LEA

Leases

When insuring leases, you must issue an ALTA Leasehold Policy or attach a (Lease) Policy Modification Endorsement. It also is customary to except to the terms of the insured lease in Schedule B. If the lease was previously created, you must confirm that lease is current and not in default, and that the lessor consents to the current transaction. The lease or a satisfactory memorandum must be recorded. When you delete the standard parties in possession exception, use a tenants exception where appropriate.

Requirement

LEAR01 STG

Proof that Lease Exists

The Company requires a satisfactory statement from the lessor and lessee that:
a) There are no unrecorded amendments, modifications, or transfers affecting the lease which have not been disclosed to the Company.
b) The lease is current and not in default and there is no breach of any terms of the lease.
c) The current transaction is authorized by the lessor.
The Company requires for its review a copy of the lease and of any amendments, modifications, or assignments. At that time, the Company may make additional requirements or exceptions.
Comment: When insuring a preexisting lease, you should verify that it remains in effect and that the assignment or mortgage is authorized.

LEAR02 STG

Proof that Lease Ended

Terms and provisions of lease from ____________, lessor, to ____________, lessee, dated ____________ and recorded ____________. The Company requires satisfactory evidence of the termination and surrender of possession of the lease. At that time, the Company may make additional requirements or exceptions.
Comment: If you are informed of an outstanding lease, you must require evidence that it was terminated (e.g., term expired, or forcible detainer) and that the tenant is no longer in possession.

LEAR03 STG

Insuring New Lease

Before the Company will issue a title commitment covering the leasehold estate, the Company must be furnished with an authentic copy of the lease and the memorandum of lease, if applicable. At that time, the Company may make additional requirements or exceptions. Upon approval by the Company, the lease must be executed and the lease or a memorandum of lease must be filed for record.
Comment: When insuring a proposed lease, you must review the lease and require recordation of the lease or satisfactory memorandum of lease.

See Underwriting Manual

LEAR04 STG

Leasehold Endorsement

If a Leasehold Policy is not issued, a Leasehold Policy Modification Endorsement will be attached to the Policy.
Comment: If you insure a lease, you must either issue a Leasehold Policy or attach the Leasehold Policy Modification Endorsement to the Policy. The endorsement defines the Leasehold Estate and adds damage provisions.

See Underwriting Manual

LEAR05 STG

Leasehold Definition

The following provision is added to paragraph 1 of the Conditions and Stipulations of this Policy: “‘Leasehold Estate,’ the right to possession for the term or terms described in Schedule A hereof subject to any provision contained in the lease, which limit such right of possession.”
Comment: If you insure a lease on a standard ALTA Owner’s or Loan Policy and you do not attach the Leasehold Policy Modification Endorsement, you should add this definition to the Policy and the commitment.

(a) Proof is required to show that such lease has not been assigned, altered, modified or amended previously, except as shown in this certificate; that said lease is in full force and effect and that no defaults now exist in relation thereto;

(b) An estoppel certificate is required from the owner of the fee and from the holders of all subordinate interests therein;

(c) Policy will except all the terms, covenants, conditions, provisions and agreements contained in said lease being assigned; [Add where applicable: as modified, altered or amended by agreement dated __/__/__, made by and between __(name)__ and __(name)__;]

(d) The assignment of lease to be made should contain the covenant required by the Lien Law, and such covenant must be absolute and not conditional.

(a) the lessee, certifying the amount remaining unpaid on the leasehold mortgage to be assigned, and
(b) the lessor, certifying that the lease remains in full force and effect, that there are no present defaults by the tenant under the lease.

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

See Underwriting Manual

Exception

LEAX01 ALTA

Lease (Full Lease Recorded)

Terms and provisions of a lease dated ____________, executed by ______________ as lessor and ______________ as lessee, recorded ____________.
Comment: This exception should be used if a recorded lease remains in effect or if the Company insures that lease.

LEAX02 ALTA

Lease (Memorandum of Record)

Terms and provisions of a lease dated ____________, executed by ____________ as lessor and ____________ as lessee a memorandum of which is recorded ____________.
Comment: This exception should be used if a recorded lease (memorandum) remains in effect or if the Company insures that lease.

LEAX03 ALTA

Sublease Exception (Full Sublease Recorded)

Terms and provisions of a sublease dated ____________, executed by ____________ as sublessor and ____________, as sublessee, recorded ____________.
Comment: This exception should be used if a recorded sublease remains in effect or if the Company insures that sublease.

