Guideline: ALTA Endorsement 31-06 (Severable Improvements) Adopted 02-03-11

Explanation:

The ALTA Loan Policy 2006 and Owner’s Policy 2006 define the insured Land to include affixed improvements that by law constitute real property. Some affixed improvements may not constitute real property because of the character and manner of their attachment or because the improvement can be severed from the land without causing material injury to the land or to the improvement.

These types of severable improvements are often encountered in industrial projects, such as factories, cell towers, wind farms and energy projects.

Absent an endorsement, in the event of a loss by reason of a defect, lien, encumbrance, or other matter covered by the policy, the calculation of the loss would not include consideration of the value of such severable improvements.

This endorsement provides that, in the event of a loss by reason of a defect, lien, encumbrance, or other matter covered by the policy, the calculation of the loss shall include: (a) the diminution in value of the Insured's interest in any severable improvement, reduced by its salvage value, and (b) the reasonable cost incurred by the Insured in connection with the removal or relocation of the severable improvement and the cost of transportation of the severable improvement for the initial one hundred miles.

This endorsement relates solely to the calculation of loss relating to a severable improvement. This endorsement does not insure against loss or damage relating to ownership of the severable improvement, or defects, liens or encumbrances on the severable improvement, or a determination of whether any specific property is real or personal in nature.

Underwriting Requirements:

1.    This endorsement may be issued at the request of the customer for Owner’s and Loan Policies.

2.    Confirm that the Amount of Insurance includes the improvements that are severable.

3.    This endorsement should not be issued for a project that is primarily residential, retail or office, unless approved by a Stewart Title Guaranty Underwriter.

4.    The ALTA Energy Project Endorsements (ALTA Endorsement 36-06 - ALTA Endorsement 36.8-06) and ALTA Leasehold Endorsements (ALTA Endorsement 13-06 - Leasehold - Owner’s and ALTA Endorsement 13.1-06 Leasehold - Loan) contain similar provisions. You many nevertheless issue ALTA Endorsement 31-06 with those other endorsements, if requested.

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):

ALTA Endorsement 31-06 (Severable Improvements) Adopted 02-03-11