The ALTA 2021 Owner's Policy form consists, essentially of six parts:

1. The basic contractual undertakings of the Company “Covered Risks”: what the Company insures.
2. Defense of Covered Claims. The Company will pay costs, attorneys fees and expenses in defense of a covered claim.
3. The "Exclusion from Coverage": specific exclusions from coverage.
4. The "Conditions": information relative to the Company's insurance obligations, definition of terms, choice of law, choice of forum, and notice and defense provisions pertaining to claims arising under the policy.
5. Schedule "A": the specifics of the particular policy that is being issued. These specifics include:

• • Policy number
  • Date of Policy
  • Amount of Insurance
  • Name of the Insured
  • Estate or Interest Being Insured
  • Vesting of Title
  • Description of Land

6. Schedule "B": the specific matters that affect the land being insured. It includes two basic sub-parts:

• • Certain preprinted "general exceptions" which are included in every standard owner's policy.
    
  • "Special exceptions" relative to the particular piece of land being insured.

The following are the standard ALTA Insuring Provisions of an Owner's Policy:

The following matters are excluded from the coverage of this policy, and the Company will not pay loss or damage, costs, attorneys’ fees, or expenses that arise by reason of:

1.  a. any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) that restricts, regulates, prohibits, or relates to:

i. the occupancy, use, or enjoyment of the Land;

ii. the character, dimensions, or location of any improvement on the Land;

iii. the subdivision of land; or

iv. environmental remediation or protection.

b. any governmental forfeiture, police, regulatory, or national security power.

c. the effect of a violation or enforcement of any matter excluded under Exclusion 1.a. or 1.b.

Exclusion 1 does not modify or limit the coverage provided under Covered Risk 5 or 6.

2.  Any power of eminent domain. Exclusion 2 does not modify or limit the coverage provided under Covered Risk 7.

3.  Any defect, lien, encumbrance, adverse claim, or other matter:

a. created, suffered, assumed, or agreed to by the Insured Claimant;

b. not Known to the Company, not recorded in the Public Records at the Date of Policy, but Known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy;

c. resulting in no loss or damage to the Insured Claimant;

d. attaching or created subsequent to the Date of Policy (Exclusion 3.d. does not modify or limit the coverage provided under Covered Risk 9 or 10); or

e. resulting in loss or damage that would not have been sustained if consideration sufficient to qualify the Insured named in Schedule A as a bona fide purchaser had been given for the Title at the Date of Policy.

4.  Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors’ rights law, that the transaction vesting the Title as shown in Schedule A is a:

a. fraudulent conveyance or fraudulent transfer;

b. voidable transfer under the Uniform Voidable Transactions Act; or

c. preferential transfer:

i. to the extent the instrument of transfer vesting the Title as shown in Schedule A is not a transfer made as a contemporaneous exchange for new value; or

ii. for any other reason not stated in Covered Risk 9.b.

5.  Any claim of a PACA-PSA Trust. Exclusion 5 does not modify or limit the coverage provided under Covered Risk 8.

6.  Any lien on the Title for real estate taxes or assessments imposed or collected by a governmental authority that becomes due and payable after the Date of Policy. Exclusion 6 does not modify or limit the coverage provided under Covered Risk 2.b.

7.  Any discrepancy in the quantity of the area, square footage, or acreage of the Land or of any improvement to the Land.

See policy jacket of the 2021 Owner's Policy form.

Policy Number

Every owner's policy must have a designated number for purposes of reference and identification. Generally, these policy numbers are preprinted on the policy jackets. The policy numbers, either preprinted or typed, must coincide with the policy numbers to be typed on Schedule A.

Additionally, if the issuing office has a file or case or order number system, said numbers should always be shown on the policy. This will act as a cross reference to the files in the issuing office.

Date of Policy

The date and time (month, day, year, hour, minute) of the policy must coincide with the date and time of recording of the last instrument to be reflected in the policy, either as an exception or creating the interest being insured. It should be no later.

Amount of Insurance - In General

An owner's policy must always be written for the amount of the purchase price, but in the event no sale is involved, then, for the present fair market value of the land, including improvements, except under the following circumstances:

Where the land is unimproved, but the owner intends to erect improvements thereon in the immediate future, the policy may be written for the value or purchase price of the vacant land and the estimated cost of the improvements to be erected thereon, but if so written, the following must be inserted at the end of Schedule B of the policy:

Note: It is agreed between the Company and the insured that, in the event of a loss hereunder, the liability of the Company shall be limited to the present value of said land as now improved, but shall automatically increase by the amount expended for improvements placed thereon in good faith, and without actual notice of adverse claim, but in no event shall exceed the amount of this policy, to wit, $ (here insert amount shown in the insuring clause of the policy.)

