Bulletin: TX2024008

Dear Associates:

The Texas Department of Insurance (TDI) recently adopted changes to the Basic Manual that are effective November 1, 2024. Changes to the Statistical Plan will be covered in a separate bulletin and will be effective January 1, 2025.  

Please view the adoption order in its entirety at: TDI Order and TDI Adopted Changes 2024.  

This bulletin will cover the remaining changes not already addressed by prior bulletins.

Residential Real Property: P-1.u and R-16

What you should know:

The TDI order revises P-1u and R-16 by:

• Clarifying that immediately contemplated improvements of residential units for the land fall within the definition of “residential real property.”
• Removing the agricultural requirement for property between 10 and 200 acres. This means that land up to 200 acres that has or will have residential housing will be considered residential real property.
• Allowing the 5% survey coverage rate to apply to a T-1 policy as well as the T-1R policy.

Additional Insured Endorsement: P-57 and T-26

What you should know:

The TDI order revises P-57 and the Additional Insured Endorsement (Form T-26):

• P-57 and the Additional Insured Endorsement (Form T-26) are modified to expand the permitted additional insureds to include and clarify qualifying estate planning conveyances.
• P-57 continues to set forth the requirements for issuing the Additional Insured Endorsement (Form T-26) and adds and clarifies “Estate Planning Vehicles” as an additional insured.
• The Additional Insured Endorsement (Form T-26) to be added up to 90 days after title was conveyed to the additional insured.
• The Additional Insured Endorsement (Form T-26) still does not extend the coverage beyond the original Policy Date.
• Rate Rule R-33 still controls the premium to be charged and is left unchanged (10% of Basic Rate, not less than $25).

Estate Planning Vehicles

P-57 adds a new definition of an “Estate Planning Vehicle” which can be a legal entity, a trust or trustee of a trust, if the entity or trust is established by the Insured for the purpose of planning the disposition of that person’s estate. It also clarifies who can be added as an additional insured by an Additional Insured Endorsement (Form T-26), including:

• An Estate Planning Vehicle to which the Insured conveys the title after Policy Date; or
• A distributee who has acquired an interest according to the terms of an Estate Planning Vehicle; or
• A partnership, limited liability company, or corporation solely composed of or owned by members of the Insured’s family and the Insured; or
• Any existing partner, member or stockholder that acquires the interests of other owners of the Insured in accordance with the terms and provisions of a written agreement in effect at Date of Policy.

For Limited Liability Companies, the rule still provides:

• There will be a transfer(s) of all or any part of the Limited Liability Company members' interests in the insured to any transferee(s), or
• The withdrawal(s) of one or more of the members from the Limited Liability Company, or
• The addition(s) of one or more persons or entities as members of the Limited Liability Company.

In the case of an additional insured falling under P-57 A.2.b.iii:

• The proposed additional insured must request the Additional Insured Endorsement (Form T-26).
• The request must be made within 90 days of the recorded transfer.
• The conveyance must include a warranty of title.

What you should do:

Please refer to the applicable subsections in the Texas Guidelines for the Additional Insured Endorsement (Form T-26) on Virtual Underwriter.

Taxes Not Yet Due and Payable: P-20C

What you should know:

The TDI order amends P-20C:

• On a Loan Title Policy (T-2) and Loan Title Policy Binder on Interim Construction Loan (T-13) the “year of the issuance” is amended to allow the title company to insert the applicable requested year.
• Additionally, the current year of payment may differ according to the various taxing units, if the title company is satisfied that some, but not all, taxes are paid.

What you should do:

Review the revised rule and promulgated language for how to provide the coverage. Please note that the tax certificate information will still determine the years for which taxes have been paid. For example, if taxes for the year 2023 are unpaid, 2024 cannot be shown in Sch B 2 simply because a party so requests.

Simultaneous Issuance of Owner Policy and Loan Policy: R-5

What you should know:

The TDI order revises R-5F allowing the hold open period for a loan policy after an owner’s policy has been issued:

• Reduces the qualifying amount from $5 million to $1 million
• Has the date that the insured document was recorded
• Restricts the property type to non-residential (property that is not 1-4 family per P-1u)
• States that the same company that issued the OTP must issue the simultaneously issued (delayed) Loan Policy
• Does not change the R-5F1(b) (same Land or part of the Land covered by the OTP) or (c) no change in ownership or (d) amount of loan policy does not exceed the amount of the OTP (if it does, see R-5F.2.)

R-5B, C and D were also amended to clarify other discounts can be applied with the simultaneous issue rate when policies insure the same Land.

Other Rate Rule Adjustments

What you should know:

The TDI order revises various Rate Rules:

Assignment of Mortgage Endorsement (Form T-3):

Form T-3; Rate Rule R-11.a; Procedural Rule P-9.b.1 and P-9.b.2:

• The Assignments of Mortgage Endorsement is charged at the minimum Basic Premium Rate plus $100 each year starting after the first anniversary of the initial Date of Policy.
• The initial rate remains at the minimum Basic Premium Rate, which serves as the baseline fee for the first year.

