T-19 Guideline - TX Restrictions, Encroachments, Minerals Endorsement

Explanation:

This endorsement to the Loan policy insures against violations of restrictions, encroachments over easements, building lines or property lines, and damage by reason of mineral or other subsurface substance development. It is similar to the CLTA Form 100 and other comprehensive endorsements. It may not be issued on an owner's policy.

Endorsement T-19 is issued with a T-2 Loan Policy.

Underwriting Requirements:

Please also see P-50B and R-29A (residential) or R-29B (not residential) as applicable to endorsement T-19. 

(1) Covenant(s) (covenant, condition, limitation, or restriction in a document or instrument in effect at Date of Policy):

(a)        Verify that there are no forfeiture provisions in the Covenant(s). If there are forfeiture provisions, verify that the forfeiture provisions are expressly subordinate to the lien of the insured mortgage. If forfeiture provisions are not subordinate to the lien of the insured mortgage, delete Section 3(a).

(b)        Verify that any maintenance lien in the Covenant(s) is expressly subordinate to the lien of the Insured Mortgage and that prior assessments are paid before closing. If the Covenant(s) create a maintenance lien and do not expressly subordinate the maintenance lien to the lien of the Insured Mortgage, delete Section 3(a).

(c)        Verify whether the existing use materially violates the Covenant(s). If the existing use violates the Covenant(s), except to the violation in Schedule B.

(2) Encroachments:
(a)        Unless underwriting guidelines by the Company provide otherwise, require a survey reflecting the current Improvements.  In this connection, please see Texas Bulletin TX-000074.  Except in Schedule B to all encroachments over building setback lines, property lines, or easements.

(b)        If Improvements encroach over more than one half of the width of an easement, delete Section 4(c)(i) of the Endorsement, unless you secure underwriter approval.

(c)        If Improvements encroach over adjoining land or onto a road, delete Section 4(b), unless you secure underwriter approval.

(d)        For other specific underwriting issues and solutions see T-19 check list attached. 

(3) Minerals and Other Subsurface Substance:

In order to provide the coverage of Section 4(c)(ii) relating to minerals and other subsurface substances, comply with one of the following requirements: 

(a)        verify that there are no outstanding minerals or other subsurface substances (other than royalties) or that surface rights have been waived; or

(b)        on single family residences within platted subdivisions, you may provide the coverage even if there are outstanding minerals or other subsurface substances unless you know that the subdivision has actual mineral or other subsurface substance development; or

(c)        on apartment complexes, you may provide the coverage even if there are outstanding minerals or other subsurface substances unless you know that the immediate area has actual mineral or other subsurface substance development; or

(d)        on office buildings and shopping centers, you may provide the coverage even if there are outstanding minerals or other subsurface substances unless you know that the immediate area has actual mineral or other subsurface substance development; or

(e)        secure underwriter approval. Factors of relevance on other land include percent of minerals or other subsurface substances outstanding, zoning prohibitions, waivers of surface rights, development in the area, and any applicable Accommodation Doctrine or Surface Damage Law.

(4) If paragraph 4d. is deleted as to minerals in the T.19 then you cannot issue the T-19.2 or T-19.3 without senior underwriter approval.

If you cannot comply with these guidelines, delete Section 4(c)(ii).
(5)        Notices of Violation of Environmental Covenants.

(6)        For additional information about minerals issues please review Bulletins TX 2009005 and TX 2012-006

For further guidance, refer to the applicable subsections in Section 11.04 of the National Underwriting Manual on Virtual Underwriter.

http://www.vuwriter.com/vumanuals.jsp?displaykey=UM00000208 

Please see the following Texas Bulletins:
TX2015002 - UNDERWRITING - HB 40 By Darby Relating to Exclusive Jurisdiction of the State to Regulate Oil and Gas Operations and Express Preemption of Local Regulations of These Operations (Effective May 18, 2015)
TX2014006 - RATES AND/OR FORMS UPDATE - T-19 Series Endorsements (T-19.1 for Owner’s Policies and T-19 for Loan Policies after 2014 Revisions)
TX2012001 - T-19.2 and T-19.3 and Mineral Credits
TX2011001 - Writing Mineral Coverage after Commissioner's Order 10-0959 Order in 2008 Rate Case
TX2009007 - Oil and Gas and Other Minerals Supplement
TX2009005 - Resolution of Mineral Exception Issue; Commissioner's Order 09-0650

Additionally, see the Texas Underwriting Manual 12.16 Mineral Rights on Virtual Underwriter.