PDC

Pending Disbursement Clauses

Pending disbursement clauses are inserted in Mortgagee Policies when future disbursements of loan proceeds are contemplated. These proceeds may be advanced for construction or other purposes. The Company generally uses the pending disbursement clauses on construction loans. Where the future advances do not relate to construction, the pending disbursement clause does not require a downdate, although such downdate is sometimes done.

Exception

PDCX04 STG

Loan Policy – Downdate Not Required

Pending disbursement of the full proceeds of the loan secured by the lien instrument set forth under Schedule A hereof, this policy insures only to the extent of the amount actually disbursed, but increases as each disbursement is made in good faith and without knowledge of any defects in, or objections to, the title up to the face amount of the policy. Nothing contained in this paragraph shall be construed as limiting any exception under Schedule B, or any printed provision of this policy.
Comment: This clause is required if the loan is a construction loan.

PDCX05 STG

Loan Policy – Construction – Downdate Required

Pending disbursement of the full proceeds of the loan secured by the lien instrument set forth under Schedule A hereof, this policy at the effective date hereof insures only to the extent of the amount actually disbursed, but increases as each disbursement is made in good faith and without knowledge of any defects in, or objection to, the title up to the face amount of the policy. Nothing contained in this paragraph shall be construed as limiting any exception under Schedule B or any printed provision of this policy. Notwithstanding the foregoing, liability hereunder shall only increase as down-date endorsements are issued pursuant to construction advances and as the corresponding fractional premium for the policy and the full premium for the down-date endorsement are paid.
Comment: This clause is required if the premium for the Mortgagee Policy is paid in installments pursuant to Rate Rule R-2(a) which requires, among other things, that the policy amount be $5,000,000 or more.
a title search is made by the Company that reveals no liens, objections or any adverse changes in the title,
(c) the contractor and owner furnish the Company satisfactory paid bills, liens waivers, estoppel certificates and other evidence that all items from which a lien might arise, have been paid or otherwise satisfied, and
(d) the Owner and Contractor furnish the Company satisfactory updated Affidavit and Indemnity Agreement(s) as to the matters referred to in (c) above.

PDCX08 STG

Owner Policy

Liability hereunder at the date hereof limited to $____________. Liability shall increase as contemplated improvements are made so that any loss payable hereunder shall be limited to said sum plus the amount actually expended by the Insured in improvements at the time the loss occurs. Any expenditures made for improvements, subsequent to the date of this policy, will be deemed made as of the date of this policy. In no event shall the liability of the Company hereunder exceed the face amount of this policy. Nothing contained in this paragraph shall be construed as any exception or any printed provision of this policy.
Comment: You should use this exception in the Owner Policy if the amount of insurance includes contemplated improvements. You may not delete the standard mechanics’ lien exception from that Policy.

Note: You may add additional local exceptions here. Please consult with our underwriting personnel in preparing appropriate provisions.