Stewart Title Guaranty Company
P. O. Box 2029 Houston, Texas 77252-2029 (800) 729-1902
|Date:||January 2, 2002|
|To:||All Issuing Offices in Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming|
The American Land Title Association adopted new ALTA Leasehold Endorsements on October 13, 2001.
New ALTA Endorsement 13 (Leasehold-Owners) (available through the references section at the end of this bulletin) may be attached to the ALTA Owner's Policy. It is not attached to a Leasehold Owner's Policy.
New ALTA Endorsement 13.1 (Leasehold-Loan) (available through the references section at the end of this bulletin) may be attached to the ALTA Loan Policy. It is not attached to a Leasehold Loan Policy.
These new endorsements are designed to respond to criticism of existing Leasehold Policies and prior Leasehold Endorsements. Those criticisms assert that the existing policies and endorsements do not consider improvements added by the tenant, and do not indemnify the tenant adequately in the event it is evicted because of an insured claim.
The new endorsements may be issued with policies that insure only leasehold estates, or with policies that insure leasehold estates and other estates or interests, such as a fee parcel and an easement.
ADDITIONAL BENEFITS OF NEW LEASEHOLD ENDORSEMENTS
The new endorsements, unlike the existing Leasehold Policies and prior Leasehold Endorsements, expressly include the value of improvements added by the tenant in the calculation of loss because of an eviction by reason of a matter insured against by the policy. Eviction as defined includes lawful dispossession and deprivation of use because of an insured matter.
The new endorsements increase the scope of moving expense to include a move of up to 100 miles (formerly 25 miles).
The new endorsements expand the additional items of loss to include reasonable costs incurred by the insured to secure a replacement leasehold equivalent to the leasehold estate.
The new endorsements also expand the additional items of loss to include actual costs incurred by the insured, less salvage value, for tenant leasehold improvements. These costs include costs to obtain land use, zoning, building and occupancy permits, architectural and engineering fees, construction management fees, costs of environmental testing and reviews, and landscaping costs.
GIVE THIS ENDORSEMENT TO YOUR CUSTOMERS
We encourage you to provide these endorsements with the regular Owner's
or Loan Policy, in lieu of the Leasehold Policy if you insure a leasehold estate.
These endorsement provide more beneficial coverage to the insureds, and should
justify title insurance on leasehold estates. You can, of course, continue
to issue the existing Leasehold Policies, if requested by a customer.
There is no separate rate for this endorsement. Simply charge your regular rate for the policy insuring the leasehold estate.
We are in the process of filing these endorsements where filing is required. You may secure copies of these endorsements from Stewart Forms and Information.
EXCEPTION TO LEASE
The definitions of Lease and Leasehold Estate do not expressly except to the terms of the lease. If you are not furnished with a complete current estoppel certificate from the lessor and you are not insuring a newly created lease, you should except to the terms of the lease in Schedule B or you should except to ?any failure to comply with the terms, provisions and conditions of the lease (refer to lease, and any recording information).? You should be satisfied that any mortgage or assignment of the leasehold is authorized by the lease or approved by the lessor, unless you secure underwriter approval.
Refer to Leasehold Insurance, Section 11.04, Underwriting Manual, and Leases, Section 11.08, Underwriting Manual