Significant claims can occur when outstanding rights to minerals and other substances are not taken exception to in title insurance policies, especially in those areas of the state where there are known resources that are actively being harvested, or may be harvested in the future as technological capabilities are developed, and become commercially viable. These claims and their resulting losses can occur when the search of title doesn’t include and/or disclose the severance(s) of rights in minerals and other substances, or mineral lease(s); or the title records relied upon (including title plant records) did not accurately reflect these matters; or the starters and/or prior title insurance policy did not reflect the severance(s) or lease(s).
All Preliminary Reports, title commitments, binders, and title insurance policies (other than a Short Form Loan Policy) in any California county, must reflect the following General Mineral Exception:
GENERAL MINERAL EXCEPTION:
Ownership of, or rights to, minerals or other substances, subsurface and surface, of whatsoever kind, including, but not limited to coal, ores, metals, lignite, oil, gas, geothermal resources, brine, 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 the ownership or rights arise by lease, grant, exception, conveyance, reservation or otherwise, and whether or not appearing in the Public Records or listed in Schedule B. Stewart Title Guaranty Company and its issuing agent make 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.
This General Mineral Exception (GME) may only be eliminated by the Title Officer if all of the following conditions are met:
- there is a written request by the proposed insured to remove the GME;
- the Land is a residential 1-4 family;
- the Land is within the boundaries of a city or town, or within a residential subdivision created in 1964 or afterwards;
- you are not aware of any minerals or other substances actively being harvested within one mile of the Land; and
- you obtain and review a fully completed STG Owner’s Affidavit and Indemnity.
Any other elimination of this General Mineral Exception requires prior written approval from a Stewart Title Guaranty Company (STG) Underwriter.
SEVERED INTERESTS IN MINERALS OR OTHER SUBSTANCES
In addition to the above requirements, when there are known or potential interests in minerals or other substances and the legal description reflects a specific severance of an interest of those minerals or other substances, including those severed in a patent, whether 100% or any lesser interest, you must comply with all of the following requirements:
- include a corresponding (nearly identical) exception in Schedule B for all specific reservations or grants that are identified;
- include any leases of these minerals or other substances as an exception in Schedule B;
- include as an exception in Schedule B, any specific reservations or grants created in the current transaction. The language creating the specific reservations or grants must be drafted and agreed to by the parties or their respective counsel and then submitted to the Title Officer prior to recording; and
- include the following language at the end of the any specific minerals or other substances exception or lease reflected in Schedule B:
Stewart Title Guaranty Company and its issuing agent make 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 elimination of any leases of minerals or other substances as an exception in Schedule B requires prior written approval from an STG Underwriter.
Note: Rights to, or interests in, severed minerals or other substances shall not be separately insured.
PATENT AND WATER EXCEPTION
The Western Regional Exception 5 – patent and water rights exception – is included in the standard coverage owner’s policy. WRE Number 5 reads as follows:
(a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b), or (c) are shown by the Public Records.
Inclusion of the WRE#5 does not eliminate the requirement of including the GME in Schedule B.
Elimination of any patent exception, including the WRE#5, requires prior written approval from an STG Underwriter.
Elimination of the water rights provision in WRE#5 is prohibited.
Please see Section 2.15 of the STG Schedule of Charges and Forms for Title Insurance in the State of California for additional information related to the above exception and deletion of other WREs.
All Preliminary Reports, title commitments, binders, and extended coverage title insurance policies in any California county, must reflect the following General Water Exception:
GENERAL WATER EXCEPTION:
Water rights, claims or title to water in, on or under the Land, whether or not shown by the public records.
Any request to eliminate this General Water Exception requires prior written approval from an STG Underwriter.
Note: Rights to, or interests in, water shall not be insured.
ENDORSEMENTS RELATING TO MINERALS AND OTHER SUBSTANCES
The foregoing 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 other substances, such as the CLTA 100 series (ALTA 9 series) and the CLTA 140 series (ALTA 35-06 series), pursuant to applicable STG Underwriting Guidelines and STG Underwriter approval requirements.
If you have any questions about these changes or any pricing concerns, please contact a member of your Stewart Title Guaranty Company's California Underwriting Team.
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