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.