Stewart Title Guaranty Company has experienced significant claims because of outstanding rights to minerals and other substances that were not excepted in the title insurance policy. These losses often have occurred because the title agent relied on a prior policy as a starter or conducted a streamline search and, consequently, failed to discover the severance of rights in mineral and other substances.
Therefore, add the following exception in Schedule B of each Commitment, Binder, or Policy, other than a Short Form Loan Policy, a policy insuring a residential condominium property, or a policy insuring a platted 1-4 Family residential property, unless you secure Underwriter approval to remove the exception based upon an extended search and examination:
“Minerals of whatsoever kind, subsurface and surface substances, including but not limited to coal, lignite, oil, gas, uranium, clay, rock, sand and gravel in, on, under and that may be produced from the Land, together with all rights, privileges and immunities relating thereto, whether or not appearing in the Public Records or listed in Schedule B. The company makes no representation as to the present ownership of any such interests. There may be leases, grants, exceptions or reservation of interest that are not listed.”
A starter may not be relied upon for the search and examination required to remove this exception.
Always include in Schedule B any specific grant, reservation, or lease of minerals or other substances (such as caliche, gravel, rock, coal, lignite) that your search reflects. You should also add the following at the end of the specific exception (although the policy does not insure the title to any interest that is excepted):
"The Company makes no representation as to the present ownership of any such interests. There may be leases, grants, exceptions or reservations of interests that are not listed."
The foregoing policy does not affect the potential availability of endorsements that provide coverage for damage to buildings or improvements on the land resulting from the future exercise of any right to use the surface of the land for the extraction or development of minerals or any other subsurface substances, such as the ALTA 9-06 series, pursuant to applicable guidelines.
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