title application
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Why should we purchase an owners policy?

When you purchase real estate, it is important to know that you will be able to recoup your investment in that property at some future date, when you choose to sell.  By purchasing an Owner's Title Insurance Policy, you can rest easier knowing that the Title Insurer will defend against claims that you do not have good title to the property.

Title insurance is issued only after a through search and examination of the real estate records relating to the property.  American Land Title Association (ALTA) estimates that in 25 per cent of the examinations, some type of title problem is discovered and then resolved prior to closing.

Occasionally, however, despite the care taken in searching and examining, hidden problems can arise after closing.  These problems include fraud, forgery, ineffective conveyance documents, and liens such as mechanics liens or liens for unpaid estate, inheritance, income or gift taxes. 

Title insurance will pay for defending against any lawsuit arguing that the title to the property is not as shown on the policy, and will either fix the title problem, or pay for any loss you, as the insured, suffer.

An owner's policy of title insurance will continue in effect for as long as you retain an interest in the property or have any obligation under a warranty given in any document conveying title to the property to another party.


What endorsements do we need?

Endorsements are used to customize a general policy of title insurance to meet the customer's specific needs.  Because of this, it is difficult to put together a list of endorsements that would meet everyone's needs in any one transaction, let along to compile a single list of endorsements that would apply to every transaction.

That being said, the American Land Title Association (ALTA) has developed a number of "standard" endorsements which are often requested.  Even so, the applicability of these endorsements must be determined on a case by case basis. 

The earliest ALTA endorsements were designed primarily for use with residential risks.  Those risks which were particularly of concern to investors in the secondary mortgage market were addressed through standard endorsements designed to protect residential lenders.  These endorsements include:  Street Assessments (ALTA 1), Truth in Lending (ALTA 2), Condominium (ALTA 4 and 4.1), Planned Unit Development (ALTA 5 and 5.1), Variable Rate Mortgage (ALTA 6, 6.1 and 6.2), Manufactured Housing (ALTA 7), and Environmental Protection Lien (ALTA 8.1).

Other ALTA endorsements are generally recognized as relating to commercial transactions, rather than residential transactions.  Historically, the commercial ALTA endorsements were limited to Zoning (ALTA 3 or 3.1), Comprehensive (ALTA 9, 9.1 or 9.2), Mortgage Assignment (ALTA 10), Mortgage Assignment and Date down (ALTA 10.1), Mortgage Modification (ALTA 11) and Aggregation or Tie-In (ALTA 12). 

Between 2001 and 2004, additional Commercial Transaction oriented endorsements were added.  These include Leasehold (ALTA 13 and 13.1), Future Advance (ALTA 14, 14.1 and 14.2), Non-Imputation (ALTA 15, 15.1, and 15.2), Mezzanine Financing (ALTA 16), Access and Entry (ALTA 17 and 17.1), Tax Parcel (ALTA 18 and 18.1), Contiguity (ALTA 19 and 19.1), First Loss (ALTA 20) and Creditors Rights (ALTA 21)

Locally and regionally additional endorsements have been used regularly and become a "standard" for that area. Other endorsements can be crafted to meet specific concerns in a given transaction. 

Before requesting endorsements, it is important to evaluate your transaction and identify the specific concerns for which you want additional coverage.  We will need to understand what coverage you are looking for and may ask for additional information to evaluate the risk of issuing such coverage.

Some of the most commonly requested endorsements, in our experience, are:  Comprehensive, Contiguity, Access Survey, Revolving Credit Endorsement, Variable Rate, Tax Parcel, and Zoning.

For more detail about endorsements, please contact our sales and marketing department to arrange for a seminar.


What is Title Insurance?

Title Insurance is a contract or agreement in which the Title Insurance Company (insurer) agrees to indemnify the owner (insured) of the Title Insurance Policy against any loss (up to the insured amount) that the party incurs as a result of the title being other than as shown in the policy. 

Unlike other Insurance Policies, such as a homeowner's policy or automobile policy, title insurance is purchased with a single, non-repeating premium.  This premium will be based in part on the amount of coverage, and in part on the customized extent of coverage provided through endorsements. 

Title Insurance protects against errors that have already occurred as of the date of the policy, ordinarily the date of the closing or the date the documents are actually recorded, whichever is later.

Prior to issuing a policy of title insurance, the insurer will perform research and document review necessary to evaluate and limit the risk to both the insurer and to the insured.  This will involve reviewing public records, the information  about the transaction and other matters provided by the parties,


What is a "date down" endorsement?

Because title insurance only covers errors occurring through a particular date, there are occasions when a party wants a more current date on their existing policy, or to obtain a new policy with a more current date.  The most common occurrence when this is required is when a borrower and lender agree to modify a mortgage, or when a lender assigns a mortgage.  Especially where a modification includes loaning additional funds to the borrower, the lender wants to be certain that their mortgage has the same priority over other liens as to all of the funds advanced

In order to issue an endorsement which extends the effective date of the policy, a new search of the records must be made.  A letter report is then presented to the relevant parties showing what documents have been filed during the period from the policy date to the current date of the county records.  This report does not actually affect the policy, but provides information to decide what needs to be done prior to closing on the proposed modification.

Based upon what the letter report reveals, a specimen endorsement will be provided to the lender, showing how we expect the final endorsement to appear.  This endorsement will include "standard" policy exceptions related to gap, parties in possession, mechanic's liens, survey matters, etc, which occur after the original policy date, unless these are separately resolved as part of the current transaction.

In addition to abstracting and examination fees, an additional premium will be charged for this endorsement, which is generally some percentage of the original premium plus an amount for any additional funds advanced under the mortgage.  The premium relates to the fact coverage period for the policy has been expanded.  The amount of this premium will depend on factors such as the length of time the policy is extended, the policy amount, and particular risk factors which apply. 


What is a "piggyback" endorsement?

Under particular circumstances, a Title Insurer will issue an endorsement to a policy originally issued by a different Title Insurer.  We call this a "piggyback" endorsement, because it rides on the back of the other company's policy.

A piggyback endorsement is made subject to all the terms of the original policy and any other endorsements already issued against that policy.  It also contains an express provision that it does not provide coverage for any matters covered under the underlying policy.

The piggyback endorsement clearly begins its coverage as of the date of the underlying policy and only provides insurance for the period from that date through the effective date of the endorsement. 

In other respects this type of endorsement is very similar to a date down endorsement.  Ordinarily, a letter report is presented to the relevant parties showing what documents have been filed during the period from the policy date to the current date of the county records.  This report does not actually affect the policy, but provides information to decide what needs to be done prior to closing on the proposed modification.

Based upon what the letter report reveals, a specimen endorsement will be provided to the lender, showing how we expect the final endorsement to appear.  This endorsement will include "standard" policy exceptions related to gap, parties in possession, mechanic's liens, survey matters, etc, which occur after the original policy date, unless these are separately resolved as part of the current transaction.

In addition to abstracting and examination fees, an additional premium will be charged for this endorsement, which is premium for bringing the date forward plus an amount for any additional funds advanced under the mortgage.  The premium relates to the fact coverage period for the policy has been expanded.  The amount of this premium will depend on factors such as the length of time the policy is extended, the policy amount, and particular risk factors which apply. 

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