Guideline: ALTA Construction Loan Policy 1992
A Construction Loan Policy is issued to a lender making a construction loan secured by a mortgage on the parcel of land to be improved. The policy insures against the invalidity or unenforceability of the lien of the mortgage and against loss or damage should the priority of the mortgage be other than as shown in the policy. The policy designates the vested owner of the land and discloses those defects, liens or encumbrances which in the judgment of the insurer should appear in the policy. The policy is not a report or abstract of title. Instead, the insured is indemnified against loss or damage should matters exist which are not shown in the policy.
The insuring provisions of the policy are less broad than those of the ALTA Loan Policy as to insurance against unfiled mechanic's liens. Coverage is also limited by the Exceptions in Schedule B, the printed Exclusions from Coverage and the Conditions and Stipulations contained in the policy. Although the policy itself gives no coverage against unfiled mechanic's liens the coverage of the policy may be broadened by the use of any one of four approved endorsements. The use of each endorsement is designed to accommodate the laws of a particular state or states.
Endorsement A insures against lack of priority of the insured mortgage over mechanic's liens for labor and materials which were provided before a specified date and for which the insured has advanced funds.
Endorsement B insures against lack of priority of the insured mortgage over mechanic's liens for labor and materials furnished before or after the date of policy, but only for those loan proceeds advanced at date of policy or subsequently in compliance with the lender's legal obligation to advance.
Endorsement C insures against lack of priority of the insured mortgage over mechanic's liens advanced at the date of policy or subsequently, but before the filing of any mechanic's liens in the public records.
Endorsement D insures against lack of priority of the insured mortgage over mechanic's liens for labor or material furnished before or after the date of policy.
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):