Name of the Insured

Item No. 1 of Schedule A of an owner's policy shows the following:

"1.  Name of Insured."

The "insured" is the person or persons or the entity for whose benefit the owner's policy is written.

The "insured" will normally be a purchaser and its name or names must be the same as the vestee of the estate or interest insured.

It should be recognized, however, that by definition in the 2021 form the insured extends not only to the name insured, but also to:

- the successor to the Title of an Insured by operation of law as distinguished from purchase, including heirs, devisees, survivors, personal representatives, or next of kin;

- the successor to the Title of an Insured resulting from dissolution, merger, consolidation, distribution, or reorganization;

- the successor to the Title of an Insured resulting from its conversion to another kind of Entity; or

- the grantee of an Insured under a deed or other instrument transferring the Title, if the grantee is:

(1) an Affiliate;

(2) a trustee or beneficiary of a trust created by a written instrument established for estate planning purposes by an Insured;

(3) a spouse who receives the Title because of a dissolution of marriage;

(4) a transferee by a transfer effective on the death of an Insured as authorized by law.

On occasion, the named insured may not be the party in whose name title is vested.

Estate or Interest Being Insured

The estate or interest in the land being insured must be properly set forth, in the same manner as stated in the instrument under which title was acquired by the party to be insured (or by the party in whose name title is vested).

Item No. 2 Schedule A shows the paragraph as follows:

"2.  The estate or interest in the Land insured by this policy is:”

The type of interest or estate would then be stated, (fee, leasehold, easement, etc.).

Vesting of Title

Item No. 3 of Schedule A shows the following:

“3.  The Title is vested in:”

(See 4.16 Deeds of Conveyance)

Description of the Land

Schedule A, Item No. 4 shows the following:

"(4) The Land is described as follows:"

It is essential that the legal description enable a competent surveyor to locate the land on the ground.

By policy definition, “Land” means “The land described in Item 4 of Schedule A and improvements located on that land at the Date of Policy that by State law constitute real property. The term “Land” does not include any property beyond that described in Schedule A, nor any right, title, interest, estate, or easement in any abutting street, road, avenue, alley, lane, right-of-way, body of water, or waterway, but does not modify or limit the extent that a right of access to and from the Land is insured by this policy”.

The legal description of an area of land, if no exclusions or limitations appear, includes the surface, the soil and minerals underneath the surface, the air space above it, trees and growing crops, buildings and other structures permanently affixed to it, etc. While most title policies cover all of the land, it is possible to insure some constituent part of the land if this is specified in the Schedule A description of the land.

Schedule B of the owner's policy lists matters which are not embraced within the insurance of a particular parcel of land.

In an owner's policy, Schedule B includes general (or standard) exceptions and the special exceptions. The general (or standard) exceptions state those matters which are excluded from coverage generally. These matters are either not within the scope of the matters examined by the title insurer in preparation of the issuance of the title insurance policy or they would not be reflected by an examination of the public records. The special exceptions are exceptions relating to defects, encumbrances, liens, covenants, restrictions or other matters affecting only the particular land being insured.

The "general" or “standard” exceptions are sometimes referred to as "preprinted" exceptions. In most instances there are seven such exceptions. In certain states the number may increase in order to include matters of "mining claims", "water rights", "patent reservations", restrictive covenants", "spousal rights," etc. The general exceptions may be eliminated from an owner's title insurance policy. The deletion of any or all of the "general", "standard", or "preprinted" exceptions from the owner's policy is considered "extended coverage”.  Certain procedures must be followed, and certain requirements must be met to accomplish said deletion. (See Extended Coverage 5.32).

Schedule B of the ALTA 2021 Owner's Policy reads as follows:

Some historical land records contain Discriminatory Covenants that are illegal and unenforceable by law. This policy treats any Discriminatory Covenant in a document referenced in Schedule B as if each Discriminatory Covenant is redacted, repudiated, removed, and not republished or recirculated. Only the remaining provisions of the document are excepted from coverage.