LEAX04 ALTA

Sublease (Memorandum of Record)

Terms and provisions of a sublease dated ____________, executed by ______________ as sublessor and ______________ as sublessee a memorandum of which is recorded ____________.
Comment: This exception should be used if a recorded sublease (memorandum) remains in effect or if the Company insures that sublease.

LEAX05 ALTA

Lease (Disclosed to Company, Not Recorded)

Terms and provisions of a lease dated _____________, executed by _____________ as lessor and ____________ as lessee, as disclosed to the Company.
Comment: This exception should be used if you are informed of a specific unrecorded lease. To insure that lease, you must require that the lease or memorandum be recorded.

LEAX06 ALTA

Lease (Disclosed in Another Instrument)

Terms and provisions of a lease dated _________, executed by _____________ as lessor and ______________ as lessee as disclosed by a(n) ______________ recorded ________________.
Comment: The Company prefers to use this exception if an instrument (such as an assignment of leases to a mortgagee) discloses a specific unrecorded lease.

LEAX07 ALTA

Lease Modification

A document recorded ____________ declaring a modification or amendment of the lease recorded or disclosed by instrument recorded _________________.
Comment: Use this provision if the excepted lease is modified.

See Underwriting Manual

LEAX08 ALTA

Lease Subordination

A document entitled _____________ recorded __________, provides that the lease recorded or disclosed by instrument recorded ______________ is subordinated to the _________, which was recorded ______________.
Comment: This is the preferred exception to a non-disturbance agreement affecting a lease. This exception should be used if the lease is described in Schedule B, Part II of the Loan Policy (as subordinate).

See Underwriting Manual

LEAX09 ALTA

Lease Subordination (Short Form Exception)

Terms and provisions of a subordination, non-disturbance and attornment agreement recorded _________.
Comment: This exception to a subordination of a lease is used if the lease is described in Schedule B of an Owner’s Policy or Schedule B, Part I of the Loan Policy. Use the alternative subordination language of LEA37 if you describe the lease in Schedule B, part II of the Loan Policy or if the Policy insures that the lease is subordinate.

See Underwriting Manual

LEAX10 ALTA

Lease Assignment (Lessee’s Interest)

The lessee’s interest, under the lease recorded disclosed by instrument recorded _______________ has been assigned to _______________ by assignment, recorded ____________________.
Comment: Use this provision in describing an assignment of an excepted lease.

LEAX11 ALTA

Lease Assignment

The lessor’s interest, under the lease recorded or disclosed by instrument recorded _________, has been assigned to __________, by assignment, recorded ______________.
Comment: Use this exception if the lessor’s interest is assigned..

LEAX12 ALTA

Assignment of Rents

An assignment of rents and leases, executed by ______________, to ___________, recorded __________________.
Comment: The Company prefers not to refer to the assignment of rents to a mortgagee in Schedule A. You should place it in Schedule B (e.g., Part II) or in a note of the policy to the insured lender.

LEAX13 ALTA

Tenants in Possession

Rights of tenants in possession.
Comment: If you delete the standard parties in possession exception, the Company prefers this exception if there are tenants. This exception would include any rights (e.g., options).

LEAX14 ALTA

Parties in Possession

Rights of parties in possession.
Comment: Use this exception unless you determine the names of those persons in possession, if any, and you except to their rights. If a mortgagor remains in possession after foreclosure, consult with the Company.

LEAX15 ALTA

Tenants in Possession Under Unrecorded Leases

Rights of tenants in possession as tenants only under unrecorded leases.
Comment: If you determine that the tenants have no options or rights to purchase, you may use this tenants in possession exception.

LEAX16 ALTA

Tenants in Possession (Evidence of Records)

Rights of tenants in possession, as tenants only, under the following leases:
Comment: If you determine that only specific listed tenants exist and that they have no options or rights to purchase, you may use this tenants exception.

LEAX17 ALTA

Recharacterization

Any defect, lien or encumbrance or claim that the title is vested other than insured, resulting from a claim or determination that any, or all, of the following documents, either jointly or severally, should be or has been recharacterized as a mortgage or as a loan transaction:
1) Deed from ________ to ________, dated __________, recorded ____________.
2) Lease from _________ to ________, dated _________, recorded ____________.
3) Option from ________ to ________, dated _________, recorded ____________.
Comment: A sale leaseback or lease with option to purchase or repurchase option may have many of the features of a mortgage transaction. If you insure such a transaction, consult the Company for consideration of this exception.

