Bulletin: KY2016003

Dear Associates:

The following ALTA forms and endorsements have been approved by the Kentucky Department of Insurance for use in Kentucky. A new rate manual containing the changes has also been approved and can be found [HERE]. The effective date for the new ALTA forms and rate manual is December 16, 2016. Each of these policies, when issued, must have the KY Arbitration Endorsement attached thereto, and can be found [HERE].

Among the forms described below are new versions of the ALTA Expanded Coverage Residential Loan Policy and the ALTA Short Form Expanded Coverage Residential Loan Policy. These policies replace all prior versions of the ALTA Expanded Coverage Residential Loan Policy and the ALTA Short Form Expanded Coverage Residential Loan Policy.

** NOTE ** Please continue checking with condo and homeowner’s associations for outstanding assessments at the time of closing, which is in keeping with our current practices. If assessments are current, you can issue the ALTA Expanded Coverage Residential Loan Policy - Assessments Priority (or the short form thereof) for policies covering first mortgages on condominiums. For policies covering homes subject to a homeowner’s association, you may issue the Residential Loan Policy - Assessments Priority (or the short form thereof) only if the governing HOA documents also provide for subordination of the HOA assessments to a first mortgage. Otherwise, issue the Expanded Coverage Residential Loan Policy - Current Assessments (or the short form thereof) or ALTA Short Form Residential Loan Policy - Current Violations.

ALTA Expanded Coverage Residential Loan Policy - Assessments Priority (04-02-15)

The ALTA Expanded Coverage Residential Loan Policy - Assessments Priority (04-02-15) provides additional coverage to lenders regarding lack of priority of the lien of the Insured Mortgage over the lien of certain assessments.

ALTA Short Form Expanded Coverage Residential Loan Policy - Assessments Priority (04-02-15)

This policy is the Short Form version of the ALTA Expanded Coverage Residential Loan Policy. It incorporates the insuring provisions, exclusions and conditions of that ALTA policy. It provides additional coverage to lenders regarding lack of priority of the lien of the insured Mortgage over the lien of certain assessments.

ALTA Expanded Coverage Residential Loan Policy - Current Assessments (04-02-15)

The ALTA Expanded Coverage Residential Loan Policy - Current Assessments (04-02-15) provides additional coverage to lenders for certain assessments imposed at Date of Policy.

The ALTA Short Form Expanded Coverage Residential Loan Policy - Current Assessments (04-02-15) 

This policy is the Short Form version of the ALTA Expanded Coverage Residential Loan Policy. It incorporates the insuring provisions, exclusions and conditions of that ALTA policy. It provides additional coverage to lenders for certain assessments imposed at Date of Policy.

ALTA Short Form Residential Loan Policy - Current Violations (04-02-15)

The ALTA Short Form Residential Loan Policy - Current Violations (04-02-15) is issued to a lender making a loan secured by a one-to-four family residential lot or condominium. This policy insures against violations of covenants, conditions, or restrictions at Date of Policy.

ALTA Commitment for Title Insurance 08-01-16

The ALTA Commitment for Title Insurance 08-01-16 updates and consolidates the ALTA Commitment Form (6-17-06) and the ALTA Plain Language Commitment Form (6-17-06).

The ALTA Commitment contains the following notable changes and features:

* adds a Notice at the top of the Commitment reiterating that the Commitment is an offer to issue a title insurance policy or policies, and is not an abstract or opinion of title, and limits the Company’s potential liability to the proposed insured;

* clarifies the Company’s right to amend the Commitment at any time and the limitations on the Company’s liability relating to an amendment (Commitment Conditions 4 and 5);

* improves readability by adding and revising headings and reordering certain Commitment Conditions;

* adds certain definitions consistent with the ALTA Owner’s Policy 2006 and the ALTA Loan Policy 2006 (Commitment Conditions 1);

* clarifies that the deletion or modification of any Schedule B, Part II - Exception does not constitute an agreement or obligation to provide coverage for that item (Commitment Conditions 6(d));

* adds a new section reiterating that an issuing agent is the Company’s agent only for the limited purpose of issuing title insurance commitments and policies. Also states that the issuing agent is not the Company’s agent for the purpose of providing closing or settlement services (Commitment Conditions 7);

* adds a new section reiterating that, if a proforma policy is provided to a proposed insured, it does not reflect the current status of title and does not constitute a commitment to insure (Commitment Conditions 8);

* adds an optional section preceding Schedule A to insert Transaction Identification Data (Issuing Agent, Issuing Office, ALTA Universal ID, Loan ID Number, Commitment Number, Issuing Office File Number, Property Address, Revision Number), all for reference only. Liability for this data is also limited by Commitment Condition 5(e);

* adds a notice to Schedule B, Part II - Exceptions stating that the Commitment does not republish any covenant, condition, restriction, or limitation contained in any document to the extent that the covenant, condition, restriction, or limitation violates state or federal law based on race, color, religion, sex, sexual orientation, gender identity, handicap, familial status, or national origin; and

* adds an introductory clause to Schedule B, Part II - Exceptions stating that the Policy will not insure against loss or damage resulting from the terms and provisions of any lease or easement identified in Schedule A.

Endorsements:

The American Land Title Association adopted for use some new endorsements as of April 2, 2014, December 1, 2014, April 2, 2015, August 1, 2015, and August 1, 2016, which are to be used in connection with the 2006 policies forms already in use.

These forms are largely designed to better coordinate with the 2006 ALTA Loan and Owner’s Policies already approved for use in the state. The format of these new forms should aid in their understanding and interpretation as they have been written to clarify terms and reorganize the content of the language for easier understanding by the consumer. 

