Policy and represent the “counterpart” in the fee estate context to the existing 36.1-06 and 36.3-06 endorsements. 

ALTA Endorsement 45-06 (Pari Passu Mortgage – Loan Policy) (12-01-14). This new endorsement addresses the needs of lenders who are obtaining co-equal lien priority with other lenders relating to a specific parcel or parcels of real property collateral of a debtor. This type of transaction typically arises in the context of credit facility transactions where multiple lenders seek to obtain equal lien priority through separately recorded mortgages and an associated intercreditor agreement.

The ALTA 45-06 endorsement insures the lender that the lien will not be invalid or unenforceable due solely to the provisions of the mortgage or intercreditor agreement providing for co-equal lien priority. The endorsement also insures against loss or damage if the insured mortgage does not have equal lien priority with the other pari passu lenders. Liability under the endorsement is conditioned upon the insured lender and the other pari passu lenders complying with the terms of the mortgages and intercreditor agreement and requires that all of the lenders involved simultaneously foreclose their respective mortgages. 

Loss or damage arising from preferences for the sharing of Indebtedness in the intercreditor agreement is not covered. Finally, if there is a dispute as to the loss payable under the policy for a covered matter, the issuing company has the option of interpleading the loss amount into court, allowing the insured and the other lenders to resolve their differences judicially. These types of transactions are typically limited to commercial transactions.

ALTA Residential Limited Coverage Mortgage Modification Policy (12-01-14) insures against loss or damage sustained by the Insured by reason of: (1) The invalidity or unenforceability of the lien of the Insured’s Mortgage upon the Title at Date of Policy as a result of a covered mortgage modification; and (2) The loss of priority of the lien of the Insured’s Mortgage, at Date of Policy, over any defects in or liens or encumbrances on the Title as a result of a covered mortgage modification. 

These forms are currently available for use in Illinois, Iowa, Massachusetts, Mississippi, and Oklahoma. In those states where form and/or rate filings are required, we will distribute subsequent state-specific bulletins as these forms become available.  

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.

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.