Bulletin: CA2023004

Dear Associates:

Stewart Title Guaranty Company (STG) is concurrently issuing a Bulletin related to its filing of an amended Schedule of Charges and Forms for Title Insurance in the State of California (STGC Manual). Included in the amended STGC Manual are references to the following new California Land Title Association (CLTA) policy forms that became effective April 9, 2022: 

• CLTA Standard Coverage Owner’s Policy – 2022 (02-04-22)
• CLTA Standard Coverage Loan Policy – 2022 (02-04-22)

The CLTA Forms and Practices Committee (F&P) created these two policies to replace the single form standard policy, i.e., the CLTA Standard Coverage Policy – 1990 (11-09-18) (1990 CLTA Standard Coverage Policy), which has now been archived. The 2022 CLTA Standard Coverage Owner’s Policy and the 2022 CLTA Standard Coverage Loan Policy provide clearer coverage and the changes and revisions are consistent with those found in the 2021 ALTA Owner's Policy and the 2021 ALTA Loan Policy. These changes notably include the following:

• Use of new or amended defined terms such as Affiliate, Consumer Protection Law, Discriminatory Covenant, Enforcement Notice, Governmental Mortgage Agency or Instrumentality, Insured, Knowledge, Obligor, PACA-PSA Trust, Public Records, and State in the policies and revised endorsements (these terms made changes to some endorsements necessary).
• Moving some exceptions that became commonplace (such as calculation of area and PACA-PSA Trust) to the jacket as Exclusions.
• Punctuation and grammatical refinements.
• Clarification that choice of law will be the state, or to the extent it controls, federal law.
• Clarification that the choice of forum will be a state court or a federal court.
• Amendments based on how courts have treated the prior policy language.
• New coverages and exclusions for both Insured and Insurer.
• The ALTA 39 Policy Authentication (Electronic Policy/Signature) endorsement will become obsolete. The endorsement's coverages are now included in the Policy Jacket. However, you may issue it upon request.
• The new standard policies treat the PACA-PSA Trust both as a Covered Risk and an Exclusion. If there is a recorded PACA-PSA Trust Enforcement Notice (such as a lis pendens) and the policy does not except to that recorded notice, it is a Covered Risk. If it is a regular PACA-PSA Trust lien and not recorded in the Public Records, it is excluded.
• A new definition of the term "Insured" will allow coverage to continue when the Land is conveyed to an Affiliate, even when there is a monetary exchange.
• Remote Online Notarization (RON) is now part of Covered Risk 2.a; however, California does not yet have any RON laws – please refer to STG Bulletin CA2022003 hyperlinked here for your convenience.
• "Enforcement Notice" is a new defined term. This is a document affecting the Title, recorded in the Public Records at the Date of Policy that describes any part of the Land and identifies a violation or enforcement of a law, ordinance, permit, or governmental regulation, exercise of a power, or enforcement of a PACA-PSA Trust.
• Covered Risk 10 of the new standard loan policy adds language to clarify and confirm for lenders that the coverage is for certain enumerated components of the Indebtedness.
• Covered Risk 11.a. on Mechanics Liens (consistent with the ALTA 32 Series endorsements) confirms that the coverage relates to services and equipment, in addition to labor and materials.
• Exclusion 9 of the new standard loan policy and Exclusion 7 of the new standard owner’s policy exclude liability for the quantity of area, square footage, or acreage described in the Land (if any).
• The Transaction Identification Data that has been a part of ALTA Commitments since 2016 is now formatted into Schedule A of the new policies as well, for consistency, and is made clear that the information is not insured.
• The new standard loan policy adds a new option for the Insured to select the date the Insured Mortgage is extinguished for determination of value.
• The new standard owner’s policy adds a new option for the Insured to select the Date of Policy for determination of value if Title to all the Land is void.

