To insure on a condominium, you must verify that the Declaration complies with state law. The Company requires a review of the Declaration to verify that the Condominium Endorsement ALTA Form 4 (or 4.1 in those states where the assessment lien has priority for some assessments) can be issued. You must carefully consider expandable condominium regimes in accordance with the Company’s guidelines. Always be aware of mechanic’s lien issues on new condominium projects recently or not yet complete.
Condominium Unit charges
The Company requires a satisfactory statement from the condominium association or its agent stating that all charges levied against the condominium unit for the upkeep of the common elements as provided in the Declaration of Condominium have been paid, to the date of closing.
Right of first refusal
The terms of the Declaration of Condominium relative to the transfer of title or the making of a mortgage must be complied with.
Compliance with New York law, conveyance of uni
Closing deed must contain a statement of the use for which the unit is intended, as required by Real Property Law § 339-o.3.
Blanket mortgages and liens
The unit to be insured must be released from the lien of mortgages or other blanket liens appearing of record, pursuant to Real Property Law § 339-r.
Subordination of blanket mortgage
The mortgages returned herein must be unconditionally subordinated to the Declaration and By-Laws [dated __/__/__, recorded on __/__/__ in ________ ] [to be recorded.]
Proof is required that the appropriate consents have been obtained and that the declaration of condominium has been filed with the Attorney General.
Further, proof is required that there has been no application made to annul the conversion to condominium form of ownership, and that no proceedings are pending for such annulment.
Where declaration and bylaws are not recorded,
The declaration of condominium must be recorded, pursuant to § 339-n of the Real Property Law, together with the By-Laws, as required by RPL § 339-v. Prior to recording, the declaration and bylaws must be reviewed by the Company, and additional exceptions may be raised.
Before the first conveyance, a unit floor plan must be filed in the County Clerk’s office pursuant to RPL § 339-p, which contains the unit designation certified by the appropriate taxing authority as conforming to the official tax lot number.
Tax lot numbers for each unit in the condominium must be separately apportioned.
The terms, conditions and provisions of the declaration and by-laws of the condominium are excepted.
Violation Does Not Affect Good Faith Mortgage
Said instrument also provides that any violation thereof shall not defeat or render invalid the lien of a mortgage or deed of trust made in good faith and for value.
Comment: This language may be added to the Declaration exception if the Declaration and state law provide that violations will not defeat good faith mortgages. The Condominium Endorsements (ALTA 4 and 4.1) also provide this coverage.
Possible Unrecorded Contract Purchasers of Unit
Rights of purchasers under unrecorded contracts to purchase part of the land as condominium units and all persons claiming by, through, or under them.
Comment: On new or contemplated condominiums, outstanding contracts to buy units may exist. This issue is of particular concern on construction financing or sales of a large number of units.
See Underwriting Manual
Violation Does Not Affect Insured Mortgage
Said instrument also provides that any violation thereof shall not defeat or render invalid the lien of the insured mortgage.
Comment: This provision is appropriate only for the Loan Policy and only if the Declaration and state law provide that violations will not defeat the insured mortgage.
Assessment Lien is Subordinate to Good Faith Mo
Said instrument also provides for a lien to secure assessments, which is subordinate to the lien of certain mortgages or deeds of trust made in good faith and for value.
Comment: This provision is appropriate only for the Loan Policy and only if state law and the Declaration subordinate the assessment lien to the certain mortgages. Some state laws provide that assessments (usually six months) are superior to first mortgages. Many states provide that future assessments are superior to subordinate mortgages. In many states, you also must verify the assessments are paid current.
Assessment Lien is Subordinate to Insured Mortg
Said instrument also provides for a lien to secure assessments, which is subordinate to the lien of the insured mortgage.
Comment: This provision is appropriate only for the Loan Policy and only if state law and the Declaration subordinate the assessment lien to the insured mortgage. Many state laws provide that assessments (usually six months) are superior to first mortgages. Do not use this language in those states. Many states provide that future assessments are superior to subordinate mortgages; do not use this language for subordinate mortgages unless you secure the Company’s approval. In many states, you also must verify that the assessments are paid current.
Special Time-share Exception
This Policy does not insure against any loss by reason of the holds over or unauthorized occupancy by other owners of an interest in the unit(s) and week(s) described in Schedule A, or by the Association, the developer, its lessees or other third parties. It is understood that the land insured hereby is an undivided interest and there is excepted from this property any rights, title or interest of the other tenants in common or those persons claiming by, through, or under them, including rights of ownership, possession, reimbursement and partition, and right of the United States to sell the land.
Comment: When insuring time-shares, you must make use of this exceptions and those exceptions and requirements appropriate to condominiums.
See Underwriting Manual
Declaration Exception (New York)
Policy will except the terms and conditions set forth in the Declaration of Condominium and By-Laws dated __/__/__, recorded in the office of the _______ (County Clerk/City Register) in (L, RL, Reel) ______, (C)p _______; but policy will insure against loss or damage occasioned by the premises not being a part of a Condominium validly created pursuant to Article 9-B of the Real Property Law as amended.
Where Declaration not recorded
Pursuant to RPL § 339-n and § 339-v, the condominium declaration and by-laws must be recorded. Same must be submitted to the Company for review prior to recording.
Section 339-p of the Real Property Law calls for filing of the unit floor plan containing a unit designation certified by the appropriate local taxing authority conforming to the official tax lot number.
If the condominium declaration contains a provision relating to requiring prior approval of the sale by the Condominium Association or Board of Managers, or a right of first refusal, proof is required that these provisions have been complied with.
The tax map designation must be apportioned for each unit in the condominium.
Policy excepts the restrictive uses and regulations set forth in the declaration or the By-Laws of the condominium.
Condominium survey exception
Any state of facts which an accurate survey and inspection of the apartment unit would show, but policy insures that any encroachment of the insured unit upon adjoining units or the common elements may remain undisturbed, as long as the encroachment may continue.
Condominium subordinate mortgage
If the mortgage to be insured hereunder is a subordinate mortgage affecting a condominium unit, policy excepts the statutory priority afforded to unpaid common charges (including charges accruing after the recording of the mortgage), together with interest thereon (see RPL Section 339-z).
Note: You may add additional local exceptions here. Please consult with our underwriting personnel in preparing appropriate provisions.