This article contains an example template of the ALTA first loss endorsement. For more information on ALTA endorsements, request your copy of our free endorsement book.
FIRST LOSS-MULTIPLE PARCEL TRANSACTIONS (ALTA 20-06) (Adopted 6/17/2006)
This endorsement is effective only if the Collateral includes at least two parcels of real property.
- For the purposes of this endorsement:
- “Collateral” means all property, including the Land, given as security for the Indebtedness.
- “Material Impairment Amount” means the amount by which any matter covered by the policy for
- which a claim is made diminishes the value of the Collateral below the Indebtedness.
- In the event of a claim resulting from a matter insured against by the policy, the Company agrees to pay that portion of the Material Impairment Amount that does not exceed the extent of liability imposed by Section 8 of the Conditions without requiring:
- maturity of the Indebtedness by acceleration or otherwise,
- pursuit by the Insured of its remedies against the Collateral, or
- pursuit by the Insured of its remedies under any guaranty, bond or other insurance policy.
- Nothing in this endorsement shall impair the Company’s right of subrogation. However, the Company agrees that its right of subrogation shall be subordinate to the rights and remedies of the Insured.
The Company’s right of subrogation shall include the right to recover the amount paid to the Insured pursuant to Section 2 of this endorsement from any debtor or guarantor of the Indebtedness, after payment or other satisfaction of the remainder of the Indebtedness and other obligations secured by the lien of the Insured Mortgage. The Company shall have the right to recoup from the Insured Claimant any amount received by it in excess of the Indebtedness up to the amount of the payment under Section 2.
This endorsement is issued as part of the policy. Except as it expressly states, it does not (i) modify any of the terms and provisions of the policy, (ii) modify any prior endorsements, (iii) extend the Date of Policy, or (iv) increase the Amount of Insurance. To the extent a provision of the policy or a previous endorsement is inconsistent with an express provision of this endorsement, this endorsement controls. Otherwise, this endorsement is subject to all of the terms and provisions of the policy and of any prior endorsements.