Guideline for NM 88.4 – Energy Project Covenants, Conditions & Restrictions – Land Under Development – Owner’s Endorsement (ALTA 36.4, 4/2/12)
This endorsement is one of a series of ALTA endorsements designed specifically for energy projects (e.g., wind farms, solar farms, geothermal plants, traditional electricity generating facilities, etc.). These energy project endorsements are designed to address several unique issues associated with these projects, including:
· The projects are typically large geographically and are usually created through a combination of fee parcels, leaseholds, and/or easements.
· These interests allow the energy producer to construct improvements, access the improvements for service, maintenance and repairs.
· The projects often include a transmission line component from the generating facility to the electrical grid.
· These projects typically comprise many constituent parcels of land that are aggregated into a large tract but may be more of a checkerboard with respect to wind farms, and issues of contiguity and accessibility are paramount.
· Although these projects tend to cover a lot of ground, the real economic value of the project usually lies with the solar panels or wind turbines or transmission lines, all of which may or may not be considered to be real property.
There are two endorsements that address issues regarding violations of covenants, conditions, and restrictions: the NM form 88.4 for an owner’s policy and the NM form 88.5 for a loan policy. The endorsements are similar to each other. NM form 88.4 is identical to ALTA 36.4-06 and is modeled on and provides coverage similar to ALTA Endorsement 9.8-06 (Covenants, Conditions and Restrictions – Land Under Development – Owner’s Policy). NM form 88.5 is identical to ALTA 36.5-06 and is modeled on and provides coverage similar to ALTA Endorsement 9.7-06 (Restrictions, Encroachments, Minerals – Land Under Development – Loan Policy), except for encroachments. NOTE: neither the ALTA 9.7 nor 9.8 is promulgated for use in New Mexico.
NM form 88.4 can be issued with a NM form 1 Owner’s Policy (ALTA 2006). NM form 88.5 can be issued with a NM form 2 Loan Policy (ALTA 2006). These forms are not designed for use with the 1992 policy forms.
This endorsement contains an expansive definition of “Electricity Facility” that includes an existing electricity generating facility and an electricity generating facility under construction or to be built on the land in locations according to defined “Plans” depicting the project. This endorsement also contains a definition of existing and future “Severable Improvements” linked to the definition of Electricity Facility and the Plans.
The endorsement insures against: (a) violations of covenants by any existing or future Electricity Facility or Severable Improvement, (b) enforced removal of any existing or future Electricity Facility or Severable Improvement as a result of a violation of an existing platted building setback line, and (c) notices of violations of covenants relating to environmental protection, unless an exception in Schedule B identifies the violation or notice of violation, as applicable.
1. The project must involve an electricity generating facility (e.g., wind farms, solar farms, geothermal facilities, traditional electricity generating facilities, etc.). Although these endorsements are designed primarily for a policy insuring an energy project under construction or to be built, they can be used for an existing, completed energy project.
2. If the project is to be built or under construction, obtain and retain a set of the plans for the project (survey, site and elevation plans or other depictions or drawings prepared by an architect or engineer), and such plans must be referenced in the endorsement. If the project is completed or existing, and no construction is contemplated, you may waive the requirement of the plans.
3. Obtain a current, accurate survey in accordance with Stewart’s Survey Guidelines, which shows the location of: (a) all existing improvements and all proposed improvements, based upon the Plans defined in the endorsement, and (b) all existing and proposed setback lines. Except in Schedule B to all encroachments over property lines or easements.
4. Verify that the existing and planned Electricity Facility and Severable Improvements do not materially violate any existing enforceable covenants. Specifically except to each and every violation of covenants in Schedule B.
5. Verify that the existing and planned Electricity Facility and Severable Improvements do not violate a building setback line shown on a plat of subdivision recorded in the real property records (the “Public Records”). Specifically except to each and every encroachment over building setback lines in Schedule B.
6. If a notice of violation of a covenant relating to environmental protection has been recorded in the real property records (the “Public Records”), except to it in Schedule B.
7. Do not issue this endorsement without at least Associate Senior Underwriter approval.
8. The cost of this endorsement is ten percent (10%) of the Basic Premium Rate. You may charge the 10% for all owner policy endorsements, irrespective of the number issued, and the 10% for all loan policy endorsements, irrespective of the number issued. Do not charge the 10% for each endorsement.
Any revision to this form requires approval of a Stewart Title Guaranty Company underwriter. 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):