Thursday, February 5, 2009

Overview of Standard Title Insurance Forms (part 3)

The policies may be modified to provide additional coverages by three methods: (1) Schedule B affirmative insurance, or (2) endorsement, or (3) deletion of printed standard exceptions. Schedule B affirmative language usually consists of a specific insurance provision following and related to a specific exception. It is more a product of East Coast jurisdictions (although promulgated "express insurance" is available in Texas). Endorsements may provide insurance, as to a specific exception, changes in the Exclusions or Conditions and Stipulations, or, more generally, additional insurance.

The policies provide "extended coverage" if the more common standard exceptions are deleted. Those exceptions are typically the following:

(a) Rights or claims of parties in possession not shown by the public records.

(b) Easements, or claims of easements, not shown by the public records.

(c) Encroachments, overlaps, boundary line disputes, or other matters which would be disclosed by an accurate survey and inspection of the subject property.

(d) Any lien, or right to a lien, for services, labor, or material hereto or hereafter furnished, imposed by law and not shown by the public records.

(e) Taxes or special assessments which are not shown as existing liens by the public records.

Assignments of rents may be described in a Loan Policy in several ways: in Schedule A with the description of the insured mortgage, in Schedule B-I (generally not acceptable to the insured), in Schedule B-II (as subordinate), or in a "Note." The assignment may be subject of a CLTA Endorsement 104.6.

An attorney may be guilty of negligence in not recommending adequate title review or title insurance. Given this duty, the attorney advising a purchaser is likely guilty of malpractice if the attorney does not recommend:

(1) a title insurance policy, and

(2) extended coverage.

If the more extensive coverages of the ALTA Homeowner's Policy of Title Insurance are reasonably available, it would seemingly be negligent if the attorney failed to recommend the advantages of this policy.

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