Bulletin: FL2011002

Dear Associates: 

NEW FORMS

The Florida Office of Insurance Regulation has approved for use in Florida effective March 1, 2011, the American Land Title Association (ALTA) 2006 Owner’s Policy and Loan Policy with Florida modifications, new and revised Endorsements, revised Commitments, and a revised Short Form Residential Loan Policy.

It is our company policy to issue these new forms unless directed otherwise by the customer.  However, in this transition period, if you have issued a commitment prior to March 1, 2011, which provides for the issuance of the 1992 policy form, please issue the 1992 policy unless directed to do otherwise by the prospective insured.

At this time, the existing ALTA Loan Policy with Florida modifications (10/17/92), ALTA Owner’s Policy with Florida modifications (10/17/92), Short Form Loan Policy with Florida modifications (10/21/00), and endorsements applicable only to the 1992 Policies are not being withdrawn although we anticipate that they will be at some point in the future.

2006 POLICIES

The new ALTA Owner’s Policy and Loan Policy (6/17/06) with Florida modifications extensively revise and improve coverage.

Those changes include:

• The 2006 Policies contain defined terms that also are used in new endorsements: Amount of Insurance, Date of Policy, Entity, Indebtedness, Insured, Insured Claimant, Insured Mortgage, Knowledge, Land, Mortgage, Public Records, Title, and Unmarketable Title.
• Schedule A of the 2006 Owner’s and Loan Policies contains the phrase "Address Reference."  You may fill this in, delete it, or say N/A.
• Schedule A of the 2006 Loan Policy includes "Loan No."  You should complete if you know the number.
• Schedule B of the 2006 Loan Policy contains an optional phrase to refer to Schedule B II ("Except as provided in Schedule B – Part II…") if you show subordinate liens or leases.
• The Exclusions no longer have what were considered to be insuring or carve out provisions that could be construed as providing insurance.  Those carve outs appear in "Covered Risks."
• The insuring provisions are now "Covered Risks."
• Schedule A of the 2006 Loan Policy incorporates, by selection, endorsements in optional paragraph 6.  These endorsements do not have to be attached to the policy.  You may select these endorsements by marking the appropriate boxes: Endorsements, 4.1-06 (Condominium), 5.1-06 (Planned Unit Development), 6-06 (Variable Rate), 6.2-06 (Variable Rate – Negative Amortization), 8.1-06 (Environmental Protection Lien), 9-06 (Restrictions, Encroachments, Minerals), 13.1-06 (Leasehold Loan), 14-06 (Future Advance – Priority), 14.1-06 (Future Advance – Knowledge), 14.3-06 (Future Advance – Reverse Mortgage), and Florida Endorsements NSE (navigational servitude).  The Insured may continue to request other endorsements.
• Covered Risks in the 2006 Owner’s and Loan Policies cover Electronic Transactions, such as failure to comply with requirements to create documents electronically and failure to properly record a document electronically.
• Covered Risk 2(b) in the 2006 Owner’s and Loan Policies insures against loss because of:

"The lien of real estate taxes or assessments imposed on the Title by a Governmental authority due and payable, but unpaid." 

• You should be satisfied that taxes and assessments are not yet due and payable, or add the following at the end of your tax exception. 

"These taxes and assessments are due and payable." 

• You may continue to note in Schedule B that excepted taxes are not yet due and payable, if requested by the insured.
   
• Covered Risk 2 ( C ) of the 2006 Owner’s and Loan Policies insures survey matters, by issuing against loss by reason of: 

"Any encroachment, encumbrance, violation, variation, or adverse circumstance affecting the Title that would be disclosed by an accurate and complete land survey of the Land.  The term "encroachment" includes encroachments of existing improvements located on the Land onto adjoining land, and encroachments onto the Land of existing improvements located on adjoining land." 

Our survey requirements do not change.  If we are not willing to provide survey coverage, we should include a survey exception, such as the following. 

