Pending Disbursement Clauses

Pending disbursement of the full proceeds of the loan secured by the Insured Mortgage, this Policy insures only to the extent of the amount actually disbursed, but increases as each disbursement is made in good faith and without Knowledge of any defects, liens or encumbrances on the Title, up to the face amount of the Policy. Nothing contained in this paragraph limits any exception or any printed provision of this Policy.
Comment: This clause is appropriate if the loan is not a construction loan or if the construction mortgage has and will retain priority for future good faith disbursements.

Pending disbursement of the full proceeds of the loan secured by the Insured Mortgage, this Policy insures only to the extent of the amount actually disbursed, but increases as each disbursement is made in good faith and without Knowledge of any defects, liens or encumbrances on the Title, up to the face amount of the Policy. At the time of each disbursement of the proceeds of the loan, the title must be continued down to that time for defects, liens or encumbrances on the Title intervening or recorded between Date of Policy and the date of the disbursement.
Comment: This clause is used if the construction loan mortgage has initial priority, but priority may be lost because of knowledge, recorded claims, or optional disbursements, and where the construction loan mortgage does not have initial priority but the Company approves this limited coverage.

Liability hereunder at the date hereof limited to $____________. Liability shall increase as contemplated improvements are made so that liability hereunder shall be limited to that sum plus the amount actually expended by the Insured in improvements in good faith and without Knowledge of any defects, liens or encumbrances on the Title at the time the expenditure occurs. In no event shall the liability of the Company hereunder exceed the face amount of this Policy. Nothing contained in this paragraph shall limit any exception or any printed provision of this Policy.
Comment: You should use this exception in the Owner’s Policy if the amount of insurance includes contemplated improvements. You may not delete the standard mechanics’ lien exception from that Policy without approval by the Company.