STG Lien Priority Endorsement Guideline 1
Explanation:The insurer may be requested to insure against mechanic's liens or other encumbrances on the title, which it will be willing to do based upon an escrow and/or indemnity agreement. In order to avoid insuring against unmarketability of title which is created by the outstanding lien that has apparent priority over the lien of the insured mortgage, the endorsement insures only against loss by reason of the establishment of priority of the lien.
Sometimes the underwriter is requested to issue without exception to liens or encumbrances based upon an escrow or indemnity. In such case, the escrow and/or indemnity must be much more flexible in authorizing the underwriter to settle the matter. It may have to quickly respond to a demand by the insured because of the unmarketability of title created by the matter and as to which insurance is thereby given. In addition, care must be taken to be certain that the insured is aware of this outstanding matter as evidenced by specific written consent. We prefer to show the outstanding encumbrance on the Policy and remove it by separate endorsement to reflect that the insured has knowledge of the outstanding matter. Where the underwriter is specifically aware of an outstanding valid encumbrance and the insured is not, the underwriter may have committed a criminal violation.
Underwriting Requirements:(1) Senior Underwriter approval of the issuance of the endorsement and acceptance of the indemnity and/or escrow;
(2) Senior Underwriter approval of the form of the endorsement; and
(3) Specific consent of the insured to the issuance of the endorsement.
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):