5.32 Extended Coverage

5.32.1

In General

Extended coverage is provided when the policy contains an insuring provision and when any or all of the general or standard exceptions relating thereto are deleted from the policy.

These exceptions as they appear printed in Schedule B of the commitment are as follows:

Standard Exceptions:

  • 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 or inspection of the Land.
  • Any lien, or right to a lien, for services, labor, or material heretofore 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.

Extended coverage can be provided by either deleting any or all of the standard exceptions from Schedule B of the policy or deletion through a proper endorsement.

5.32.2

Effect Of The Deletion Of Parties In Possession Exception

When the policy contains an insuring provision and the Company deletes the standard parties in possession exception and a specific exception or exclusion (such as matters known by the insured) does not apply, the Company is specifically insuring against loss or damage arising by reason of the:

  • Any parties in possession of the property or any part thereof whose interests are not of record.
  • Any rights of tenants holding pursuant to month-to-month tenancies or other oral leases.
  • Any possessory rights of underground public utilities.

5.32.3

Effect Of The Deletion Of The Easement Exception

When the policy contains an insuring provision and the Company deletes the standard easement exception and a specific exception or exclusion (such as matters known by the insured) does not apply, the Company is insuring against loss or damage arising by reason of following:

  • Any easements other than those easements of which have been shown as specific exceptions in Schedule B.
  • Any easements created by law, such as utility lines in abandoned streets, alleys or highways.
  • Any presciptive easement or any implied easement of necessity, way of necessity or easement by estoppel.

5.32.4

Effect Of The Deletion Of The Survey Exception

When the policy contains an insuring provision and the Company deletes the standard survey exception and a specific exception or exclusion (such as matters known by the insured) does not apply, the Company is insuring against loss or damage arising by reason of the following:

  • Any discrepancy in the location of the boundary of the land with reference to highways, streets, or any other type of monument.
  • Any gaps or overlaps affecting the land.
  • Any boundary line disputes affecting the land.
  • Any encroachments of the improvements (above or below the ground) on the insured land onto any easement on the land or onto adjoining land.
  • Any encroachments of the improvements (above or below the ground) located on adjoining land onto the insured land.

5.32.5

Effect Of The Deletion Of The Mechanic Lien Exception

When the policy contains an insuring provision and the Company deletes the standard mechanic lien exception and a specific exception or exclusion (such as matters known by the insured or created by the insured) does not apply, the Company is insuring against loss or damage arising by reason of the following:

  • (In an owner's policy): Any mechanic's lien filed subsequent to the date of policy for services, labor, and material furnished prior to the date of policy.

  • (In a loan policy): Any mechanic's lien for prior labor or material, or any mechanic's lien pursuant to a prior contract, which gains priority over the insured mortgage.

5.32.6

Important Considerations Relative To Extended Coverage

No commitment should be issued showing the printed or standard exceptions already deleted unless all requirements have been satisfied for deletion. If the commitment provides for extended coverage, the commitment should contain the necessary conditions and requirements for deletion of the standard exceptions from the title policy.

The requirements for the deletion of the printed or general exceptions must state the following in a clear manner:

  • Type of proof, documentation, search, or investigation required by the Company for the deletion of each exception.

  • Right of the Company to 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 proof, documentation, searches, or investigations.

5.32.7

Phrasing The Commitment Requirements For The Deletion Of The General Exceptions

In order to delete any of the following standard exceptions the Company requires the following:

Parties in possession exception of this commitment may be deleted upon inspection of the subject property. 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 land other than the owner and the tenants of the owner. Any tenancy is to be specifically excepted in the policy.

Easement and survey exceptions of this commitment may be deleted upon the review and examination by this Company, prior to closing, of a current survey of the land acceptable to the Company, duly certified by a registered land surveyor,

The certificate of survey must show, among other things, the exact location of all the improvements located on the land, the situation, width, and length of all the recorded or unrecorded easements, the existence of fences, signs, and building setback areas, and finally, any dimension discrepancy, gap, overlap, or boundary line problem that may affect the property.

Any specific item, shown by this review and examination is to be specifically excepted in the policy. Ideally, the survey should state that it is made for the benefit of Stewart Title Guaranty Company in order that privity be established between the surveyor and the Company.

Note: In some cases the Company may be willing to accept an existing prior survey or may agree to provide survey coverage without a survey. Please call our underwriting personnel and review our survey coverage bulletins.

Mechanic Lien exception may be deleted:

  • Upon examination and inspection by the Company of the land and satisfactory evidence of the completion and full payment of the improvements erected on the land.

  • If at the time of closing, the Company is furnished with a satisfactory affidavit executed by the record owner of the land stating that there have been no improvements within the mechanic's lien period as prescribed by state law.

Generally, the following are considerations that should be considered before deleting the mechanic's lien exception.

  • Affidavits;
  • Indemnities; or,
  • Lien waivers.

The main factors to consider when attempting the deletion of the exception are:

  • The land;

  • The improvements;

  • The time of construction of the improvements: time of commencement and time of termination;

  • Evidence that all the bills and claims for any work and labor done or any material used in making any improvements or alterations, remodeling, repairing or adding to any existing improvements on the property have been fully paid;

  • The statutory mechanic's liens filing period;

  • The statutory enforcement period;

  • The indemnitors' credit, net worth, and reliability; and,

  • The possibility of a phased construction.

Tax or special assessments exception of this commitment may be deleted if at the time of closing, the Company can ascertain 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.

Any pending proceeding or any assessment that may be levied prior to the time of closing must be specifically excepted in the policy.