- October 15, 1992
- All Louisiana Issuing Offices
- Extended Coverage
a.Extended coverage is provided by a Policy when any or all of the general, standard, or printed exceptions are deleted from a Policy.
b.These general and standard exceptions commonly appear in Schedule B of the Commitment as follows:
Rights or claims of parties in possession not shown by the public records.
Easements, or claims of easements, not shown by the public records.
Encroachments, overlaps boundary line disputes, or other matters which would be disclosed by an accurate survey and inspection of the subject property.
Any lien, or right of a lien, for services, labor, or material hereto 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 public records.
c.The origin of the term "extended coverage" lies in the fact that all title insurance policies are supposed to contain the general, printed, or standard exceptions in their Schedules B, and any deletion increases or extends the coverage afforded by the Policy.
d.These exceptions can be either deleted from Schedule B of the Policy or deleted through a proper endorsement if evidence satisfactory to the Company is obtained. The underwriting standards for deleting these exceptions are set forth below.
e.Sometimes prospective insureds request that they be provided a form of affirmative insurance dealing with the matters covered by these exceptions. The ALTA Endorsement Form 9 is typical, but not exclusive, of the type of affirmative insurance requested. Generally, these coverages are designed for use with loan policies and are not available for use with owner's policies. Of course, the underwriting standards for use of the affirmative insurance must be satisfied before the coverage is provided.
f.Please refer to Section 5.32 of the Underwriting Manual for additional information, including the effect of the deletion of these exceptions.
2.The Parties in Possession Exception - Underwriting Standards for Deletion
a.The Parties in Possession Exception (see 1.B(a) above) of the Commitment may be deleted upon inspection of the subject property.
b.In some cases, the Company will accept, prior to closing, an affidavit executed by the owner of the subject property, identifying the subject property, and stating that no one is in possession of the subject property other than the owner and the tenants of the owner.
c.Any tenancy disclosed by the inspection or affidavit is to be specifically excepted in the policy.
3.The Easement or Servitude Exception and the Survey Exception - Underwriting Standards for Deletion
a.The "Easement or Servitude Exception" (see 1.b above) and the "Survey Exception" (see 1.b above) of the Commitment may be deleted upon the review and examination, prior to closing, of a current survey of the subject property. The survey should be duly certified by a registered or certified land surveyor, and stating that it was made in accordance either with the Minimum Standard Detail Requirements for Land Title Surveyors as adopted by the ALTA or the survey standards for Louisiana land title surveys.
b.The certificate of survey must show, among other things, the exact location of all the improvements located on the land; the length of all the recorded or unrecorded easements, the existence of fences, signs, and building setbacks; and finally, any dimension discrepancy, gap, overlap, or boundary line problem that may affect the property.
c.Any specific item, revealed by this review and examination is to be specifically excepted in the Policy.
These matters are often the subject of a request by a lender for affirmative insurance. If prudent underwriting concerns are satisfied, then such coverage may be provided for a Loan Policy. It is rare that such coverage is available for an Owner's Policy.
d.There are special guidelines for surveys, when issuing either the Master Residential Loan Policy or the Short Form Residential Loan Policy. Briefly, both policies provide affirmative insurance over matters of survey, but the forms neither require nor negate the requirement for a survey. However, those policies are not suitable for (1) acreage tracts and (2) subdivisions with survey problems. Please refer to current underwriting guidelines for more information. (At the date of this Bulletin, the most current guidelines may be found in Bulletin MULT 2-8/92 dated August 1, 1992.)
e.For information. Ideally, the survey should run to Stewart Title Guaranty Company in order that privity be established between the surveyor and the Company.
f.Please refer to Section 5.00 of the Underwriting Manual for additional information on easements.
4.The Mechanics' and Materialmen's Lien - Underwriting Standards for Deletion
a.No Recent Construction
The Mechanics' and Materialmen's Lien Exception (see 1.b above) may be deleted from a Loan Policy or an Owner's Policy if it can be determined that no work for which a lien could attach has been performed on the property within the statutory lien period (currently 60 days).
The existence of recent improvements may be ascertained through an affidavit of the owner.
Removing the lien exception is more difficult if construction has been completed recently - (within the prior 60 days). In this situation, the statutory lien period has not expired and the possibility exists that liens will be filed after the date of the policy, which will attach to the interest of the insured. The Mechanics' and Materialmen's Lien Exception (see 1.b above) in many cases may be deleted from a Loan Policy or an Owner's Policy in a recent construction situation (within the prior 60 days) if:
A bond with sufficient surety is furnished and recorded by the contractor in an amount sufficient to cover the cost of such improvements, or if
The following are obtained:
Affidavits from the owner and general contractor identifying all parties (i) having performed work on the property or (ii) having furnished materials, who would have lien rights.
An appropriate lien waiver or lien subordination from each entity identified in the affidavits, including the general contractor.
An indemnity from the owner and contractor indemnifying against loss or damage suffered as a result of issuing the policy without an exception for mechanics' and materialmen's liens.
The Mechanics' and Materialmen's Lien Exception (see 1.b above) should not be deleted from an Owner's Policy issued after (a) construction has commenced, or (b) notice of the contract for labor or materials is filed.
The Mechanics' and Materialmen's Lien Exception (see 1.b above) may, with the Company's prior approval, be deleted from a Loan Policy issued after (a) construction has commenced, or (b) notice of the contract for labor or materials is filed.
To delete this exception from the Loan Policy, the Company may require adequate indemnities from parties having sufficient financial strength, or that the Company be named as an obligee on a satisfactory bond which insures against loss from mechanics' liens. Additional requirements may be necessary. Please contact the National Legal Department.
Deletion of the Mechanics' and Materialmen's Lien Exception (see 1.b above) must be accompanied by the appropriate charge as provided in the current Stewart Title Guaranty Company Schedule of Charges and Forms for Title Insurance in the State of Louisiana.
Please refer to Section 12.12 of the Underwriting Manual for additional information on Mechanics' liens.
5.The Taxes or Special Assessments Exception - Underwriting Standards for Deletion
a.The Taxes or Special Assessments Exception (see 1.b above) of the Commitment may be deleted if at the time of closing it can be ascertained that there are no pending proceedings to create or confirm a special assessment on the land or that there is no work in progress that may result in a special assessment or lien on the land.
b.Any such pending proceeding or any assessment that may be levied prior to the time of closing should be specifically excepted in the Policy.
c.A separate and distinct exception for property taxes is also included in each Commitment and Policy, and should not be confused with the "Taxes and Assessments" Exception.
6.Important Considerations Relative to Extended Coverage
a.Extended coverage presupposes and requires a complete and thorough understanding of the meaning, comprehensiveness, and liability range of each of the printed or standard exceptions.
b.No Commitment can be issued showing the printed or standard exceptions already deleted. Instead, the Commitment must contain the necessary conditions and requirements for their deletion from the title policy.
c.The requirements for the deletion of the printed or general exceptions must state in a clear manner the following:
Kind of proof, documentation, search, or investigation required by the Company for the deletion of each exception.
Right of the Company to fully examine the proof, documentation, search, or investigation.
Right of the Company to raise any additional, special or specific exception which may be necessary because of facts or matters found in or disclosed by the records, documents, searches or investigations.
7. Unanswered Questions
If you have any questions about this Bulletin or this subject, please contact any underwriting attorney in the National Legal Department.
THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.