5.36 Extrahazardous Risks


In General

Extrahazardous risks are matters of title insurance that either from a legal or business standpoint are considered to involve an exceptional degree of risk or call for nontypical forms of coverage.

For that reason, when these situations are encountered, consult the National Legal Department in Houston or a Texas Underwriter before the Company is committed to insure the extrahazardous risk situations.


Risks That May Be Considered As Extrahazardous

It is impossible to enumerate all the risks that may be considered extrahazardous.The complexity of real estate transactions, the development of new financing techniques, and the willingness of title insurance companies because of market competitiveness and customer pressure to accept and assume additional risks, make it extremely difficult to arrange a comprehensive list of extrahazardous risks. The following risks can be considered at the present time as extrahazardous and require the approval of the Company:

  • Automatic subordinations;
  • Insuring title to land formerly covered by navigable water; (Prohibited in Texas).
  • Insuring tidelands or submerged lands; (Prohibited in Texas)
  • Insuring title to air space;
  • Insuring title by adverse possession;
  • Insuring title through (a) tax deed, (b) sheriff's deed under an execution sale, (c) federal marshall's deed under an execution sale, (d) sale by Commissioner of Internal Revenue for unpaid federal taxes, and (e) other similar sales not confirmed by a court of record having jurisdiction over the parties;
  • Transactions involving municipal corporations or other governmental bodies;
  • Insuring a mineral estate separate and apart from the surface interest;
  • Insuring easements in gross or prescriptive easements;
  • Insuring title by escheat or forfeiture;
  • Insuring shopping centers;
  • Insuring leveraged buyouts;
  • Insuring title to beaches or recreational areas; (Prohibited in Texas)
  • Insuring title to abandoned railroad property;
  • Insuring conveyances by a corporation to one of its officers or by a partnership to one of its partners;
  • Insuring conveyances which appear to be a preference or in consideration for an antecedent debt;
  • Insuring conveyances with leasebacks to the grantor;
  • Insuring execution, IRS, or other summary sales.
  • Insuring water rights (may require payment to Stewart Title Guaranty Company)
  • Creditor’s rights (Prohibited by Texas Law to all title insurers licensed in Texas on property located anywhere in US).
  • Non-imputation.
  • Broken priority in construction loans.