This policy does not insure against loss or damage and the Company will not pay costs, attorneys’ fees, or expenses resulting from the terms and conditions of any lease or easement identified in Schedule A, and the following matters:

General Exceptions

Rights or claims of parties in possession not shown by the Public Records.

Any encroachments, encumbrance, violation, variation, or adverse circumstance affecting the Title that would be disclosed by an accurate and complete land survey of the Land and not shown by the Public Records.

Easements, liens, or encumbrances, or claims thereof, which are not shown by the Public Records.

Any lien, or right to a lien, for services, labor, material, or equipment heretofore or hereafter furnished, imposed by law and not shown by the public records.

Taxes or special assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the Public Records. Proceedings by a public agency which may result in taxes or assessments, or notices of such proceedings, whether or not shown by the records of such agency or by the Public Records.

(a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims, or title to water, whether or not the matters excepted under (a), (b) or (c) are shown by the Public Records. Note: 5(c) shall be included in all commitments and policies unless Underwriter approval to delete the same is obtained.

Minerals of whatsoever kind, subsurface and surface substances, including but not limited to coal, lignite, oil, gas, uranium, clay, rock, sand and gravel in, on, under and that may be produced from the Land, together with all rights, privileges, and immunities relating thereto, whether or not appearing in the Public Records or listed in Schedule B. The Company makes no representation as to the present ownership of any such interests. There may be leases, grants, exceptions or reservations of interests that are not listed.

Note: It is imperative to understand the meaning, scope and limitations of each of the above exceptions.

An authorized signatory should countersign the policy in the appropriate space on the jacket. In addition, the issuing agent's full name, address, and phone number should appear on the jacket.

Under certain circumstances, the amount of insurance of an existing owner's policy may be increased through the issuance of an endorsement.

Before issuing the endorsement, the following points must be considered:

• Why is the increase being considered?
• Did the Company issue any future increase endorsement?
• Has a rundown search of the records been made?
• Has any intervening matter been found?
• If any found, does it have any bearing on the Company's liability under the policy?
• If the original policy deleted any of the general exceptions, is the exception being reinserted, or is the proper documentation being obtained in order to authorize its further deletion?

Occasionally developers purchase title insurance at the time the insured land is vacant or at a time prior to completion of construction of the improvements on the land. Insurance is purchased to cover the unimproved value of the land in an attempt to protect initial investments during a long-term development. However, between the date when construction begins and the date it is completed, there is a growing disparity in regard to the market value of the land and the outstanding amount of title insurance to such an extent that the insured may not be able to recover the actual loss should there be a claim on the policy. Consequently, title insurance companies are being asked to agree at the time the initial commitment is issued that, upon application of the insured, they will increase the amount of the insurance on the outstanding policy or issue a new policy for the increased amount.

It should be remembered that a commitment by the Company, to increase the amount of a title insurance policy for the purposes of covering future improvements or appreciation in the value of the land at the request of the insured and at a later date, is tantamount to a policy for such increased insurance immediately and without the appropriate premium.

It is much more desirable to have a good faith estimate of the additional amount of insurance made at the outset and included in the initial issuance of the policy. (See Amount of Policy 1.56).

However, because this is not always feasible, the Company is willing to agree to increase the amount of insurance if the insured makes a binding agreement to purchase such increased insurance as soon as the further improvements are made and within a definite period of time. Prior to issuance of this endorsement, you must obtain approval of your Stewart underwriting counsel.

When the amount of insurance is substantially less than the market value of the land, the following note must be shown in Schedule A:

"In consideration of the issuance of this Policy at the request of the Insured for an amount less than the market value of the Land described in Schedule A, the Insured accepts this Policy upon the condition that in the event any loss or damage occurs to the Insured by reason of any defects in the Title to the estate or interest in the Land not shown in Schedule B, the Company shall be liable only for the proportion of the loss or damage which the amount of the Policy bears to the market value of the Land at the time of any such loss or damage: and upon the further condition that in the event the Company is called upon under the Policy to provide for the defense of the Insured in any litigation affecting the Title to the estate or interest in the Land, the Insured agrees to pay the same proportion of the cost for the defense, including court costs and attorneys' fees, as the market value of the Land less the face amount of the Policy bears to the market value of the Land and to indemnify the Company therefor before it undertakes to provide such defense."

Under certain circumstances it is permissible to issue an owner's policy naming as the insured one other than the owner of the estate or interest described in the policy.