ALTA Endorsement 9.6.1-06 Private Rights - Current Assessments - Loan Policy (04-02-15)

This new endorsement insures against loss or damage sustained by the Insured under the policy if enforcement of a Private Right in a Covenant affecting the Title at Date of Policy: (a) Results in the invalidity, unenforceability, or lack of priority of the lien of the Insured Mortgage; or (b) Causes a loss of the Insured’s Title acquired in satisfaction or partial satisfaction of the Indebtedness.

ALTA Endorsement 18.2-06 (Multiple Tax Parcel) 08-01-16

This new endorsement is based upon ALTA Endorsement 18.1-06 (Multiple Tax Parcel). Both ALTA Endorsement 18.1-06 and ALTA Endorsement 18.2-06 can be issued with Owner’s or Loan Policies. Both endorsements insure against loss or damage if the specified parcels described in the endorsement are not assessed for real estate taxes under the listed tax identification numbers or if those tax identification numbers include any additional land.

The endorsements differ in that ALTA Endorsement 18.1-06 also insures against loss or damage if easements, if any, described in Schedule A can be cut off by non-payment of real estate taxes or assessments imposed on the servient estate. In many situations, the additional easement coverage contained in ALTA Endorsement 18.1-06 is not applicable, because there are no easements insured in Schedule A, or because state law does not accord priority to the easements over real estate taxes imposed on the servient estate. New ALTA Endorsement 18.2 (Multiple Tax Parcel) does not contain the coverage provision regarding priority of easements over taxes imposed on the servient estate.

ALTA Endorsement 19.2-06 Contiguity - Specified Parcels (04-02-15)

This new endorsement insures against loss or damage sustained by the Insured by reason of there being any gaps, strips, or gores lying within or between [Parcels/Tracts] of the Land except as depicted on the survey.

ALTA Endorsement 28.3-06 Encroachments - Boundaries and Easements - Described Improvements and Land Under Development (04-02-15)

This new endorsement insures against loss or damage sustained by the Insured by reason of: (a) Encroachment of any Improvement or Future Improvement located on the Land onto adjoining land or onto that portion of the Land subject to an easement; (b) Encroachment of any Improvement located on adjoining land; (c) Enforced removal of any Improvement or Future Improvement located on the Land as a result of an encroachment by the Improvement or Future Improvement onto any portion of the Land subject to any easement, in the event that the owners of the easement shall, for the purpose of exercising the right of use or maintenance of the easement, compel removal or relocation of the encroaching Improvement or Future Improvement; or (d) Enforced removal of any Improvement or Future Improvement located on the Land that encroaches onto adjoining land.

ALTA Endorsement 36.7-06 (Energy Project - Fee Estate - Owner’s Policy) (12-01-14)

This new endorsement is one of a series of endorsements designed specifically for energy projects (e.g., wind farms, solar farms, traditional electricity generating facilities, etc.). Such projects may include fee parcels, leaseholds, and/or easements. ALTA Endorsement 36.7-06 will apply to an Owner’s Policy and be the “counterpart” form to the existing 36-06 and 36.2-06 where fee estates are being insured.

ALTA Endorsement 36.8-06 (Energy Project - Fee Estate - Loan Policy) (12-01-14)

This new endorsement is one of a series of endorsements designed specifically for energy projects (e.g., wind farms, solar farms, traditional electricity generating facilities, etc.). Such projects may include fee parcels, leaseholds, and/or easements. ALTA Endorsement 36.8-06 will apply to a Loan Policy and represent the “counterpart” in the fee estate context to the existing 36.1-06 and 36.3-06 endorsements.

ALTA Endorsement 40-06 (Tax Credit - Owner's Policy) (04-02-14)

This new endorsement insures against a reduction in a Tax Credit to an Investor that is caused solely by a defect, lien, encumbrance, or other matter insured against by the policy. The Company has no liability to the Tax Credit Investor under this endorsement until its liability and the extent of a loss insured against by the policy have been definitely fixed in accordance with the Conditions; and the Tax Credit Investor establishes the reduction in the amount of a Tax Credit.

ALTA Endorsement 40.1-06 (Tax Credit - Defined Amount - Owner’s Policy) (04-02-14)

This new endorsement insures against loss or damage, not exceeding the Additional Amount of Insurance, sustained by the Tax Credit Investor by a reduction in a Tax Credit that is caused solely by a defect, lien, encumbrance or other matter insured against by this policy. The Company has no liability to the Tax Credit Investor under this endorsement until its liability and the extent of a loss insured against by the policy have been definitely fixed in accordance with the Conditions; and the Tax Credit Investor establishes the reduction in the amount of a Tax Credit.

ALTA Endorsement 45-06 (Pari Passu Mortgage - Loan Policy) (12-01-14)

This new endorsement addresses the needs of lenders who are obtaining co-equal lien priority with other lenders relating to a specific parcel or parcels of real property collateral of a debtor. This type of transaction typically arises in the context of credit facility transactions where multiple lenders seek to obtain equal lien priority through separately recorded mortgages and an associated intercreditor agreement. The ALTA 45-06 endorsement insures the lender that the lien will not be invalid or unenforceable due solely to the provisions of the mortgage or intercreditor agreement providing for co-equal lien priority. The endorsement also insures against loss or damage if the insured mortgage does not have equal lien priority with the other pari passu lenders. Liability under the endorsement is conditioned upon the insured lender and the other pari passu lenders complying with the terms of the mortgages and intercreditor agreement and requires that all of the lenders involved simultaneously foreclose their respective mortgages.

As a reminder, other forms should not be used if a comparable ALTA version is available. If a comparable ALTA version is available, the most current version of the ALTA form available in each state should be used, unless approved by a Stewart underwriter.

NOTE: Agents please contact PropertyInfo Customer Care or your title production software vendor to get the new form changes implemented in your system.

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.