Bulletin: MI2009004

Dear Associates:

Please be advised that if you are requested to insure a time-share interest (typically recreational property) in Michigan you must be aware that you are, potentially, being asked to insure a personalty interest instead of an interest in real property. A time-share interest in property is often created by a proposed purchaser acquiring "stock or shares" in the time-share corporation or entity which stock/shares entitle the purchaser to a possessory interest in a unit or structure for a scheduled period of time. In such a transaction the purchaser is not acquiring an interest in real property. Or, the time share purchaser acquires a percentage "fee interest" in property along with others which entitles the purchaser to right of possession for a scheduled period of time, established by agreement.

While we don't insure "personalty interests," in both of the above instances the Company can offer insurance in Michigan but it must comport with the following guidelines:

Example 1 - Purchase of shares/stock in the time-share Company [not a fee interest] with a scheduled time of possession.

• Schedule A should show the name of the true fee owner of the property [typically, the time-share corporation or LLC that owns the project].
  
• The legal description should be of the entire project and not the specific building/unit/site of occupation.
  
• [You are insuring the purchaser of the stock or shares that XYZ Corporation owns the project but not the possessory interest of the purchaser.]
  
• Do not delete the pre-printed standard exception for parties in possession not shown of record.
  
• In the event that there is a request to insure a loan policy, you must contact the Michigan Legal Underwriting Department.
  

Example 2 - Purchase of a percent of fee interest along with others with a scheduled time of possession.

• Schedule A, Paragraph 3 of the Commitment may reflect that the interest being insured is: fee title.
  
• There must be a legal description for the entire property being purchased. [It can't be a building/unit/site designation unless there is a subdivision plan showing exactly where that building/unit/site is located akin to a condominium subdivision plan.]
  
• Schedule A must also reflect the names of all of the other fee interest owners.
  
• There should be a Schedule B exception for the interests of the other fee owners, parties claiming by or through those fee owners and a disclaimer of liability as to their respective percentage of interests, as follows:

The rights, claims or interest of other fee owners in and to the subject property and parties claiming by or through those owners. Any loss or damage resulting from any dispute as to the percentage of ownership among the parties in interest.

• In the event that there is a request for a loan policy, you must contact the Michigan Legal Underwriting Department.

In either of these situations we must avoid indicating on the commitment or policy that we are insuring "time of occupation" or "location of occupation."

If you have questions relating to this bulletin, please contact your local underwriting personnel.

This bulletin relates solely to the State of Michigan.

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