Bulletin: CA2014002

Date:
April 03, 2014
To:
All California Issuing Office
RE:
UNDERWRITING - Inspection Standards and Guidelines

Dear Associates: 

Your STG Underwriters have encountered various inspection standards and guidelines throughout the state. It is the intent of this Bulletin to set statewide standards and guidelines.

Owner’s Policies

(1)   CLTA Standard Coverage Owner’s Policy – no inspection required.

(2)   ALTA Owner’s Policy with Western Regional Exceptions (WREs) – no inspection required.

(3)   ALTA Owner’s Policy without WREs – a survey is required, but if waived by an STG Underwriter, an inspection and/or an Owner’s Affidavit and Indemnity may be required.

CLTA/ALTA Homeowner’s Policy (issued when the home is in a subdivision or similarly mapped development)

$0 to $2,000,000 – no inspection required.

$2,000,000 to $10,000,000 – no inspection required if you obtain an Owner’s Affidavit and Indemnity, or, if pursuant to local custom or knowledge, no inspection is required (you must obtain STG Underwriter approval).

Over $10,000,000 – an inspection is required.

Loan Policies, Residential (1-4 family)

(1)   CLTA Standard Loan Policy – no inspection required.

(2)   ALTA Loan Policy with WREs – no inspection required.

(3)   ALTA Loan Policy without WREs –

a. For non-institutional lenders (individuals and hard money lenders), do not issue, but if approved by an STG Underwriter, a detailed inspection is required.

b. For institutional lenders –

$0 to $2,000,000 – no inspection required.

$2,000,000 to $10,000,000 – no inspection required if you obtain an Owners Affidavit and Indemnity, or if pursuant to local custom or knowledge, no inspection is required (you must obtain STG Underwriter approval).

Over $10,000,000 – an inspection is required.

Loan Policies, Commercial

            An inspection is always required.

Loan Policies, Construction (Residential or Commercial)

            An inspection is always required.

Note:

When an inspection is required, it must be detailed and complete. A limited sight-only or exterior or ‘drive by’ inspection is not acceptable.

When relying on an Owner’s Affidavit And Indemnity, it must be fully completed and carefully reviewed to assure that the property is clear of any realized or potential title defects.

Many endorsements have specific requirements for issuance and some may require a detailed inspection. Check endorsement requirements in Virtual Underwriter to ensure you are in compliance.

In addition to the standards and guidelines set forth above, you must inspect when you have local knowledge of problem areas. Such areas often include properties near or abutting water (including the Pacific Ocean), railroad rights of way, or areas known to have legal description or mapping problems.  

Note regarding the Western Regional Exceptions:

The Western Regional Exceptions are the Regional Exceptions used in California as follows:

When included in Schedule B, Part One of an ALTA Owner’s Policy (06-17-06) or Schedule B, Part 1, Section One of an ALTA Loan Policy (06-17-06), the policy is commonly referred to as “standard coverage”.

When excluded from Schedule B, the policy is commonly referred to as “extended coverage”.

Click “here” for a copy of the Western Regional Exceptions.

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.

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.

References

Bulletins Replaced:
None
Related Bulletins:
None
Underwriting Manual:
None
Exceptions Manual:
None
Forms:
None