Guideline: ALTA Endorsement 30.1-06 Commercial Participation Interest (08-01-12)

Explanation:

ALTA Endorsement 30.1-06 is designed for loan policies for commercial transactions in situations where the loan agreement includes a participation interest. The participation interest is based on the equity in the Title, increase in value of the Title or cash flow as defined in the loan documents.

ALTA Endorsement 30.1-06 insures as of Date of Policy against loss or damage by reason of (a) the invalidity or unenforceability of the lien of the Insured Mortgage resulting from the provisions of the Insured Mortgage or Loan Documents containing a participation interest; (b) lack of priority of the lien of the Insured Mortgage at Date of Policy, securing (i) the unpaid principal balance of the loan and (ii) the interest on the loan, including the participation interest, if any, which lack of priority is caused by the provisions in the Loan Documents for payment or allocation to the Insured of any participation interest.

This endorsement contains exclusions from coverage:  usury; unconscionability; or any consumer credit protection or truth-in-lending law; disputes over the amount of the Participation Interest; the effects of mortgage recording or similar intangible taxes on the validity or enforceability of the Insured Mortgage; or mechanic’s liens.  

Underwriting Requirements:

1. Obtain a copy of the applicable loan documents.

2. Verify that the loan documents clearly include a participation interest.

3. A Senior Underwriter must approve the issuance of this endorsement.

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.