LA ALTA Endorsement 5 (Planned Unit Development)
Explanation:The PUD endorsement may be issued in connection with the issuance of a mortgagee's policy on a residential unit. Each of the separately stated coverage's contained in the PUD endorsement may be issued either with or without the others.
This endorsement is issued in conjunction with Loan Policies. It covers planned unit developments which may include "de minimus" PUD's. A Planned Unit Development will consist of a fee simple interest in a townhouse, patio home or single-family residence together with an appurtenant easement over common elements or together with an undivided interest as co-tenant in common elements. Underwriting requirements are:
- The examination must not reflect that the present development violates outstanding prior restrictions. For example, sometimes older restrictions prohibit more than one residence on a platted lot and the townhouse development violates such restrictions by multi-unit development.
- The restrictions may not contain forfeiture or reversionary provisions (unless expressly subordinate to the insured mortgage).
- Any maintenance assessment secured by a lien in the restrictions and due prior to the Date of Policy must be paid.
- If the restrictions provide for a maintenance assessment lien, then the declaration must state that the assessment lien is subordinate to the lien of the insured mortgage. Otherwise, you must issue the ALTA Form 5.1 endorsement (which does not insure priority) otherwise;
- If the state has enacted a common interest ownership act (which provides that assessments for six months will attain priority over a previous mortgage), issue the ALTA 5.1 endorsement. Those states include Alaska, Colorado, Connecticut, Minnesota, Nevada, and West Virginia.
- Do not issue this endorsement if you know of any significant encroachments or boundary conflicts.
- If the PUD is based on a special zoning ordinance, full compliance with that ordinance must be confirmed.
If the restrictions provide for a right of first refusal, then you must verify with the association that the right may not be exercised in connection with the current or prior transactions.
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):None