Commercial Endorsements Bill Pratt November 15, 2018 The webinar - - PowerPoint PPT Presentation

Welcome to today’s webinar!

Leasehold & Other Commercial Endorsements

Bill Pratt November 15, 2018

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• In order to obtain a CE Certificate or CLE

Credit, you must

• listen to the webinar for a minimum of 55 minutes
• btain the password (provided at the end of the

presentation)

• follow the instructions as given

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ATTORNEY INFORMATION

Because of opinions expressed by the Texas Department

• f Insurance (TDI) concerning rebates, legal credit is

available only to:  Attorneys who own title agencies that are Stewart Title Guaranty Agents  Attorneys employed by a title insurance agent licensed with Stewart Title Guaranty or Stewart entities  Fee attorneys who have an Escrow Officer license through a Stewart Title Agent or Stewart entity

We welcome any other lawyers to listen, but cannot provide continuing education credit to you.

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Leasehold & Other Commercial Endorsements:

What Is On A Lender’s Checklist

Bill Pratt

Vice President, TX Underwriting Counsel

SW Regional Underwriting Office Stewart Title Guaranty Company

Commercial Endorsements

An “endorsement” is a provision added to an insurance contract that changes the terms and application of the

• contract. It generally provides the insured with additional

coverages. Although we refer to these as “commercial” endorsements, they may be actually used in any transaction where the buyer and lender are knowledgeable about the coverages available. It is common for a high dollar residential transaction to be handled just like high dollar commercial transaction.

Commercial Endorsements

In Texas all of our title insurance policy forms, including endorsement forms, are promulgated or created by the Texas Department of Insurance. Use of any other forms is not allowed. The Procedural Rules in the Basic Manual set out when we can issue various endorsements. If the terms of the transaction don’t meet the requirements of the Procedural Rules, the endorsement can’t be issued. The Rate Rules in the Basic Manual set out the charges or premiums that are to be collected for issuance of the endorsements.

Commercial Endorsements

Procedural Rule P-1 contains definitions of terms that are used in the Basic Manual. Within the Basic Manual when these terms are used, they are not capitalized. Most of the legal documents we review have defined terms capitalized. The most commonly used defined term in the rules is “residential real property”, which is defined in Procedural Rule P-1 u. Many commercial endorsements can only be issued if the property is NOT residential real property.

Commercial Endorsements

• Residential real property -
• 1. Any real property which has improvements thereon designed

principally for the occupancy of from one to four families (including individual units of condominiums and cooperatives) and either (a) situated in a platted subdivision of record, or (b) consisting of five acres or less, or

• 2. Any real property which has improvements thereon designed

principally for the occupancy of from one to four families and consisting of more than five acres but not more than 200 acres used for agricultural production by individual insureds (according to the information known by the Company at the time of issuance of the policy of title insurance).

Commercial Endorsements

T-4 Leasehold Owner’s Policy Endorsement ALTA 13 CLTA 119.5 Premium No charge Procedural Rule P-9 (a) (1) When an Owner's Policy of Title Insurance (Form T-1) is to be issued on a leasehold estate in the land, the Company shall attach to the said Owner's Policy (Form T-1) the Leasehold Owner's Policy Endorsement.

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Commercial Endorsements

T-4 Leasehold Owner’s Policy Endorsement What does it do? It modifies the provisions relating to computing loss or damage under the terms of the policy and adds additional items of loss that are covered by the policy. Guidelines: Review a copy of the lease and all amendments. Record a copy of the lease or a recordable memorandum of lease Add an exception to the term and conditions of the lease to

• Sch. B of the title policy.

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Commercial Endorsements

T-4 Leasehold Owner’s Policy Endorsement Guidelines continued: . If this is an existing lease, obtain an estoppel certificate from the lessor that the lease is in effect, that we have a full copy of the lease and any amendments, the lessee is in compliance with the terms of the lease and there are no defaults under the lease. If the existing is being assigned, verify the assignment has been approved by the lessor and any other with an interest, such as a lender on the fee. Do a full examination of the fee title to establish the lessor has good title.

