leasehold & other commercial endorsements · commercial endorsements an “endorsement” is a...
TRANSCRIPT
Welcome to today’s webinar!
Leasehold & Other
Commercial Endorsements
Bill Pratt
November 15, 2018
The webinar will begin shortly.
In order to obtain a CE Certificate or CLE Credit, you must listen to the webinar for a minimum of 55 minutes obtain the password (provided at the end of the
presentation) follow the instructions as given
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ATTORNEY INFORMATION
Because of opinions expressed by the Texas Department
of Insurance (TDI) concerning rebates, legal credit is
available only to:
Attorneys who own title agencies that are Stewart Title
Guaranty Agents
Attorneys employed by a title insurance agent licensed
with Stewart Title Guaranty or Stewart entities
Fee attorneys who have an Escrow Officer license
through a Stewart Title Agent or Stewart entity
We welcome any other lawyers to listen, but cannot provide
continuing education credit to you.
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Leasehold &
Other Commercial
Endorsements: What Is On A Lender’s
Checklist
Bill Pratt Vice President,
TX Underwriting Counsel SW Regional Underwriting Office
Stewart Title Guaranty Company
Commercial Endorsements
An “endorsement” is a provision added to an insurance
contract that changes the terms and application of the
contract. It generally provides the insured with additional
coverages.
Although we refer to these as “commercial” endorsements,
they may be actually used in any transaction where the
buyer and lender are knowledgeable about the
coverages available. It is common for a high dollar
residential transaction to be handled just like high dollar
commercial transaction.
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Commercial Endorsements
In Texas all of our title insurance policy forms, including
endorsement forms, are promulgated or created by the
Texas Department of Insurance. Use of any other forms
is not allowed.
The Procedural Rules in the Basic Manual set out when we
can issue various endorsements. If the terms of the
transaction don’t meet the requirements of the
Procedural Rules, the endorsement can’t be issued. The
Rate Rules in the Basic Manual set out the charges or
premiums that are to be collected for issuance of the
endorsements.
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Commercial Endorsements
Procedural Rule P-1 contains definitions of terms that are
used in the Basic Manual. Within the Basic Manual
when these terms are used, they are not capitalized.
Most of the legal documents we review have defined
terms capitalized.
The most commonly used defined term in the rules is
“residential real property”, which is defined in Procedural
Rule P-1 u. Many commercial endorsements can only
be issued if the property is NOT residential real property.
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Commercial Endorsements • Residential real property -
1. Any real property which has improvements thereon designed
principally for the occupancy of from one to four families (including
individual units of condominiums and cooperatives) and either (a)
situated in a platted subdivision of record, or (b) consisting of five
acres or less, or
2. Any real property which has improvements thereon designed
principally for the occupancy of from one to four families and
consisting of more than five acres but not more than 200 acres used
for agricultural production by individual insureds (according to the
information known by the Company at the time of issuance of the
policy of title insurance).
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Commercial Endorsements T-4 Leasehold Owner’s Policy Endorsement
ALTA 13
CLTA 119.5
Premium No charge
Procedural Rule P-9 (a) (1)
When an Owner's Policy of Title Insurance (Form T-1) is to
be issued on a leasehold estate in the land, the Company
shall attach to the said Owner's Policy (Form T-1) the
Leasehold Owner's Policy Endorsement.
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Commercial Endorsements T-4 Leasehold Owner’s Policy Endorsement
What does it do?
It modifies the provisions relating to computing loss or
damage under the terms of the policy and adds additional
items of loss that are covered by the policy.
Guidelines:
Review a copy of the lease and all amendments.
Record a copy of the lease or a recordable memorandum of
lease
Add an exception to the term and conditions of the lease to
Sch. B of the title policy.
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Commercial Endorsements T-4 Leasehold Owner’s Policy Endorsement
Guidelines continued:
. If this is an existing lease, obtain an estoppel certificate
from the lessor that the lease is in effect, that we have a
full copy of the lease and any amendments, the lessee is
in compliance with the terms of the lease and there are
no defaults under the lease.
