CLTA Recorded Document Guarantee Guideline 27

Explanation:

The Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA) imposes a duty on a buyer or mortgagee to use due diligence in determining if the land is polluted with hazardous wastes. Failure to use due diligence may impose liability for clean up expenses.
One source of information disclosing the possible existence of hazardous waste are documents recorded in the public records. For instance, if the chain of title discloses that the land had been used as a automotive repair facility it may be incumbent on a buyer or mortgagee to investigate further to determine if oil has been dumped on the land.
The Guarantee assures that the documents listed in the Guarantee comprise all of the designated documents requested by the Assured.
No Guarantee shall be issued unless it is preceded by a signed Application for the issuance of a Recorded Document Guarantee. The application is a rather detailed form that is used, among other things, to establish the extent of coverage provided by the Guarantee and must be signed by the proposed Assured.
The Application specifically defines as excluded documents the following:
The applicant may request the Company to identify either (a) designated documents currently posted to the Company’s title plant and which were recorded in the land records during a specified period, or (b) recorded and indexed in the Grantor-Grantee indices during a specified period, or (c) both.
At the request of the applicant the designated documents may be limited to deeds, leases and subleases, mortgages/deeds of trust environmental protection liens or all such documents. You should require that the application be limited to such specific documents and not select "All Documents". That option should be deleted.
The Application also contains certain conditions and an express limitation of liability by the proposed Assured. The liability stated in the Application may not exceed $25,000.
Certain other Guarantee forms may give coverages similar to this form. However, this form is the only form of Guarantee that may be provided in connection with possible CERCLA liability.
This Guarantee is issued only in California and Utah.

Underwriting Requirements:

(i) documents indexed to the Company's title plant by name only;
(ii) documents pertaining to an estate or interest in minerals, gas and oil, or other hydrocarbon substances;
(iii) documents pertaining to water rights, claims or title to water; or
(iv) documents recorded or indexed outside the chain of title, whether or not the documents impart constructive notice to purchasers of the subject property for value and without knowledge.