Bulletin: MD000002

Dear Associates:

ALTA Form 8.1

You should be familiar with the ALTA Form 8.1 Endorsement which provides coverage as to environmental protection liens. This endorsement is to be attached only to loan policies and not to owner's policies. Issue this endorsement only if the property is residential or if you are insuring a construction loan to add residential improvements. For the purposes of this Bulletin, residential property shall include apartment projects, condominiums as well as single family residences.

Paragraph (a) of the Endorsement insures that there are no superior environmental protection liens recorded in the local Land Records or U.S. District Court Clerk's office. In the course of your examination, however, you only need to run your local Land Records and review any EPA liens that Stewart Title Guaranty Company or this office mails to you. You do not have to check the records of the U.S. District Court Clerk's office in order to issue this endorsement.

Please note that paragraph (b) excepts to Maryland Environmental Code Section 7-266. This law creates a lien for civil penalties assessed in connection with violations of state environmental laws.

Also note the "Excluded Matters" section of the Endorsement. Fannie Mae has authorized this exclusion. It covers matters that FNMA did not intend to include within the scope of "environmental protection liens." These matters include nuisance statutes, weedcutting liens, and similar matters.

Environmental Notices

The ALTA policies exclude liability because of environmental laws, however, if a notice of violation is recorded in the Land Records, you must except to it in Schedule B. Examples include:

Notices of storage, treatment or disposal of hazardous materials on site;

Notices of cleanup or decontamination;

Notices of lien (such as E.P.A., state, local or private) for cleanup of hazardous materials; or

Disclosures or declarations concerning hazardous materials.

You have no authority to affirmatively insure against loss or damage sustained as a result of these notices. You may not insure without exception to an environmental cleanup lien even if there has been a foreclosure of a prior mortgage or Deed of Trust or a release of the environmental cleanup lien. Where a release is found, always except to the environmental cleanup lien and refer to the release after excepting to the lien.

Rate

At this time our local policy is to make no charge for this endorsement.

Lender Objection

If any lender objects to the language of the ALTA. 8.1 Endorsement or if you have any questions about the endorsement, please contact the undersigned.