If the existing is being assigned, verify the assignment has
been approved by the lessor and any other with an
interest, such as a lender on the fee.
Do a full examination of the fee title to establish the lessor
has good title.
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Commercial Endorsements T-4 Leasehold Owner’s Policy Endorsement
Guidelines continued:
. All title exceptions that predate the recording of the lease
or the memorandum of lease should be shown on Sch. B,
together with any exceptions the lessee has consented to
or joined in creating. .
Commercial Endorsements T-4R Residential Leasehold Owner’s Endorsement
ALTA 13
CLTA 119.5
Premium No charge
Procedural Rule P-9 (a) (1)
When a Residential Owner's Policy of Title Insurance --
One-To-Four Family Residences (Form T-1R) is to be
issued on a leasehold estate in the land, the Company
shall attach the Residential Owner's Leasehold
Endorsement (Form T-1R) to the Residential Owner's
Policy -- One-To-Four Family Residences (Form T-1R).
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Commercial Endorsements T-5 Leasehold Loan Policy Endorsement
ALTA 13
CLTA 119.5
Premium No charge
Procedural Rule P-9 (b) (5)
When a Loan Policy (Form T-2) is to be issued on a
leasehold estate in the land, the Company shall attach to
the said Loan Policy the Leasehold Loan Policy
Endorsement (Form T-5).
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Commercial Endorsements T-5 Leasehold Loan Policy Endorsement
What does it do?
Like the owner policy endorsement, this modifies the
provisions relating to computing loss or damage under
the terms of the policy and adds additional items of loss
that are covered by the policy.
Guidelines:
Same as the owner policy endorsement.
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Commercial Endorsements T-23 Access Endorsement
ALTA 17
CLTA 103.11
Premium Rate Rule R-30: $100 per policy
Procedural Rule P-54
What does it do?
Insures access to an identified road, that the road is open
and publicly maintained, and that there is actual physical
pedestrian and vehicular access. May be issued with an
owner policy or loan policy.
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Commercial Endorsements T-23 Access Endorsement
Guidelines:
Property cannot be residential real property.
Property must have existing improvements.
Verify property abuts the road by survey, review of maps or
examination
Verify there is actual vehicular and pedestrian access to the
property by survey, review of maps or inspection.
Verify road is public and open to traffic.
Insuring provisions can be deleted if the risk is not
acceptable. .
Commercial Endorsements T-25 Contiguity Endorsement
ALTA 19
CLTA 116.4
Premium Rate Rule R-32: $100 per policy
Procedural Rule P-55
What does it do?
Insures two or more insured parcels of property are
contiguous along defined lines or boundaries and there
are no gaps between the parcels. May be issued with a
owner policy or a loan policy.
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Commercial Endorsements T-25 Contiguity Endorsement
Guidelines:
Property cannot be residential real property.
The properties described as contiguous must all be insured
in the policy.
Verify by survey or other satisfactory maps that the parcels
are contiguous.
Care must be exercised in describing how the parcels of
property are contiguous.
Insurer may add appropriate exceptions.
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Commercial Endorsements T-25.1 Contiguity Endorsement
ALTA 19
CLTA 116.4
Premium Rate Rule R-32: $100 per policy
Procedural Rule P-55
What does it do?
Insures four or more insured parcels of property or
irregularly shaped parcels are contiguous and there are
no gaps between the parcels. May be issued on an
owner policy or a loan policy.
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Commercial Endorsements T-25.1 Contiguity Endorsement
Guidelines:
Same as for the T-25. This is a form designed for insuring
the multiple parcels or irregularly shaped parcels are all
contiguous to each other .
Commercial Endorsements T-16 Loan Policy Aggregation Endorsement
ALTA 12 Also known as a “tie-in” endorsement
CLTA 117
Premium Rate Rule R-11 j: $25
Procedural Rule P-9 (b) (13)
What does it do?
Only available for loan policies. The endorsement
aggregates the amounts of insurance in separate listed
loan policies into one aggregate amount for all the listed
policies, making is as if one policy had been issued for all
the different sites.
