Bulletin: TX000007
Dear Associates:
New Forms. The State Board of Insurance has adopted new policies of title insurance effective October 1, 1991. If you issue a policy dated on or after October 1, 1991, you must use the new forms. These policies will continue to be the "Form T-2: Mortgagee Policy of Title Insuran...
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THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.
Exhibit A
Summary Of New Policy Coverages
Insuring Provisions
The insuring provisions of the new policies do not make affirmative representations. They provide indemnification against loss due to outstanding matters that are not excepted or excluded. We do not represent the title as "good" or that the insured has "access". We insure against loss because of defects.
The policies insure against loss because of lack of right of access. Access is defined as legal right of access and not the physical condition of access. The policy does not insure the adequacy of access for the use intended.
The policies continue to insure against title being vested other than as otherwise stated, and against defects, liens or encumbrances on title. The policies insure only against mechanic's liens that have an inception on or before date of policy.
The policies do not insure marketability of title. They insure against loss because of lack of good and indefeasible title. Good title and marketable title are not the same.
The policies agree to provide defense to the insured if there is litigation involving the title as insured.
Exclusions from Coverage
The policy excludes governmental regulations and police powers unless there are notices of enforcement or notices of defect, lien or encumbrance recorded in the local land records.
The policy excludes liability because the matters that are created, suffered, assumed or agreed to by the insured claimant.
The policy excludes liability because of matters known by the insured claimant, not known to the Company, not recorded in the public records, and not disclosed in writing.
The policy excludes liability because of matters that do not result in loss.
The policy excludes liability because of matters that attach or are created after the date of policy.
The policy excludes liability because of various creditors' rights issues that arise out of the insured transaction.
Schedule B
Schedule B of the Mortgagee Policy contains an exception as to liens and leases that are subordinate to the lien of the insured mortgage. This exception may be deleted upon request and the subordinate matters may be shown in Schedule B.
The Owner Policy contains a filled in lands, water rights and similar matters exception. This exception may not be deleted.
The Owner Policy contains a community, survivorship and homestead rights exception. This exception may not be deleted.
Both policies contain the restrictions, areas and boundaries, and standby fees and taxes exceptions.
Conditions and Stipulations
Insured. The insured lender includes subsequent owners of the indebtedness, except obligors such as guarantors and private mortgage insurers. The insured owner includes various successors by operation of law.
Continuation of Coverage. A Mortgagee Policy continues after the insured lender acquires the title by foreclosure or deed in lieu of foreclosure that discharges the mortgage. Both the Owner and Mortgagee Policies contain warrantor coverage with no time limit. Both policies continue coverage of any purchase money mortgage retained by the insured upon a sale of the land.
Notice of Claims. The policy requires the insured to notify the insurer of a claim or of litigation.
Counsel. The insurer has the right to select counsel to represent the insured as to the insured causes of action.
Proof of Loss. The insured must furnish a sworn proof of loss stating the facts causing the loss and the basis for calculating the amount of loss or damage.
Insurer Action. In the event of a valid claim where there is loss, the insurer may indemnify the insured, litigate, settle the claim with a third party, reissue a policy, or indemnify another title company.
Loss. One of the limits of liability under each policy is the difference in the value of the land as insured and the value of the land subject to the defect at the date the claimant must furnish a proof of loss.
Subsequent Debt. The Mortgagee Policy does not extend to indebtedness created subsequent to date of policy except for advances where revolving credit endorsement is issued, advances where a pending disbursement clause exists, and advances to protect the mortgage or to prevent deterioration of improvements.
Modifications. The insured lender may executed releases, substitute personal liability, or extend or modify the terms of payment, as long as the lender does not have knowledge of a claim and as long as the lender does not affect the priority or enforceability of the mortgage. Releases and principal reduction reduce liability under the policy. The lender may still secure a T-38 endorsement.
Arbitration. The Owner and Mortgagee Policies contain arbitration provisions. To the extent allowed by law, the insurer or the insured may require arbitration if the policy does not exceed $1,000,000. The insured may request that the arbitration clause be deleted before issuance of the policy.