Bulletin: GA2014006

Dear Associates:

The following examples are illustrative of the proper calculation of title insurance simultaneous issue charges in accordance with Stewart Title Guaranty Company’s “All Inclusive Schedule of Charges for Use in the State of Georgia effective July 1, 2014”.

The proper calculation of the simultaneous issue charge for owner’s and loan policies in accordance with Residential Section 7(A) pages 4-5 of the “Schedule of Charges”, is as follows:

I.      “When an owner’s and loan policy are issued simultaneously in connection with a single transaction and covering identical land, the charge for the loan policy will be at the original charge. The charge for an owner’s policy of greater value will be for the face amount of the owner’s policy at the original charge, less the charge made for the loan policy, plus a $100 charge for issuance of the extra policy.”

A.    Simultaneous Issuance of Residential Standard Owner’s Policy and Loan Policy

A property is purchased for $1,024,000 and simultaneously a first mortgage of $950,000 and a second mortgage of $50,000 are obtained. The owner has asked for the ALTA Standard Owner’s Policy (2006).

Example:  $950,000 first loan policy

$50,000 second loan policy

$1,024,000 standard owner’s policy

$2,070.00 original charge for first loan policy

$3,089.80 original charge for standard owner’s policy

Calculation: $3,089.80 – $2,070.00 + $100.00 = $1,119.80

Second Mortgage Policies, Section 6, Page 4 of the “Schedule of Charges, sets forth the proper calculation of the premium for a second loan policy in the amount of $50,000.

Calculation: ($50,000 divided by thousand) x $3.00 = $150.00.

Calculated premium of $150.00 is less than minimum charge of $200.00 for second loan policy. Therefore, charge $200.00.

Total Charges:   $2,070.00 first loan policy    

$1,119.80 standard owner’s policy

$200.00 second loan policy

B.    Simultaneous Issuance of Residential Enhanced Owner’s Policy and Loan Policy

A property is purchased for $300,000 and simultaneously a first mortgage of $250,000 is obtained. The owner has asked for the ALTA Enhanced (Homeowners) Owner’s Policy.

Example:  $250,000 loan policy

$300,000 enhanced owner’s policy

$607.50 original charge for loan policy

$1,230.00 original charge for enhanced owner’s policy

Calculation: $1,230.00 – $607.50 + $100.00 = $722.50

Total Charge:   $607.50 loan policy

$722.50 enhanced owner’s policy

II.     The charge for an owner’s policy of lesser value will be for the face amount of the owner’s policy at the original charge, less the charge for a loan policy calculated at the value of the owner’s policy, plus a $100 charge for the issuance of the extra policy.

C.   Simultaneous Issuance of Residential Enhanced Owner’s Policy and Loan Policy

A property is purchased for $150,000 and simultaneously a first mortgage of $200,000 is obtained. The owner has asked for the ALTA Enhanced (Homeowners) Owner’s Policy.

Example:  $200,000 loan policy

$150,000 enhanced owner’s policy

$495.00 original charge for loan policy

$645.00 original charge for enhanced owner’s policy

$382.50 original charge for a loan policy of $150,000

Calculation: $645.00 – $382.50 + $100.00 = $362.50

Total Charge: $495.00 loan policy

$362.50 enhanced owner’s policy

All policies must bear the same effective date and the owner’s policy must show the mortgage or lease as an exception. The owner’s policy should be issued for the purchase price of the property.

The proper calculation of the simultaneous issue charge for owner’s and construction loan policies in accordance with Residential Section 8, pages 5-6 of the “Schedule of Charges”, is as follows:

EXAMPLE 1: A builder purchases a subdivision lot for construction of a single-family residence and pays $35,000 for the land.

(1) If the builder wishes to purchase only an owner's insurance to cover the $35,000 land acquisition, he pays for the insurance at the basic rate schedule of $3.75 per thousand for the first $100,000 of insurance with a minimum charge of $200.00 for an owner’s policy. If at a later time, he obtains a $475,000.00 construction loan, the charge for the construction loan policy at the basic schedule is $1.25 per thousand or $593.75.

(2) If the builder wishes to purchase a standard owner’s policy for $510,000 to cover the cost of the land plus improvements ($35,000+$475,000) simultaneously with a construction loan policy,  the original charge for owner’s pricing is charged on the owner’s policy and the simultaneous fee of $100 is charged for the construction loan policy.

Example:  $475,000 construction loan policy

$510,000 standard owner’s policy

Total Charges: $100.00 charge for construction loan policy

$1,702.00 charge for standard owner’s policy

(3) If the construction loan policy is issued simultaneously with an owner’s policy of lesser value, the original charge for owner’s policy pricing is charged on the owner’s policy amount and the construction loan charge of $1.25 per $1,000 of coverage is charged for the construction loan policy.

Example:  $475,000 construction loan policy

$35,000 standard owner’s policy

Total Charges: $593.75 charge for construction loan policy

$200.00 minimum charge for standard owner’s policy

The rates and calculation of charges in the new Schedule of Charges effective July 1, 2014, are the rates and calculation of charges that all Issuing Offices are required to charge the consumer and upon which Issuing Offices must remit. Issuing Agents shall distribute this bulletin to all attorneys, paralegals and other staff involved in residential real estate transactions in your office where a Stewart title policy will be issued for their review.

If you have questions relating to this bulletin, please contact your local underwriter Dawn Lewallen at 678-262-4589 (dalewall@stewart.com), or Stewart Legal Services.

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

For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.