Partial Release, Release of Additional Collateral, Modification Agreement, Reinstatement Agreement, or Release from Personal Liability Endorsement (Form T-38):

Form T-38; Rate Rule R-11.b; Procedural Rule P-9.b.3:

• For loan modifications, the rate has been adjusted to the minimum Basic Premium Rate for the first year.
• After the first year, there will be an additional charge of $25 per year.

Down Date Endorsement (Form T-3) of Loan Policy During Construction (Non-residential Real Property):

Form T-3; Rate Rule R-11.c; Procedural P-9.b.4:

• The rate to issue the Down Date Endorsement (form T-3) for loan policies covering non-residential properties has been increased to $100.

Down Date Endorsement (Form T-3) of Owner’s Policy During Construction (Non-Residential Real Property):

Form T-3; Rate Rule R-15.b; Procedural P-9.a.3:

• The rate to issue the Down Date Endorsement (form T-3) for owner’s policies covering non-residential properties has been increased to $100.  The residential property rate remains the same at $50.

Premium for Access Endorsement (Form T-23):

Form T-23; Rate Rule R-30; Procedural P-54:

• The rate for issuing the Access Endorsement (T-26) is $100 for each Access Endorsement issued.

Prior Surveys and Area and Boundary Exception

Prior Surveys

What you should know:

The TDI order amends P-2 and the Residential Real Property Affidavit (Form T-47). In summary, the amendment:

• Clarifies the date for Item 4 of the Form T-47 is the date of the survey then removes the blank to include a date,
• Creates additional signature blocks, changing affiant from plural to singular,
• Adds “decking,”
• Changes reference to encroachment to “construction occurred on or near the boundary of the Property,”
• Removes that the form may be modified for commercial transactions originally notated beneath the title of the form.

 A new form T-47.1 has also been created:

• T-47.1 mirrors the T-47 but allows an unsworn declaration.

Corresponding Procedural Rule P-2 Amendment of Exception to Area and Boundaries subsection (f) is also created:

• “An unsworn declaration (Form T-47.1) may be used in lieu of a T-47 affidavit, in accordance with Texas Civil Practice and Remedies Code Section 132.001.”

What you should do:

Utilize the new affidavit forms and reach out to a Texas Stewart Title Guaranty Company underwriter should you have concerns regarding sufficiency, application or other concerns involving relying on the form of affidavit. Stewart Title Guaranty Company will generally allow the use of the new Form T-47.1, unless facts arise that suggest a Form T-47 is required.

Area and Boundary Exception

What you should know:

The TDI order revises T-1 Owner’s Policy and T-2 Lender’s Policy:

• Added language to Schedule B(2) that “Covered Risk 2(c) is hereby deleted.”
• Covered Risk 2(c) of the Owner’s Policy is amended to further explain:
  • “This coverage is deleted by Schedule B. Exceptions From Coverage. Paragraph 2 unless a survey of the Land acceptable to Company is timely provided and the applicable premium is paid to amend the exception to ‘shortages in area.’”
  • The effect of these changes is to clarify that corresponding Covered Risk 2(c) is not available unless Schedule B(2) is amended.

T Form Changes

What you should know:

The TDI Order revises, updates, or corrects several promulgated forms: 

• The new forms will be effective and available on the TDI’s website on November 1, 2024.
  • You will need to make sure that the updated forms are integrated into your software on the effective date, November 1, 2024.
  • We will have examples of these updated forms on vuwriter.com after the effective date, November 1, 2024.

Below you will find references to the T-forms that have been amended and the sections that are subject to the amendments. 

• Form T-1, Owner’s Title Policy, Covered Risk 2.c. and Schedule B.2. have been amended.
• Form T-1R, Residential Owner's Policy of Title Insurance One-to-Four Family Residences, removing the parenthetical "(Applies to Owner's Policy only)" in Schedule B, Item 3 of the form.
• Form T-2, Loan Policy of Title Insurance, Schedule B.2. amended.
• Form T-11, Policy of Title Insurance (USA), amended due to a clerical error to add the #8.
• Form T-16, Loan Policy Aggregation Endorsement, to conform more closely to the American Land Title Association (ALTA) form used in other states.
• Form T-19 Restrictions, Encroachments, Minerals Endorsement, paragraph 4.d. has been amended.
• Form T-19.1, Restrictions, Encroachments, Minerals Endorsement (Owner’s Policy), paragraph 4.d. has been amended.
• Form T-19.2, Form replaced to model the ALTA version of this form.
• Form T-19.3, Form replaced to model the ALTA version of this form.
• Form T-35, Future Advance Revolving Credit Endorsement, removes Future Advance from the Endorsement it is now called the Revolving Credit Endorsement.
• Form T-42, Equity Loan Mortgage Endorsement, intentionally deletes subparagraph 2.b.
• Form T-54, Severable Improvements Endorsement, amendments to update the formatting to reflect TDI style. This form now has a rate with R-37A, the premium for the T-54 is 5% of the Basic Premium Rate.

These forms have been provided to third-party title production system (TPS) vendors. Please contact your TPS vendor or account services representative to have the new/revised forms implemented in your system.

As a reminder, you are responsible for knowledge of and compliance with the information contained in all bulletins and Special Alerts as posted on Virtual Underwriter (www.vuwriter.com), whether you receive them by electronic distribution or not.

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

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