Virtual Underwriter

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Underwriting Manual: TX

15.04

Parties In Possession

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State Supplements

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Underwriting Manual Subtopic
15.04.1

In General

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 Because the property to be insured or any part thereof may be physically occupied by someone other than the record owner (Procedural Rule P-3) under a claim of right adverse to the record owner, Schedule B of any title policy must contain an exception reading as follows:

 

 “Rights of parties in possession”.

 

 In order to place this exception in the policy, the insured must execute a written instrument stating that the insured waives an inspection of the property and is satisfied to accept the policy with that exception in the policy. If the insured does not execute the instrument waiving the inspection, then you must delete the exception and you must make a physical inspection of the property. You may charge your reasonable and actual cost for the inspection. If the inspection reveals a physical occupation of the property or a portion thereof, you must make a specific exception to the party(ies) in possession.

 

 On occasion, you may be asked to modify the exception to read: “rights of tenants in possession”. If the property is rental or commercial, you may do this if the waiver is signed. If leases or memoranda of leases are filed of record, you must still except to them.

See also Texas Bulletin TX2012007.