Leasehold & Other Commercial Endorsements · Commercial Endorsements An “endorsement” is a provision added to an insurance contract that changes the terms and application of the

Welcome to today’s webinar!

Leasehold & Other

Commercial Endorsements

Bill Pratt

November 15, 2018

The webinar will begin shortly.

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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ATTORNEY INFORMATION

Because of opinions expressed by the Texas Department

of 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


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.

.


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.

.


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.

.


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.

.


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.

.


Guidelines continued:

. All title exceptions that predate the recording of the lease

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

together with any exceptions the lessee has consented to

or joined in creating. .

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).

.

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.

.

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

owner policy or loan policy.

.

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. .

Commercial Endorsements T-25 Contiguity Endorsement

ALTA 19

CLTA 116.4



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

owner policy or a loan policy.

.

Commercial Endorsements T-25 Contiguity Endorsement

Guidelines:


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.

.

Commercial Endorsements T-25.1 Contiguity Endorsement

ALTA 19

CLTA 116.4



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

owner policy or a loan policy.

.

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 .

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.

.

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). .

Commercial Endorsements T-27 Assignment of Rents/Leases Endorsement

ALTA 37-06

CLTA 104.6-06

Premium Rate Rule R-34: $0.00


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.

.

Commercial Endorsements T-27 Assignment of Rents/Leases Endorsement

Guidelines:


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. .

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.

.

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?


against violations of restrictions, encroachments over

easements, building lines and boundaries. It insures

against damage from mineral extraction or exploration.

.

Commercial Endorsements T-19 Restrictions, Encroachments, Mineral

Endorsement Guidelines:

See the T-19 checklists produced by Stewart. .

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?


against violations of restrictions, encroachments over

easements, building lines and boundaries. It insures

against damage from mineral extraction or exploration.

.

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

[email protected]

mailto:[email protected]

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:

[email protected]

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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• Contact us if you haven’t received your

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[email protected]

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Join us for the next Texas TIPS webinar!

December 20, 2018

Stone[d] Soup

John Rothermel

Heidi Junge

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Documents

Leasehold & Other Commercial Endorsements · Commercial Endorsements An “endorsement” is a provision added to an insurance contract that changes the terms and application of the