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Commercial Endorsements

T-4 Leasehold Owner’s Policy Endorsement Guidelines continued: . All title exceptions that predate the recording of the lease

• r the memorandum of lease should be shown on Sch. B,

together with any exceptions the lessee has consented to

• r joined in creating.

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Commercial Endorsements

T-4R Residential Leasehold Owner’s Endorsement ALTA 13 CLTA 119.5 Premium No charge Procedural Rule P-9 (a) (1) When a Residential Owner's Policy of Title Insurance -- One-To-Four Family Residences (Form T-1R) is to be issued on a leasehold estate in the land, the Company shall attach the Residential Owner's Leasehold Endorsement (Form T-1R) to the Residential Owner's Policy -- One-To-Four Family Residences (Form T-1R).

Commercial Endorsements

T-5 Leasehold Loan Policy Endorsement ALTA 13 CLTA 119.5 Premium No charge Procedural Rule P-9 (b) (5) When a Loan Policy (Form T-2) is to be issued on a leasehold estate in the land, the Company shall attach to the said Loan Policy the Leasehold Loan Policy Endorsement (Form T-5).

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Commercial Endorsements

T-5 Leasehold Loan Policy Endorsement What does it do? Like the owner policy endorsement, this modifies the provisions relating to computing loss or damage under the terms of the policy and adds additional items of loss that are covered by the policy. Guidelines: Same as the owner policy endorsement.

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Commercial Endorsements

T-23 Access Endorsement ALTA 17 CLTA 103.11 Premium Rate Rule R-30: $100 per policy Procedural Rule P-54 What does it do? Insures access to an identified road, that the road is open and publicly maintained, and that there is actual physical pedestrian and vehicular access. May be issued with an

• wner policy or loan policy.

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Commercial Endorsements

T-23 Access Endorsement Guidelines: Property cannot be residential real property. Property must have existing improvements. Verify property abuts the road by survey, review of maps or examination Verify there is actual vehicular and pedestrian access to the property by survey, review of maps or inspection. Verify road is public and open to traffic. Insuring provisions can be deleted if the risk is not acceptable.

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Commercial Endorsements

T-25 Contiguity Endorsement ALTA 19 CLTA 116.4 Premium Rate Rule R-32: $100 per policy Procedural Rule P-55 What does it do? Insures two or more insured parcels of property are contiguous along defined lines or boundaries and there are no gaps between the parcels. May be issued with a

• wner policy or a loan policy.

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Commercial Endorsements

T-25 Contiguity Endorsement Guidelines: Property cannot be residential real property. The properties described as contiguous must all be insured in the policy. Verify by survey or other satisfactory maps that the parcels are contiguous. Care must be exercised in describing how the parcels of property are contiguous. Insurer may add appropriate exceptions.

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Commercial Endorsements

T-25.1 Contiguity Endorsement ALTA 19 CLTA 116.4 Premium Rate Rule R-32: $100 per policy Procedural Rule P-55 What does it do? Insures four or more insured parcels of property or irregularly shaped parcels are contiguous and there are no gaps between the parcels. May be issued on an

• wner policy or a loan policy.

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Commercial Endorsements

T-25.1 Contiguity Endorsement Guidelines: Same as for the T-25. This is a form designed for insuring the multiple parcels or irregularly shaped parcels are all contiguous to each other

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Commercial Endorsements

T-16 Loan Policy Aggregation Endorsement ALTA 12 Also known as a “tie-in” endorsement CLTA 117 Premium Rate Rule R-11 j: $25 Procedural Rule P-9 (b) (13) What does it do? Only available for loan policies. The endorsement aggregates the amounts of insurance in separate listed loan policies into one aggregate amount for all the listed policies, making is as if one policy had been issued for all the different sites.