The 2022 CLTA Standard Coverage Owner’s Policy and the 2022 CLTA Standard Coverage Loan Policy forms will be added to Stewart’s Virtual Underwriter and may be found in the on-line CLTA Policy & Endorsement Forms Book (CLTA P&E). These new forms are hyperlinked here for your convenience. Incorporated into and in connection with these forms, the F&P has also revised the Western Regional Exceptions (WREs); see below for further discussion and details.

Although archived, the 1990 CLTA Standard Coverage Policy has not yet been decertified; thus, STG will permit the issuance of the 1990 CLTA Standard Coverage Policy, but only if absolutely necessary. STG prefers, and highly encourages, the use and issuance of the new 2022 CLTA standard coverage policies with the new WREs, in lieu of the archived 1990 CLTA Standard Coverage Policy. Accordingly, if issuing a Preliminary Report contemplating the issuance of the 1990 CLTA Standard Coverage Policy, the prior WREs, as set out in the 1990 CLTA Standard Coverage Policy form, must be reflected in Schedule B of that Preliminary Report as six separately numbered exceptions.

The charges in the STGC Manual for the issuance of a CLTA standard coverage policy continue to apply to the 2022 CLTA standard policies. The charges in the STGC Manual for the issuance of a Joint Protection Policy (JPP) also continue to apply to the 2022 CLTA policies issued concurrently, since the calculation is the same whether issuing the 1990 CLTA Standard Coverage Policy as a single JPP or issuing separate and concurrent 2022 CLTA standard coverage policies, i.e., the 2022 CLTA Standard Coverage Owner’s Policy and the 2022 CLTA Standard Coverage Loan Policy. STG prefers, and highly encourages, the use and issuance of the new 2022 CLTA standard coverage policies with the new WREs, in lieu of the archived 1990 CLTA Standard Coverage Policy.

WESTERN REGIONAL EXCEPTIONS (WREs)

The 2022 CLTA standard policy forms include revised WREs. These new WREs provide greater clarity to and expand the existing WREs found in the 1990 CLTA Standard Coverage Policy. Because of the significant improvements made to the 1990 CLTA Standard Coverage Policy, STG prefers, and highly encourages the use and issuance of the new 2022 CLTA standard coverage policies with the new WREs, in lieu of the archived 1990 CLTA Standard Coverage Policy. Accordingly, when issuing a Preliminary Report contemplating the issuance of the 2022 CLTA Standard Coverage Owner’s Policy or the 2022 CLTA Standard Coverage Loan Policy, the new WREs, as set out in the 2022 CLTA standard policy forms, must be reflected in Schedule B of that Preliminary Report as seven separately numbered exceptions.

While the revised WREs are still located in Schedule B, Part 1 of the 2022 CLTA Standard Coverage Owner’s Policy, the WREs in the 2022 CLTA Standard Coverage Loan Policy may be found in Schedule B, Part 1A, with Schedule B, Part 1B being the specific exceptions and Schedule B, Part II being the remaining subordinate matters. There are some changes to the WREs as well, most notably, the 2022 WREs include: (1) a new Exception 7 addressing claims to mineral interests or easements; (2) the rewording of Exception 4; (3) the word “equipment” is added in Exception 6; and (4) the capitalizations of certain defined policy terms. Please familiarize yourself with the new language; the new WREs read as follows:

1. (a) Taxes or assessments that are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the Public Records; (b) proceedings by a public agency that may result in taxes or assessments, or notices of such proceedings, whether or not shown by the records of such agency or by the Public Records.
2. Any facts, rights, interests, or claims that are not shown by the Public Records at Date of Policy but that could be (a) ascertained by an inspection of the Land, or (b) asserted by persons or parties in possession of the Land.
3. Easements, liens, or encumbrances, or claims thereof, not shown by the Public Records at Date of Policy.
4. Any encroachment, encumbrance, violation, variation, easement, or adverse circumstance affecting the Title that would be disclosed by an accurate and complete land survey of the Land and not shown by the Public Records at Date of Policy.
5. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b), or (c) are shown by the Public Records.
6. Any lien or right to a lien for services, labor, material, or equipment unless such lien is shown by the Public Records at Date of Policy.
7. Any claim to (a) ownership of or rights to minerals and similar substances, including but not limited to ores, metals, coal, lignite, oil, gas, uranium, clay, rock, sand, and gravel located in, on, or under the Land or produced from the Land, whether such ownership or rights arise by lease, grant, exception, conveyance, reservation, or otherwise; and (b) any rights, privileges, immunities, rights of way, and easements associated therewith or appurtenant thereto, whether or not the interests or rights excepted in (a) or (b) appear in the Public Records or are shown in Schedule B.

