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					         THE 2006 ALTA FORMS

               By
          Harry Hayes
 Senior Underwriting Counsel
Stewart Title Guaranty Company
     hhayes@stewart.com


  On your mark, get set, go !!!
    THE 2006 ALTA FORMS


Before 1970 there
were no standard
nationally accepted
title insurance policy
forms.

.
    THE 2006 ALTA FORMS

1984

Policies are modified to
make it clear, non-title
governmental actions were
not covered –
environmental matters.
    THE 2006 ALTA FORMS
1987

Policies substantially
revised, the intent was
again to “clarify” but
the changes were
viewed as favorable to
the industry.
THE 2006 ALTA FORMS

1990
The so called
“creditors rights”
exclusion was added.
1992
The creditors rights
exclusion is modified.
THE 2006 ALTA FORMS

2006
The new 2006
ALTA forms have
been approved in
Connecticut
THE 2006 ALTA FORMS

          The old forms are
          still available but
          ALTA will de-
          certify them in
          June 2007
THE 2006 ALTA FORMS

       To order new forms call
       1-800- STEWART –
       selection 9
       Fairfield office 1-800-
       448-9302
       stgforms@stewart.com
     New ALTA Forms
•   ALTA Loan Policy (6/17/06)
•   ALTA Owner’s Policy (6/17/06)
•   New Commitments - Standard/Plain
•   Short Form Loan Policy (6/17/06)
•   Totally New New Endorsements
•   2006 Policy Endorsements (XX-06)
•   Revisions to Existing Endorsements
      Format of the 2006 ALTA
               Policy

•   Covered Risks
•   Schedules
•   Exclusions
•   Conditions
•   The Idea: Improve Coverage
            New ALTA Forms
• Terms are defined:

• Amount of Insurance - Date of
  Policy
• Entity - Indebtedness - Insured
• Insured Claimant - Insured Mortgage
• Knowledge - Land - Mortgage
• Public Records – Title
• Unmarketable Title
     Laundry List of Coverage
• The 1992 Policy had only 4 insuring
  provisions.

• The 2006 Policy has 10 insuring provisions.
         Covered Risks

Covered Risk 1 is the same in
both the old and the new.
The language has been
cleaned up, but the provision
insures that title is vested as
set forth in Schedule A.
                Covered Risks
Covered Risk 2 expands the language of the
  same provision in the 1992 policy:

2(a)(i) Forgery, fraud, undue influence,
        duress, incompetency, incapacity and
   impersonation.

2(a)(ii) Lack of authority of the person
         signing.

2(a)(iii) Failure of proper creation, execution,
   acknowledgement or delivery
                Covered Risks
2(a)(iv): Electronic recording!

2(a)(v): Power of Attorney Issues!

2(a)(vi): Recording and indexing errors
          [including electronics]!

2(a)(vii): Defects in judicial or
          administrative proceedings
          through which title is derived.
          Taxes Covered Risk 2 (b)
• The lien of real estate taxes or
  assessments imposed on the Title
  by a governmental authority due or
  payable, but unpaid.
• The lien of any assessment for
  street improvements under
  construction or completed at Date
  of Policy (Loan) (ALTA
  Endorsement 1)
              Survey Coverage
               Covered Risk 2(c)
• 2 (c) “Any encroachment, encumbrance, violation,
  variation, or adverse circumstance affecting the
  Title that would be disclosed by an accurate and
  complete land survey of the Land. The term
  “encroachment” includes encroachments of
  existing improvements located on the Land onto
  adjoining land, and encroachments onto the Land
  of existing improvements located on adjoining
  land.”
                  Covered Risks

Covered Risk 3 and 4 are unchanged.