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Commercial Endorsements T-16 Loan Policy Aggregation Endorsement
Guidelines:
A Stewart underwriter must approve issuance of the
endorsement.
Two or more policies have to be issued by the companies
involved in the transaction.
The stated amount of indebtedness in the deeds of trust
must equal the aggregate amount of insurance in the
endorsement.
If necessary, the amount of insurance may be limited to the
statutory single risk limit of Stewart ($554,496,316.00). .
Commercial Endorsements T-27 Assignment of Rents/Leases Endorsement
ALTA 37-06
CLTA 104.6-06
Premium Rate Rule R-34: $0.00
Procedural Rule P-60
What does it do?
Only available for loan policies. The endorsement insures
against any defect in the execution of an assignment of
rents and leases and against any prior assignment of
rents and leases.
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Commercial Endorsements T-27 Assignment of Rents/Leases Endorsement
Guidelines:
Property cannot be residential real property.
Confirm the document is properly authorized, executed and
acknowledged.
Confirm the assignor is validly existing and in good
standing.
Confirm there are no prior assignments of rents and leases.
The assignment must be recorded and exception taken to it
in Sch. B of the loan policy. This is necessary because
the form cites to a Sch. B exception. .
Commercial Endorsements T-36.1 Commercial Environmental Protection Lien
Endorsement ALTA 8.2-06
CLTA 110.9.1-06
Premium ------------
Procedural Rule --------
What does it do?
Will provide coverage against environmental protection
liens against commercial properties. MAY NOT BE
ISSUED because there is no authorizing rule for it and no
rate rule for it.
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Commercial Endorsements T-19 Restrictions, Encroachments, Mineral
Endorsement ALTA 9 “Comprehensive endorsement”
CLTA 102
Premium Rate Rule R-29 B: 10% of the basic rate
Procedural Rule P-50 B
What does it do?
Only available for loan policies. The endorsement insures
against violations of restrictions, encroachments over
easements, building lines and boundaries. It insures
against damage from mineral extraction or exploration.
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Commercial Endorsements T-19 Restrictions, Encroachments, Mineral
Endorsement Guidelines:
See the T-19 checklists produced by Stewart. .
Commercial Endorsements T-19.1 Restrictions, Encroachments, Mineral
Endorsement-Owner Policy ALTA 9.2 “Comprehensive endorsement”
CLTA 100,10
Premium Rate Rule R-29 D: 15% of the basic rate or
10% with the survey amendment
Procedural Rule P-50 B
What does it do?
Only available for loan policies. The endorsement insures
against violations of restrictions, encroachments over
easements, building lines and boundaries. It insures
against damage from mineral extraction or exploration.
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Commercial Endorsements T-19.1 Restrictions, Encroachments, Mineral
Endorsement-Owner Policy Guidelines:
See the T-19.1 checklist produced by Stewart.
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Contact Information
Bill Pratt
Vice President
TX Underwriting Counsel
Stewart Title Guaranty Company
Austin, Texas
800.252.5712
Per the TDI and the State Bar, in order to obtain a CE Certificate or CLE Credit you must:
– listen to the webinar for a minimum of 55 minutes
–obtain the password (provided at the end of the presentation)
– follow the instructions as given
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To Receive CE Credit Each individual seeking credit hours must send their own certificate request to:
Please include the following information: • Provide only this Presentation Name in the Subject Line of your e-mail –
“Leasehold & Other Commercial Endorsements” In the body of your e-mail: • Name of Participant (as it appears on your Escrow Officer License); • Presentation PASSWORD given at the end of the webinar; • License Number Only (located on left side of Escrow Officer Certificate of License –
for example: License Number: 1234567-890123)
For Attorney CLE Credit also include: • Texas State Bar Number • Affiliation with Stewart
– Employed by Stewart Title Guaranty Company; – an affiliate; or – a Stewart agent
For more details, see the CE and CLE FAQs at:
http://www.stewart.com/en/stg/texas/education/texas-tips/ce-cle-faqs.html
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Join us for the next Texas TIPS webinar!
December 20, 2018
Stone[d] Soup
John Rothermel
Heidi Junge
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