You must consult with the Company before expressly insuring an option (by describing in Schedule A or by issuing an option endorsement), or implicitly insuring the option (e.g., describe “rights” in Schedule A when the document includes an option).
Require Release of Option
The right or option of _________________ to purchase the land upon terms and conditions established in the instrument recorded ______________. The Company requires satisfactory quitclaim of the land from said person (and spouse, if any). At that time, the Company may make additional requirements or exceptions.
Comment: Unless state law imposes a clear statute of limitations on an option, you must require a recordable release or quitclaim.
Note: You may add additional local requirements here. Please consult with our underwriting personnel in preparing appropriate provisions.
An option agreement dated __________, executed by ________, as optionor and _________, as optionee, as disclosed by document recorded ____________. The Company makes no representation as to the present ownership of this interest.
Comment: Unless state law imposes a clear statute of limitations on an option, you must except to an unreleased (and unexercised) option.
The Company makes no representation as to the present ownership of this interest.
With respect to the Option to purchase (the “Option”) described in Schedule A of this Policy, the Option is hereby incorporated into said Schedule A, as an interest insured thereby, and the Company further insures against loss or damage sustained or incurred by the insured by reason of:
A final nonappealable adverse determination of a court of competent jurisdiction:
(b) which requires the insured, as a condition to receive specific performance of the option, to pay a sum in excess of the option price, other than attorneys’ fees and all costs of litigation;
provided in either event that:
(1) The Option is properly exercised in accordance with its terms, and in compliance with applicable law, including, but not limited to, §294.7. of the Real Property Law;
(2) The superiority of the Option is asserted by the insured, at the insured’s sole cost and expense, in a timely manner and by appropriate action or proceeding against any such lienholder, encumbrancer or party having said interest or estate, including, without limitation, any action or proceeding brought by any such lienholder, encumbrancer or party, or any proceeding to have such lien, encumbrance, interest or estate removed from its effect upon the land and relegated to the fund produced as a result of the exercise of the Option; and
The terms, provisions, conditions and limitations contained in the Option, which must be recorded, are not insured.
Liability under the Option coverage added to the policy by this Exception is limited to the amount of payments made under the above described Option, at the date hereof, but increases by the amount paid subsequently under said Option, made in good faith and without notice of adverse claim, but in no event shall said liability exceed the aggregate face amount of this Policy.
Nothing contained herein shall be construed as insuring the insured against loss or damage sustained or incurred by reason of:
(1) Any loss or damage arising from bankruptcy or insolvency proceedings, or the exercise of the rights of any trustee, receiver or creditor in connection therewith, including but not limited to disaffirmance of the option under the provisions of the United States Bankruptcy Code;
(3) Any loss based upon the allegation or determination that the Option is part of a security arrangement or financing device, including, but not limited to the imposition of any mortgage recording tax pursuant to Article 11 of the Tax Law, upon the Option or the instrument containing said Option;
(4) Any loss resulting from matters developing or interests arising or created subsequent to the date of this policy, including but not limited to taxes or assessments levied by any governmental agency, instrumentality or authority subsequent to the date of the Policy, or liens arising for services, labor or material heretofore or hereafter furnished;
This policy necessarily relates solely to the title as of the date of this policy. In order that the purchaser of real estate described herein may be insured against defects, liens or encumbrances between the date covered in this policy and the time title is acquired by purchaser, a new policy should be ordered insuring the purchaser as of said date.
The total liability of the Company under said Policy and any endorsements attached thereto shall not exceed, in the aggregate, the face amount of said Policy and costs which the Company is obligated under the provisions of said Policy to pay.
Note: You may add additional local exceptions here. Please consult with our underwriting personnel in preparing appropriate provisions.
Option is Insured
Option to purchase ___________ as described in instrument dated _____________ between ________________, optionor, and ___________, optionee, recorded ________________.
Comment: You must consult with the Company before expressly insuring an option (by describing in Schedule A or by issuing an option endorsement), or implicitly insuring the option (e.g., describe “rights” in Schedule A when the document includes an option).