Guideline: ALTA Endorsement 15 and 15-06 (Nonimputation-Full Equity Transfer)

Explanation:

This endorsement, while available for a Loan Policy, is designed for simultaneous issuance with an Owner's Policy.  It contemplates acquisition by the new investors of the full interest in the entity owning the land and named as the "insured" under the policy.

The endorsement limits applicability of:

  • Exclusion 3(a) - "created, suffered, assumed or agreed to by the insured claimant"

  • Exclusion 3(b) - "not known to the Company, not recorded in the public records at Date of Policy, but known to the insured claimant and not disclosed in writing to the Company by the insured claimant prior to the date the insured claimant became an insured under this policy"

  • Exclusion 3(e) - "resulting in loss or damage which would not have been sustained if the insured claimant had paid value for the estate or interest insured by this policy"

Pursuant to this Endorsement, those Exclusions will not apply with respect to a matter by reason of action, inaction, or knowledge, at Date of Policy, of other or former stockholders, officers, directors, managers, partners or members (of an LLC) of the insured, provided that the "incoming" partner, member or stockholder acquired its interest as a purchaser for value without knowledge of the matter otherwise insured against.  The endorsement is designed for issuance simultaneously with an Owner's Policy showing the titleholder as the insured, since it relates to action, inaction or knowledge as of Date of Policy.

Endorsement 15 is issued with a 1992 ALTA Owner's Policy.  Endorsement 15-06 is issued with a 2006 ALTA Owner's Policy.

Underwriting Requirements:

We require the following in order to issue this endorsement to an Owner's Policy:

  1. We require execution of the ALTA Nonimputation Affidavit 1 by those persons (Affiants) whose knowledge, action or inaction is covered by the endorsement.

  2. We require an explanation of the transaction and reasons for the endorsement.  The transaction may, for instance, suggest other issues, such as creditor's rights.

  3. The ALTA Endorsement 15 (Nonimputation-Full Equity) should show in the first paragraph the names of specific persons (e.g. the names of the officers, directors, shareholders, members, partners) whose knowledge and participation in the insured entity is of concern.  The second paragraph should name the new participants or investors, who are concerned about the knowledge and participation of other parties.   The names should be specific and should not be general (e.g. insert "Jane Doe" and do not insert "all officers (or shareholders) of XYZ, Inc.").

  4. The "Name of Insured" in Schedule A of the Owner's Policy should be the record owner.

  5. A Stewart Title Guaranty Company Senior Underwriter or Associate Senior Underwriter must approve 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.