Guideline: STG Indemnity Agreement: Construction and STG Indemnity Agreement: Identified Risk

Explanation:

STG Indemnity Agreement: Construction is designed primarily for situations where the Company is providing mechanic’s lien coverage before and/or during construction. 

STG Indemnity Agreement: Identified Risk is designed primarily for situations where the Company is providing coverage for an identified risk (e.g., specific encumbrance, lien, judgment, etc.).

 STG Indemnity Agreement: Construction replaces STG Indemnity Against Mechanic’s Liens and STG Work Affidavit and Indemnity Agreement.

 STG Indemnity Agreement: Identified Risk replaces STG Indemnity Agreement.

Underwriting Requirements:

1. You must obtain approval from a Stewart Title Guaranty Underwriter in order to rely upon STG Indemnity Agreement: Construction or STG Indemnity Agreement: Identified Risk to remove an exception or insure over it.

2. Use STG Indemnity Agreement: Construction where the Company is providing mechanic’s lien coverage before and/or during construction and/or where there is a need to document the absence of visible commencement prior to recording the mortgage and/or to document the nature of work performed to date.  STG Indemnity Agreement: Construction may also be used in situations where coverage is provided for sales by a builder with on-going construction.

3. With respect to Section 1.B of STG Indemnity Agreement: Construction:

     A.         Section 1.B (i) is used to document the absence of visible commencement of work prior to recording the mortgage. 

     B.         Section 1.B (ii) is used to determine the services, labor, materials and equipment that have been furnished to date, the amount paid to date, and the amount remaining, if any, to be paid on account of work performed to date.  If this section is checked, Exhibit A must also be completed.

     C.        In both Section 1.B (i) and Section 1.B. (ii), the number of days is set by default to 180.  However, this period may be revised with underwriter approval to conform to the applicable lien filing period in the jurisdiction.

     D.        Section 1.B (i) and Section 1.B. (ii) are generally incompatible with each other.

4.         Use STG Indemnity Agreement: Identified Risk where the Company is providing coverage for an identified risk (e.g., specific judgment, lien or encumbrance, etc.).  STG Indemnity Agreement: Identified Risk may also be used for specific, identified (i.e., filed) mechanic’s liens or notices of lien.  Identify the risk in section 1.A.

 5. No modifications may be made to this form without the approval of a Stewart Title Guaranty Company Underwriter.

 6. If applicable, require that the indemnitor sign both in his/her personal (individual) capacity as well as in their capacity as an officer/partner, on behalf of an entity.

 7. Although the form requires a personal assurance that the signer is authorized to bind an Indemnitor that is an entity (i.e., not a person), you should obtain documentation confirming such authority.

 8. If funds are being held to secure the indemnification:

     A.         The funds should not be held in: (i) the bank that is involved in the construction loan, (ii) the bank that the Indemnitor has its bank account, or (c) any bank to which the Indemnitor is indebted.  This may put the funds at risk of an offset or preferential treatment by the lender.

     B.         If interest will be paid on the held funds, please require the recipient to provide its Taxpayer Identification Number and to complete a Form W-9 (Request for Taxpayer Identification Number and Certification) as a condition for paying interest.  The following is a link to the IRS’ Forms Website to obtain a Form W-9.  Search for “Form W-9”.

            [http://www.irs.gov/Forms-&-Pubs]

9. If no funds will be held to secure the indemnification, you may delete Section 4.E, if requested.