15.32 Pending Disbursement Clause

15.32.1

In General

A common "pending disbursement clause" reads as follows:

"Pending disbursement of the full proceeds of the loan secured by the Mortgage herein insured, this policy insures only to the extent of the amount actually disbursed but increases as each disbursement is made, up to the face amount of the policy. At the time of each disbursement of the proceeds of the loan the title must be continued down to such time for possible liens, including mechanic's liens, and other objections, intervening between the date hereof and the date of such disbursement."

A pending disbursement provision is included in the ALTA Construction Loan Policy at paragraph 7(a)(ii) of the Conditions and Stipulations. Accordingly, it is not necessary to add a pending disbursement clause when using an ALTA Construction Loan Policy form.

In certain states which have unfavorable lien laws, it may be necessary to modify the above language. Your Stewart representative will be able to provide you with the alternative language.