LEAX18 ALTA

Lease with Purchase Option

Terms and provisions of an option and/or right of first refusal, as contained in the lease recorded ______________.
Comment: Do not insure an option to purchase unless you secure the Company’s approval. Options to purchase may evidence a recharacterization issue, especially in a sale-leaseback.

LEAX19 ALTA

Severed Improvements

Any right, title or interest to the buildings, structures and other improvements located on the land, with the right to maintain and use the land, together with access and support as disclosed by document(s) recorded ______________________.
Comment: The ownership of improvements is sometimes severed in connection with a ground lease. If so, the insurance of the land must except to the improvements and right of access and support.

LEAX20 ALTA

Lease Compliance (Recorded)

Any failure to comply with the terms, provisions and conditions of the lease, recorded ____________.
Comment: This exception should be used if a recorded lease remains in effect or if the Company insures that lease.

LEAX21 ALTA

Lease Compliance (Unrecorded)

Any failure to comply with the terms, provisions and conditions of the lease, disclosed by document, recorded _______________.
Comment: This exception should be used if you are informed of a specific unrecorded lease. To insure that lease, you must require that the lease or memorandum be recorded.

LEAX22 STG

Lease Exception (Not Recorded)

Terms and provisions of the lease from ____________, lessor, to ____________, lessee, dated ____________.
Comment: This exception should be used if you are informed of a specific unrecorded lease. To insure that lease, you must require that the lease or memorandum be recorded.

LEAX23 STG

Subordination of Lease (Parties Named)

Terms and provisions of a subordination, non-disturbance and attornment agreement, executed by _____________, lender ________________, owner ___________________.
Comment: This is the preferred exception to a non-disturbance agreement affecting a lease. This exception should be used if the lease is described in Schedule B, Part II of the Loan Policy (as subordinate).

See Underwriting Manual

LEAX26 STG

Recharacterization Exception

Any claim that the vesting of title in the insured is part of a loan transaction or that the deed to the insured and/or the lease referred to in Schedule B, constitutes a mortgage or other security device.
Comment: A sale leaseback or lease with option to purchase or repurchase option may have many of the features of a mortgage transaction. If you insure such a transaction, consult the Company for consideration of this exception.

Schedule A

LEAS01 STG

Lease Memorandum with Option to Renew

The leasehold estate created by the lease from ___________, lessor, to ____________, lessee, dated ____________, a memorandum of which is recorded ____________, said lease having a term of ____________ years from ____________ and an option to renew for a term of ____________ years from ____________.
Comment: This is the appropriate description of the insured lease (memo) in Schedule A if it contains options to renew.

LEAS02 STG

Lease Memo (No Option to Renew)

The leasehold estate created by the lease from ___________, lessor, to ____________, lessee, dated ____________, a memorandum of which is recorded ____________, said lease having a term of ____________ years from ____________.
Comment: This is the appropriate description of the insured lease (memo) in Schedule A if it contains no options to renew or the options are not described.

LEAS03 STG

Full Lease with Option to Renew

The leasehold estate created by the lease from ___________, Lessor, to ____________, Lessee, dated ____________, recorded ____________ and said lease having a term of ____________ years from ____________ and an option to renew for a term of ____________ years from ____________.
Comment: This is the appropriate description of the insured lease (full copy recorded) in Schedule A if it contains options to renew.

LEAS04 STG

Full Lease (No Option to Renew)

The leasehold estate created by the lease from ___________, lessor, to ____________, lessee, dated ____________, recorded ____________ said lease having a term of ____________ years from __________.
Comment: This is the appropriate description of the insured lease (full copy recorded) in Schedule A if you do not describe options to renew.

LEAS05 STG

Lease Amendment

Amended or modified by the instrument recorded ____________.
Comment: This is the appropriate description of a modification of the insured lease in Schedule A.

LEAS06 STG

Lease Assignment

Assigned to _____________ by the instrument recorded ___________.
Comment: This is the appropriate reference to an assignment of the insured lease. You must verify with the lessor that the lease is in effect and that the current transaction is authorized.