3.   UNMARKETABLE TITLE

4.   NO RIGHT OF ACCESS TO
     AND FROM THE LAND.
  Governmental Exclusions from
 Exclusions Become Covered Risks

• Covered Risk 5: Specific Police Powers and
  Notice of Violation or Intent to Enforce by
  Anyone
• Covered Risk 6: Catch-all Notice of Enforcement
  of Police Powers
• Covered Risk 7: Eminent Domain Notice of
  Exercise
• Covered Risk 8: Eminent Domain Binding BFP
• Formerly Exclusions 1 and 2
             Creditors’ Rights
      Covered Risk 9 - Owner’s Policy
       Covered Risk 13 - Loan Policy


• Title Being vested other than as stated or being defective
• Because of Avoidance or Court Order (e.g. Money)
• Fraudulent transfer or voidable preference prior to current
  transaction
• Preferential transfer of Deed because of
   – failure to timely record
   – failure of Deed to be constructive notice
• Exclusion 4: Creditors’ Rights Exclusion
              Gap Coverage
      Covered Risk 10 Owner’s Policy
      Covered Risk 14 in Loan Policy

• Any defect in or lien or encumbrance on the Title
  or other matter included in Covered Risk that has
  been created or attached or has been filed or
  recorded in the Public Records subsequent to Date
  of Policy and prior to the recording (of the deed or
  Insured Mortgage).
• Tax Exclusion for liens after Date of Policy
• Post-Policy Creditors’ Rights Coverage
         Lien and Lien Position
              Loan Policy

• Covered Risk 9: Invalidity or Unenforceability
• Covered Risk 10: Lack of Priority – Contrast 1970
  and 1992
• Covered Risk 11(a): Lack of Priority over MMLs
  – Same Underwriting
• Covered Risk 11(b): (New) Lien for Assessments
  for Street Improvements Under Construction or
  Completed – ALTA Endorsement 1
            Loan Policy

• Covered Risk 12:

• Validity of assignments
  shown in Schedule A
          Schedule A Changes
•   Title Insurer name and address
•   Loan No.
•   Address Reference
•   Optional 6: box selection of endorsements –
    Can issue with, without, with others or with
    some
 Exciting Changes in Conditions
• (Section 1) Indebtedness includes post-
  policy advances, but not ALTA 14 coverage
  – reverse mortgage
• (Section 1) Insured in Loan Policy includes
  person who has control of transferable
  record and more transferees
• (Section 1) Insured In Owner’s Policy,
  includes some transferees
 Exciting Changes in Conditions
• (Section 2)
  Statutory Warranties now covered.
• (Section 4)
  Proof of Loss not an absolute
 Exciting Changes in Conditions

• (Old Section 7(b))
  Co-insurance - gone
• (Old Section 8)
  Apportionment - gone
      How Much Will We Owe?

• (Section 8 (b))
  We litigate and we lose
  10% Hike
• (Old Section 9(b) of
  Loan Policy) –
  Last Dollar Swan Song
      How Much Will We Owe?
• (Old Section 10 of Loan Policy)
  Liability Noncumulative Disappears,
  if lender goes into title
• (Section 13/14)
  Arbitration-Higher Limits, New Rules
         How Much Will We Owe?

• The Policy clarifies the arbitration
  clause. It is subject to mandatory
  arbitration upon request and
  compliance with applicable law has
  been raised from $1 million to $2
  million. The rules for arbitration will
  be the ALTA Title Insurance
  Arbitration Rules (which incorporate
  the National Arbitration Forum rules
  except as modified). You may find the
  Title Insurance Arbitration Rules at
  www.alta.org/standards/arbitration1.1.
  06.cfm
             Endorsements
• New ALTA 7.1 , 7.2 Manufactured Housing
  Endorsements
• New ALTA 9.3, 9.4, 9.5 (future improvements)
• New ALTA 14.3 Future Advance – Reverse
• New ALTA 22, 22.1 Location
• Revised 9, 9.1, 9.2
• New Endorsements for 2006 Policies: ALTA 1-06
  to 22.1-06 (all with xx-06 designation)
         Other New Forms
• Revised 1966 Commitment – Designed for
  2006 Policies
• Revised Plain Language 1982 Commitment
  – Designed for 2006 Policies
• Short Form Loan Policy
          More Information
• Stewart.com – Virtual
  Underwriter
• Bulletins – National – SLS00307
• Side by side comparison of loan
  policies

				
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