This kind of insurance presupposes:

• The existence of a non-record owner, who has a determinable and insurable interest in the land and who is susceptible to suffer loss or damage if a cause of action arises against the Company under the policy.
• Examples of circumstances where a non-owner named insured may suffer such loss or damage are:
  
  
  • One purchasing under an installment contract in reliance upon the vendor's representation as to the quantity and quality of the vendor's ownership.
    
    
  • One purchasing the stock of an existing corporation in reliance upon the seller's representation as to the quantity and quality of the corporation's ownership.
• In such a circumstance, the following statement should be inserted in Schedule B of the policy:
  "The rights of the Insured under this Policy shall also be subject to the defenses, if any, which the Company might have against the party shown vested with the estate or interest in the Land described in Schedule A as if said party were the Insured under this Policy."

When requested to issue, in conjunction with the issuance of an owner's policy, a duplicate thereof, the following note must be shown after the last exception in the duplicate policy.

Note: This Policy is a true copy of Stewart Title Guaranty Company Owner's Policy No: _____, and this copy is issued by the Company and accepted by the Insured herein upon the agreement and understanding that no further or additional liability is assumed or incurred by the Company, by reason of the issuance of this copy of said Policy.

When requested to issue a duplicate owner's policy in lieu of an owner's policy which has been lost or destroyed, the following is required:

• The duplicate policy number must be given a new number.
• The following note must be shown after the last exception on the duplicate policy:

Note: This duplicate owner's policy replaces Stewart Title Guaranty Company Policy No. ______ which has been lost or destroyed. It is understood that this duplicate evidences the liability of this Company under its original policy and that such liability is not increased or diminished by reason of the issuance of this duplicate policy.

The ALTA Owner's policy forms contain in the Conditions and Stipulations a clause providing for apportionment of insurance between two or more parcels covered by the same policy. For most stipulations, this formula is adequate. There are other situations, however, in which it may be desirable from the standpoint of the Company, or the insured, or both, for a definite dollar amount to be allocated. This is customarily arrived at by negotiation.

In those cases in which an owner's policy is issued covering several parcels of land and a definite dollar amount of liability is to be allocated to each parcel the amount of insurance should be allocated to each parcel by inserting the following note at the end of Schedule B of the policy:

Note: The face amount of this policy is allocated to the various parcels, the title to which is insured, as hereinafter set forth, and in the event of a loss is established affecting one or more, but not all of such parcels, such loss shall be computed and settled on the basis of the insurance on such parcel or parcels as follows:

Parcel I the amount of $ ____________.

Parcel II the amount of $ _____________.

Under certain circumstances it is permissible to issue an owner's policy naming as the insured one other than the owner of the estate or interest described in the policy.

This kind of insurance presupposes:

• The existence of a non-record owner, who has a determinable and insurable interest in the land and who is susceptible to suffer loss or damage if a cause of action arises against the Company under the policy.
  Examples of circumstances where a non-owner named insured may suffer such loss or damage are:
  
  
  • One purchasing under an installment contract in reliance upon the vendor's representation as to the quantity and quality of the vendor's ownership.
    
    
  • One purchasing the stock of an existing corporation in reliance upon the seller's representation as to the quantity and quality of the corporation's ownership.
  
  
• The insertion of the following statement in Schedule B of the policy:
  "The rights of the insured under this policy shall also be subject to the defenses, if any, which the Company might have against the party shown vested with the estate or interest in the land described in Schedule A as if said party were the insured under this policy."

When requested to issue, in conjunction with the issuance of an owner's policy, a duplicate thereof, the following note must be shown after the last exception as the duplicate policy.

Note: This policy is a true copy of Stewart Title Guaranty Company Owner's Policy No: _____ , and this copy is issued by the Company and accepted by the Insured herein upon the agreement and understanding that no further or additional liability is assumed or incurred by the Company, by reason of the issuance of this copy of said policy.

When requested to issue a duplicate owner's policy in lieu of an owner's policy which has been lost or destroyed, the following is required:

• The duplicate policy number must be given a new number.
  
• The following note must be shown after the last exception on the duplicate policy:

Note: This duplicate owner's policy replaces Stewart Title Guaranty Company Policy No. ______ which has been lost or destroyed. It is understood that this duplicate evidences the liability of this Company under its original policy and that such liability is not increased or diminished by reason of the issuance of this duplicate policy.

See 1.80 Assignment of Owner's Policy.