STG Affiliation Endorsement Guideline 1
Explanation:This endorsement is requested where the lender has an ownership interest in an entity as a partner in a limited partnership borrower. The lender's concern is that its lien may be determined to be subordinate to other mortgages or liens because the relationship of the partners to the lender or because partnership law does not allow the partner to make a loan to the partnership.
Underwriting Requirements:(1) Verify the relationship of the parties referred to in the partnership agreement in order to verify that affiliates of the lender are not the sole parties participating in the partnership and do not have exclusive management and control of the partnership.
(2) Verify that the ownership by the affiliates of the lender in the partnership is not excessive (for example, over 50%).
(3) Verify that the applicable limited partnership law allows a partner (general or limited) to make loans to the partnership (this is not relevant if the lender is not a partner or if the partner's affiliates are adequately capitalized and not formed for a single transaction).
(4) Verify to the best extent possible that the borrower will be solvent.
(5) Review the loan agreement and partnership agreement to verify the limit of control of the lender.
(6) Verify the improvements are completed or substantially complete and that there is no serious possibility of mechanic’s liens because of construction financing.
(7) Secure Senior Underwriter approval prior to issuing this endorsement.
The underwriting guidelines contained herein have been provided for general reference. The facts, circumstances, and location of the subject property should be considered when determining the issuance of the requested form or endorsement. Please note that all of the forms and endorsements included in this system may not be available in all states. Accordingly, please contact the appropriate Stewart Title Guaranty Company underwriting personnel in order to determine availability.
Compliance with the underwriting guidelines contained herein in no way obligates Stewart Title Guaranty Company to issue any form or endorsement.
This guideline applies to the following form(s):