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Commercial Endorsements

T-16 Loan Policy Aggregation Endorsement Guidelines: A Stewart underwriter must approve issuance of the endorsement. Two or more policies have to be issued by the companies involved in the transaction. The stated amount of indebtedness in the deeds of trust must equal the aggregate amount of insurance in the endorsement. If necessary, the amount of insurance may be limited to the statutory single risk limit of Stewart ($554,496,316.00).

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Commercial Endorsements

T-27 Assignment of Rents/Leases Endorsement ALTA 37-06 CLTA 104.6-06 Premium Rate Rule R-34: $0.00 Procedural Rule P-60 What does it do? Only available for loan policies. The endorsement insures against any defect in the execution of an assignment of rents and leases and against any prior assignment of rents and leases.

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Commercial Endorsements

T-27 Assignment of Rents/Leases Endorsement Guidelines: Property cannot be residential real property. Confirm the document is properly authorized, executed and acknowledged. Confirm the assignor is validly existing and in good standing. Confirm there are no prior assignments of rents and leases. The assignment must be recorded and exception taken to it in Sch. B of the loan policy. This is necessary because the form cites to a Sch. B exception.

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Commercial Endorsements

T-36.1 Commercial Environmental Protection Lien Endorsement ALTA 8.2-06 CLTA 110.9.1-06 Premium

• Procedural Rule --------

What does it do? Will provide coverage against environmental protection liens against commercial properties. MAY NOT BE ISSUED because there is no authorizing rule for it and no rate rule for it.

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Commercial Endorsements

T-19 Restrictions, Encroachments, Mineral Endorsement ALTA 9 “Comprehensive endorsement” CLTA 102 Premium Rate Rule R-29 B: 10% of the basic rate Procedural Rule P-50 B What does it do? Only available for loan policies. The endorsement insures against violations of restrictions, encroachments over easements, building lines and boundaries. It insures against damage from mineral extraction or exploration.

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Commercial Endorsements

T-19 Restrictions, Encroachments, Mineral Endorsement Guidelines: See the T-19 checklists produced by Stewart.

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Commercial Endorsements

T-19.1 Restrictions, Encroachments, Mineral Endorsement-Owner Policy ALTA 9.2 “Comprehensive endorsement” CLTA 100,10 Premium Rate Rule R-29 D: 15% of the basic rate or 10% with the survey amendment Procedural Rule P-50 B What does it do? Only available for loan policies. The endorsement insures against violations of restrictions, encroachments over easements, building lines and boundaries. It insures against damage from mineral extraction or exploration.

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Commercial Endorsements

T-19.1 Restrictions, Encroachments, Mineral Endorsement-Owner Policy Guidelines: See the T-19.1 checklist produced by Stewart.

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Contact Information

Bill Pratt

Vice President TX Underwriting Counsel

Stewart Title Guaranty Company Austin, Texas

800.252.5712 bpratt@stewart.com

Per the TDI and the State Bar, in order to obtain a CE Certificate or CLE Credit you must:

–listen to the webinar for a minimum of 55 minutes –obtain the password (provided at the end of the presentation) –follow the instructions as given

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To Receive CE Credit

Each individual seeking credit hours must send their own certificate request to: CEcertificate@stewart.com Please include the following information:

• Provide only this Presentation Name in the Subject Line of your e-mail –

“Leasehold & Other Commercial Endorsements” In the body of your e-mail:

• Name of Participant (as it appears on your Escrow Officer License);
• Presentation PASSWORD given at the end of the webinar;
• License Number Only (located on left side of Escrow Officer Certificate of License –

for example: License Number: 1234567-890123) For Attorney CLE Credit also include:

• Texas State Bar Number
• Affiliation with Stewart

– Employed by Stewart Title Guaranty Company; – an affiliate; or – a Stewart agent

For more details, see the CE and CLE FAQs at:

http://www.stewart.com/en/stg/texas/education/texas-tips/ce-cle-faqs.html

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Join us for the next Texas TIPS webinar!

December 20, 2018

Stone[d] Soup

John Rothermel Heidi Junge

For Questions/Comments Email john.rothermel@stewart.com

• r

heidi.junge@stewart.com

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