Bulletin: NJ000032

Dear Associates:

Effective March 2, 1998 a new form of survey endorsement has been approved by the New Jersey Department of Banking and Insurance. This form is intended to replace Form No. 5-01 (last revised 12/10/93). The company's underwriting guidelines had been not to use Form 5-01 as your survey endorsement but instead the preferred form was the so called "Plain Language" form 5-14. The revised Form 5-01 will now be the preferred form of survey endorsement. During the transition phase between these forms, you may continue to use form 5-14 until your supplies are exhausted and then switch to the newly revised version of Form 5-01. Agents generating their forms on their computers should use the newly revised version of Form 5-01 for all files in which the survey endorsement has not already been issued on and after March 2, 1998. It is anticipated that Form 5-14 will be shortly withdrawn by the Rating Bureau and will no longer be used.

The survey endorsement was revised in response to a recent unreported trial court decision in a case entitled DeCandido vs. First American Title, wherein Judge Fitzpatrick, sitting in Bergen County, held First American Title liable for purported errors on a survey relative to the location of certain improvements shown on the survey which did not relate to the title. In essence Judge Fitzpatrick held that the title insurer had insured the accuracy of the entire survey and not just matters relating to title. It has never been the intention of title insurers to guaranty the complete accuracy of surveys. Rather, title insurers have used surveys to insure against certain title matters as specified in the policy and endorsement. The case is presently pending appeal.

Although it was always believed the survey endorsement was unambiguous, Form 5-01 has been revised to add the following sentence to make it clear that the endorsement does not guaranty the accuracy of the survey in all respects:

"This policy does not insure against error or inaccuracies in the survey with respect to matters which do not affect title."

In addition, and perhaps more importantly, the survey endorsement has been re-worded to make it clear that it does not insure against matters already shown as exceptions on Schedule B of the policy. As you are aware because of the broad language of the survey endorsement, it had always been necessary to take as the first excepted matter in the survey endorsement, "Easements and other matters shown on Schedule B of the policy". The revised endorsement makes it clear that the endorsement does not provide insurance over easements and other matters for which exception is taken in Schedule B and therefore it will no longer be necessary to take an exception to those matters in the survey endorsement.

The revised Form 5-01 will be available shortly from the forms department in Houston. The new Form 5-01 is available through the references at the end of this bulletin.

Our underwriting guidelines for the issuance of the survey endorsement are unchanged, except as specifically revised herein.

If you have any questions please call the state office.