ENDORSEMENTS: The F&P also reviewed the CLTA endorsements to evaluate which needed to be: (i) revised to either improve upon the existing language or comport with the 2021 ALTA policy and endorsement forms and the new 2022 policy forms; or (ii) archived due to obsolescence, lack of issuance, or because they were specifically drafted for issuance with only the 1990 CLTA Standard Coverage Policy. This analysis resulted in 118 CLTA endorsements being archived, revisions to 58 endorsements that have been refiled without the “-06” designation, and the addition of a new endorsement, all as more specifically set out in the tables below. The current versions of the endorsement available for issuance and the archived endorsements may be found in the CLTA P&E. In addition, the STGC California Underwriters have reviewed and revised six of the CA - STG specific endorsements, as more specifically set out below. The update to the existing STGC Manual incorporating these changes is being filed concurrently with the issuance of this bulletin.

Significantly, the new CLTA 100 replaces the now archived CLTA 100.2-06, mirroring the ALTA 9-06, and the new CLTA 116 replaces the now archived CLTA 116.02-06, mirroring the ALTA 22.1-06. In addition, the new CLTA 110.2 was filed to delete the arbitration provision in the policy Conditions. Further, please review and familiarize yourself with all the endorsements found in Section 10 of the STGC Manual, and their related charges.

CLTA ENDORSEMENTS

CLTA Endorsements Available for Issuance with Only the 2021 ALTA Policies and the 2022 CLTA Policies:

The following CLTA endorsements (and their respective ALTA equivalents, as applicable) may be issued with the 2021 ALTA Owner's Policy, the 2021 ALTA Loan Policy, the 2022 CLTA Standard Coverage Owner’s Policy, and the 2022 CLTA Standard Coverage Loan Policy, if applicable, and pursuant to existing underwriting guidelines:

CLTA Endorsements Available for Issuance with Only the 2006 ALTA Policies:

The following CLTA endorsements may be issued with the 2006 ALTA Owner's Policy and the 2006 ALTA Loan Policy, if applicable, and pursuant to existing underwriting guidelines:

CLTA Endorsements Available for Issuance with the 2006 ALTA Policies, the 2021 ALTA Policies and the 2022 CLTA Policies:

1.  The following CLTA endorsements (and their respective ALTA equivalents) may be issued with all the policies identified above, if applicable, and pursuant to existing underwriting guidelines:

2.  The following CLTA endorsements (that do not have ALTA equivalents) may be issued with all the policies identified above, if applicable, and pursuant to existing underwriting guidelines:

CLTA Endorsements Archived in 2022:

CA - STG SPECIFIC ENDORSEMENTS

The following CA - STG specific endorsements were renamed and/or revised with a revision reading (Revised Feb 2023) and may be found in virtual underwriter and/or obtained from your local STG Underwriter:

1. CA - STG 110.5E, Extension Modification
2. CA - STG 110.5S, Specified Minor Modifications (replaces the CA-STG 110.5F, Forbearance Modification)
3. CA - STG Additional Insured
4. CA - STG Amendment of Covered Risk 10
5. CA - STG Deletion of PACA-PSA
6. CA - STG Homeowner’s Gold
7. CA - STG Modified 104.10
8. CA - STG Modified 122
9. CA - STG Non-Vested Spouse
10. CA - STG Post-Policy Forgery

Please contact PropertyInfo Customer Care or your title production software vendor to advise them of the new rates and forms and be sure you have the most current versions of all documents including the Revised Feb 2023 versions of the STG-specific endorsements.

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

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