Guideline for NM 88.6 – Energy Project - Encroachments Endorsement (ALTA 36.6, 4/2/12)

Explanation:

This endorsement is one of a series of ALTA endorsements designed specifically for energy projects (e.g., wind farms, solar farms, geothermal plants, traditional electricity generating facilities, etc.).  These energy project endorsements are designed to address several unique issues associated with these projects, including:

·         The projects are typically large geographically and are usually created through a combination of fee parcels, leaseholds, and/or easements.

·         These interests allow the energy producer to construct improvements, access the improvements for service, maintenance and repairs.

·         The projects often include a transmission line component from the generating facility to the electrical grid.

·         These projects typically comprise many constituent parcels of land that are aggregated into a large tract but may be more of a checkerboard with respect to wind farms, and issues of contiguity and accessibility are paramount.

·         Although these projects tend to cover a lot of ground, the real economic value of the project usually lies with the solar panels or wind turbines or transmission lines, all of which may or may not be considered to be real property.

This endorsement is modeled on and provides coverage similar to ALTA Endorsement 28.1-06 (Encroachments – Boundaries and Easements).   The ALTA 28.1-06 is not promulgated for use in New Mexico.

This endorsement contains an expansive definition of “Electricity Facility” that includes an existing electricity generating facility and an electricity generating facility under construction or to be built on the Land in locations according to defined “Plans” depicting the project.  This endorsement also contains a definition of existing and future “Severable Improvements” linked to the definitions of Electricity Facility and the Plans.

This endorsement provides coverage against loss by reason of: (a) an encroachment of any existing or future Electrical Facility or Severable Improvement onto adjoining land or onto that portion of the Land subject to an easement, unless exception in Schedule B identifies the encroachment, (b) an encroachment of an improvement located on adjoining land onto the Land at Date of Policy,  unless exception in Schedule B identifies the encroachment, (c) enforced removal of any existing or future Electrical Facility or Severable Improvement, as a result of an encroachment by any existing of future Electrical Facility or Severable Improvement onto any portion of the Land subject to any easement, or (d) damage to any existing or future Electrical Facility or Severable Improvement that encroaches onto that portion of the Land subject to an easement.

Underwriting Requirements:

1. The project must involve an electricity generating facility (e.g., wind farms, solar farms, geothermal facilities, traditional electricity generating facilities, etc.). Although this endorsement is designed primarily for a policy insuring an energy project under construction or to be built, it can be used for an existing, completed energy project.

2. If the project is to be built or under construction, obtain and retain a set of the plans for the project (survey, site and elevation plans or other depictions or drawings prepared by an architect or engineer), and such plans must be referenced in the endorsement.  If the project is completed or existing, and no construction is contemplated, you may waive the requirement of the plans.

3. Obtain a current, accurate survey, which shows the location of: (a) all existing improvements and all proposed improvements, based upon the Plans defined in the endorsement, as applicable, and (b) all existing and proposed easements.  Except in Schedule B to all encroachments over property lines or easements.  In addition, if a planned improvement encroaches over any portion of an easement or an existing improvement encroaches over more than one half of the width of an easement, reference those encroachments in section 3.e in order to delete the coverages provided by section 3.c and 3.d, unless you secure underwriter approval.

4. Sections 3.c and 3.d are alternative coverages.  They should not appear in the same endorsement.

5. This endorsement can be issued with either a NM form 1 Owner’s Policy (ALTA 2006) and a NM form 2 Loan Policy (ALTA 2006).  It is not designed for use with the 1992 policy forms.

6.   Do not issue this endorsement without at least Associate Senior Underwriter approval.

7.  The cost of this endorsement is ten percent (10%) of the Basic Premium Rate.  You may charge the 10% for all owner policy endorsements, irrespective of the number issued, and the 10% for all loan policy endorsements, irrespective of the number issued.  Do not charge the 10% for each endorsement.

The underwriting guidelines contained herein have been provided for general reference. The facts, circumstances, and location of the subject property should be considered when determining the issuance of the requested form or endorsement. 

Compliance with the underwriting guidelines contained herein in no way obligates Stewart Title Guaranty Company to issue any form or endorsement.