Bulletin: CA2023009

Dear Associates:

Significant claims can occur when outstanding rights to minerals and other substances are not taken exception to in title insurance policies, especially in those areas of the state where there are known resources that are actively being harvested or may be harvested in the future as technological capabilities are developed and become commercially viable. These claims and their resulting losses can occur when the search of title doesn't include and/or disclose the severance(s) of rights in minerals and other substances, or mineral lease(s), or the title records relied upon (including title plant records) did not accurately reflect these matters, or the starters and/or prior title insurance policy did not reflect the severance(s) or lease(s).

ALL TITLE PRODUCTS - PRELIMINARY REPORTS, COMMITMENTS, BINDERS, AND TITLE INSURANCE POLICIES - MUST INCLUDE IN THE SCHEDULE ‘B’ EXCEPTIONS, THE GENERAL MINERAL EXCEPTION (GME) AND THE GENERAL WATER EXCEPTION (GWE).

FOR THOSE TITLE PRODUCTS THAT CONTAIN THE SEVEN (7) STANDARD EXCEPTIONS KNOWN AS THE WESTERN REGIONAL EXCEPTIONS (WRE) IN THE SCHEDULE ‘B’ EXCEPTIONS, THE GME AND THE GWE NEED NOT BE ADDED AS THEY ARE ALREADY A PART OF THE WRE.

THERE ARE TWO TITLE PRODUCTS THAT DO NOT REQUIRE ADDING THE GME AND THE GWE: 

• • THE ALTA RESIDENTIAL LIMITED COVERAGE JUNIOR LOAN POLICY; AND
  • THE STG DIRECT ISSUANCE HOME EQUITY LOAN POLICY (“HELP”).

ALL TITLE PRODUCTS THAT CONTEMPLATE ISSUING MULTIPLE POLICY COVERAGE TYPES UNDER THE SAME TRANSACTION, E.G., STANDARD OWNERS AND EXTENDED LOAN, MUST INCLUDE THE SEVEN WRES IN THE SCHEDULE ‘B’ EXCEPTIONS AND THE GWE WITH CERTAIN ADDITIONAL LANGUAGE (SEE DETAILS BELOW).

GENERAL MINERAL EXCEPTION (GME):

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.

This GME now mirrors the WRE number 7.

This GME may only be eliminated by the Title Officer if all of the following conditions are met:

1. there is a written request by the proposed insured to remove the GME;
2. the Land is a residential 1-4 family;
3. the Land is within the boundaries of a city or town, or within a residential subdivision created on or after 1964;
4. you are not aware of any minerals or other substances actively being harvested within one mile of the Land; &
5. you obtain and review a fully completed STG Owner's Affidavit and Indemnity.

Any other elimination or modification of the GME requires prior written approval from a Stewart Title Guaranty Company (STGC) Underwriter.

SEVERED INTERESTS IN MINERALS OR OTHER SUBSTANCES

In addition to the above GME requirement, when the legal description reflects a specific severance of interest in minerals or other substances, including those severed in a patent, whether 100% or some lesser interest, you must comply with all of the following requirements:

1. include a corresponding (nearly identical) exception in Schedule B for all specific reservations or grants that are identified, (e.g., "A reservation of …" or "A grant of …");
2. include any lease or leases of these minerals or other substances as additional exceptions in Schedule B;
3. include as an exception in Schedule B, any specific reservations or grants newly created in the current transaction to be insured. The language creating the specific reservations or grants must be drafted and agreed to by the parties or their respective counsel and the draft deed(s) submitted to the Title Officer for review prior to recording. If the mineral severance is by a deed reservation, there should also be an escrow instruction executed by the parties acknowledging the additional language in the deed; and
4. include the following language at the end of any specific minerals or other substances exception, and/or any lease exception reflected in Schedule B:
   Stewart Title Guaranty Company and its issuing agent make no representation as to the present ownership of any such interests. There may be leases, grants, assignments, exceptions, or reservations of interests that are not listed.

The elimination of any leases of minerals or other substances as an exception in Schedule B requires prior written approval from an STGC Underwriter.

NOTE: Rights to, or interests in, severed minerals or other substances shall not be separately insured.

GENERAL WATER EXCEPTION (GWE):

Water rights, claims, or title to water, whether or not shown by the Public Records.

This GWE now mirrors the WRE number 5(c).

NOTE: Rights to, or interests in water shall not be insured.

PROTOCOLS FOR WRES, GMES AND GWES WHEN MULTIPLE POLICY COVERAGE TYPES ARE ISSUED UNDER THE SAME TRANSACTION:

When various policy coverage types are issued under the same transaction, e.g., a standard owner’s policy with an extended loan policy or an ALTA/CLTA Homeowners policy with a standard loan policy, the following protocols are now required for all title products:

1. always include all the WREs as exceptions, numbers 1 through 7 in Schedule B with the following additional language:

(Note: Exception Nos. 1 through 6 will be deleted on any extended coverage policy.)

2. after the WREs, always include the GWE as exception number 8 in Schedule B with the following additional language:

(Note: The above, separate general water exception will remain on any extended coverage policy.)

WHEN ISSUING A TITLE PRODUCT WITHOUT THE WESTERN REGIONAL EXCEPTIONS, THE GME AND THE GWE MUST BE REFLECTED IN THE SCHEDULE ‘B’ EXCEPTIONS. ALTHOUGH THE GME MAY BE ELIMINATED IN ACCORDANCE WITH THIS BULLETIN, THE GWE MUST ALWAYS REMAIN AS AN EXCEPTION.

Please see Sections 2.15 and 3.13 of the STG Schedule of Charges and Forms for Title Insurance in the State of California for additional information related to the charges associated with deleting specified WRE from standard coverage policies.

ENDORSEMENTS RELATING TO MINERALS AND OTHER SUBSTANCES

The foregoing does not affect the potential availability of endorsements that provide coverage for damage to buildings or improvements on the Land resulting from the future exercise of any right to use the surface of the Land for the extraction or development of minerals or other substances, such as the CLTA 100 series (ALTA 9-06 series) and the CLTA 140-06 series (ALTA 35-06 series), pursuant to applicable underwriting guidelines and STGC underwriter approval requirements.

If you have any questions about this bulletin, any pricing concerns, or any other bulletin please contact a member of your Stewart Title Guaranty Company’s California Underwriting Team.

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