Guideline: NM 91 – Contract Purchaser Conversion Endorsement

Explanation:

This endorsement is attached to an existing contract purchaser owner’s policy (NM form 1). This endorsement is used when the insured owner acquires fee title to the insured property upon payoff of the real estate contract and wishes to down date the policy and/or increase the amount of insurance.[1] This endorsement has the effect of changing the Date of Policy.

[1] Pursuant to § 13.14.6.10(B NMAC  if the contract purchaser has an existing owner’s policy, upon recordation of the payoff deed, the insured interest automatically converts to a fee simple interest.  The date of policy is unchanged, the conversion is automatic, and there is no charge for this conversion.

Underwriting Requirements:

We require the following:

1. Record the deed from the contract seller to the contract purchaser.

2. You must search the public records from the Date of Policy of the insured contract purchaser to the date of recording the deed conveying fee title to the contract purchaser.

3. Paragraph 1A of the endorsement, the new Date of Policy, is the date of recording of the deed into the contract purchaser.

4. Paragraph 1B is the amount of insurance.  If there is no increase in coverage insert the amount of the current policy.  If there is an increase in coverage, insert the new coverage amount. 

5. In paragraph 2 delete the exceptions for the terms and conditions of the real estate contract and the exception for the failure of the contract seller to deliver the deed.  If other existing exceptions have been released or removed based on your updated search, you may delete those as exceptions.

6. All intervening matters relating to the insured property or the contract purchaser between the original Date of Policy and the date of recording of the deed must be shown in  paragraph 2.  If any intervening matters relate to the contract seller, contact your underwriter.

7. Secure a current tax and assessment search. Except under paragraph 2 of the Endorsement to unpaid taxes and assessments.

8.  If the Policy has provided survey coverage, require a current survey and add as exceptions any new matters revealed by the new survey or except in Paragraph 2 to survey matters arising subsequent to Date of Policy.  If there was no survey coverage, there is no need for a new survey exception.

9.  The cost of this endorsement is 50% of the basic premium rate up the face amount of the existing contract purchaser policy.  § 13.14.10.63 NMAC.  If the insured wishes to increase the amount of coverage beyond the existing contract purchaser policy amount, the increased coverage is calculated using the full Basic Premium Rates for the amount of increased coverage.  

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):

NM Form 91 Contract Purchaser Conversion Endorsement