Guideline: ALTA Endorsement 05.1 and 5.1-06 (Planned Unit Development)

Explanation:

This endorsement is issued in conjunction with Loan Policies. It covers planned unit developments which may include "de minimus" PUD's. A planned unit development will consist of a fee simple interest in a townhouse, patio home or single-family residence together with an appurtenant easement over common elements or together with an undivided interest as co-tenant in common elements. The endorsement may be attached to the Owner's Policy. This endorsement does not insure the priority of an assessment lien over the mortgage. You must issue this endorsement in states which have adopted a Uniform Common Ownership Act.

Endorsement 5.1 is issued with a 1992 ALTA Loan or Owner's Policy.  Endorsement 5.1-06 is issued with a 2006 ALTA Loan or Owner's Policy.

Underwriting Requirements:

(1) The examination must not reflect that the actual present development violates outstanding prior restrictions. For example, sometimes older restrictions prohibit more than one residence on a platted lot and the townhouse development violates such restrictions by multi-unit development.

(2) The restrictions may not contain forfeiture or reversionary provisions (unless expressly subordinate to the insured mortgage).

(3) Any maintenance assessment secured by a lien in the restrictions and due prior to the Date of Policy must be paid.

(4) If the state has enacted a common interest ownership act (which provides that assessments for six months will attain priority over a previous mortgage), you must issue the ALTA 5.1 endorsement. Those states include Alaska, Colorado, Connecticut, Minnesota, Nevada, and West Virginia.

(5) If the restrictions provide for a maintenance assessment lien and the declaration does not expressly subordinate the assessment lien to the insured mortgage, you must issue the ALTA 5.1 endorsement.

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

(7) If the restrictions provide for a right of first refusal, then you must verify with the association that the right may not be exercised in connection with the current or prior transactions.

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.