"Any encroachment, encumbrance, violation, variation, or adverse circumstance that would be disclosed by an accurate and complete land survey of the Land." 

• Covered Risks 5, 6, and 7 of the 2006 Owner’s and Loan Policies insure against notices of governmental enforcement, notices of legal violation and notices of eminent domain proceedings that are recorded in the Public Records.   You should except to a recorded notice of governmental violation (such as zoning, subdivision, environmental) or notice of eminent domain proceeding filed by any person.  Do not remove as an exception because of a release unless you receive approval from underwriting personnel. 
• Covered Risk 9 of the 2006 Owner’s Policy and Covered Risk 13 of the 2006 Loan Policy provide creditors’ rights coverage because of prior fraudulent transfers and ineffective or delayed recording.  The Policies remain subject to creditors’ rights exclusions relating to the current transaction.
   
• Covered Risk 10 of the 2006 Owner’s Policy and Covered Risk 14 of the 2006 Loan Policy provide Gap Coverage.  You may show as your Date of Policy the date of disbursement and delivery of all documents.  You do not need to await recording information unless the closing instructions require that information on the Policy.
   
• The definition of "Insured" in the 2006 Owner’s Policy is expanded.  It includes a successor by conversion, certain affiliated grantees, and certain trustee grantees.
   
• The definition of "Indebtedness" is broadened in the 2006 Loan Policy, and includes future advances, but does not insure validity or priority of the Insured Mortgage for those advances.  The Insured should still secure a Future Advance Endorsement (such as the ALTA Endorsement 14 or 14.1)
   
• There is no co-insurance clause in the 2006 Owner’s Policy.
   
• There is no apportionment clause in the 2006 Owner’s Policy.
   
• There is no non-cumulative liability clause in the 2006 Loan Policy. 
• There is no pro tanto reduction clause by payment of principal in the 2006 Loan Policy, and therefore no need for a Last Dollar Endorsement.  You may continue to issue the endorsement if requested. 

REVISED COMMITMENTS 

The new ALTA Commitments are the ALTA Commitment Form (6/17/06).  

You should use these Commitments when you issue the 2006 Policies, but not when you issue the 1992 Policies.  These commitments disclose that the 2006 ALTA Policy includes an arbitration provision. 

CONFORMING CHANGES TO EXISTING AND NEW ENDORSEMENTS TO ISSUE WITH 2006 POLICIES (-06 ENDORSEMENTS) 

The ALTA has adopted modified versions of each of the existing and new endorsements that are designed for issuance with the new ALTA Owner’s Policy (6/17/06) and new ALTA Loan Policy (6/17/06).  Endorsements include in the assigned number "-06" and incorporate the terms used in the new policies, such as "Land," "Amount of Insurance," "Title," "Insured," and "Indebtedness."  These endorsements adopted for issuance with the 2006 Policies are listed on the right-hand column of Table 1 below.  Endorsements that may be issued with the 1992 Policies are listed on the left-hand column of Table 1 below. 

Table 1 

 
The following endorsements specific to Florida and set forth in the Florida Title Insurance Promulgation Order may still be issued:

SHORT FORM LOAN POLICY REVISIONS

The new Short Form Residential Loan Policy One to Four Family with Florida modifications (6/17/06) incorporates the ALTA Loan Policy (6/17/06).  The new Short Form Residential Loan Policy automatically incorporates several endorsements, and certain endorsements may also be incorporated by marking a box on the Policy (see Table 2).

Table 2

Endorsements incorporated by marking a box on the Short Form Residential Loan Policy One-to-Four Family (6/17/06):

Schedule A 

Schedule A no longer states that the Date of Policy is the later of the stated Settlement Date or Date of Recording of the Insured Mortgage.  You should place the date of settlement by Date of Policy.  You should always promptly file for record the Insured Mortgage. 

See Table 1 and Table 2 above for list of endorsements. 

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

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