T-28 Guideline - TX Condominium Endorsement

Explanation:

This endorsement to the T-2 Loan Policy insures that the condominium project was created in accordance with Texas law, that there are no maintenance liens or forfeiture provisions with priority over the lien of the insured mortgage, and that there can be no exercise of a right of first refusal in connection with the current or prior transactions. The endorsement may be attached to the T-2 Loan Policy.

This endorsement may only be issued if the property is residential.  It may not be issued in conjunction with a T-17 Planned Unit Development Endorsement.

Please also see P-9b(15) and R-11l for more information regarding this endorsement. 

Underwriting Requirements:

(1)        The initial examiner of the condominium must verify that the condominium declaration complies with all statutory requirements and that any conditions to creation of the condominium have been met.

(2)        All taxes for years prior to the time that the units are entitled to separate assessment must be paid. See however Texas Procedural Rule P-20 dealing with payment of Taxes, Owners Reserve Accounts, rollback taxes and taxes not yet due and payable. 

(3)        The restrictions disclosed by the examination must not contain any forfeiture or reversionary provision (unless they are, by their express terms, subordinate to the lien of the insured mortgage).

(4)        If the declaration creates a lien for maintenance assessments, all assessments outstanding for the period of time prior to closing must be paid and the declaration must state that the assessment lien is subordinate to the lien of the insured mortgage. Read the Condominium Declaration carefully to determine if assessment liens are superior to all mortgages except first mortgages.  If your analysis of the Declaration determines that the lien to be insured is subordinate to the assessment lien, you must obtain an express subordination or delete paragraph 4 from the endorsement. 

(5)        If the declaration creates a right of first refusal, you must verify with the association that the right is waived or ineffective as to the current and prior transactions.

(6)        If the condominium creates commercial condominium units, then you must verify that any prior restrictions do not prohibit use for commercial purposes; otherwise, you must delete the first sentence of paragraph 3.

(7)        Do not issue this endorsement if you know of any significant encroachment or boundary conflicts.                                                                                                           

For further guidance, refer to the applicable subsections in Section 11.04 of the National Underwriting Manual on Virtual Underwriter http://www.vuwriter.com/vumanuals.jsp?displaykey=UM00000208

The underwriting guidelines contained herein have been provided for general reference. The facts, circumstances, and location of the subject property should be considered when determining the issuance of the requested form or endorsement. Please note that all of the forms and endorsements included in this system may not be available in all states. Accordingly, please contact the appropriate Stewart Title Guaranty Company underwriting personnel in order to determine availability.

Compliance with the underwriting guidelines contained herein in no way obligates Stewart Title Guaranty Company to issue any form or endorsement.

This guideline applies to the following form(s):

T-28 TX Condominium Endorsement