Title Policy Corner: An Overview of the ALTA 9 Series Endorsements

The article below was contributed by the National Commercial Services Team at Fidelity National Title:

 

In 2012, the ALTA Forms Committee adopted significant changes to the series of ALTA 9 Restrictions, Easements and Agreements (REA) endorsements, not only to clarify the specific extra title coverage provided, but also to address the result of litigation about a Schedule B exception for an REA.  The old “plain Jane” ALTA 9 endorsement provided coverage to an owner or a lender against three major title issues:  violations of recorded REAs that could affect the validity of title or the lien status of a mortgage, encroachments, and mineral rights.  Now, the Committee has separated coverages for these issues into ALTA 9 (REA), ALTA 28 (encroachments), and ALTA 35 (mineral rights). Below is an explanation of the latest ALTA 9 series endorsements.

 

ALTA Form 9-06    Loan policy:  This endorsement contains all the coverages provided under the old ALTA 9 except that it removes coverage over any encroachment from adjoining property (or onto adjoining property) that is identified in the Schedule B exceptions.  The change is handled primarily through a clarification of what constitutes a “violation".  Disclosure of a known violation in the Schedule B exceptions removes that violation from coverage under the ALTA 9-06 endorsement.

 

ALTA Form 9.1-06   Unimproved land — Owners Policy: This form endorsement only addresses covenants and restrictions.  The ALTA 28.1 and ALTA 35 endorsements must be added to address encroachments or mineral rights.

 

ALTA 9.2-06   Improved land — Owners Policy: Revisions to this form endorsement also only addresses covenants and restrictions.  Coverage for encroachments (ALTA 28.1) and mineral rights (ALTA 35) must be addressed separately as additional endorsements.

 

ALTA 9.3-06   Loan Policy: Like the ALTA 9.2-06 for Owners Policies above, this endorsement only addresses covenants and restrictions and any coverage for encroachments or mineral rights would be dealt with by separately under the ALTA 28 or ALTA 35 series of endorsements.

 

ALTA 9.6-06   Private Rights — Loan policy: This endorsement provides coverage to the lender against loss that results from the invalidity, unenforceability or lack of priority of the insured mortgage arising from “private rights” such as a private charge or REA assessment, option to purchase, right of first refusal, or right of prior approval of a future purchaser or occupant.

 

ALTA 9.7-06   Land under Development — Loan policy: This endorsement is substantially similar to the ALTA 9-06 discussed above, providing the broadest form of coverage to the lender, but is only used for issuance on a future development site.  In order to provide this endorsement, the title office needs a specifically identified set of building plans and specifications that it can compare against any recorded restrictions.

 

ALTA 9.8-06     Land under Development  — Owners policy: This endorsement is substantially similar to the ALTA 9.2-06, except that it applies to future development. It does not contain any coverage against encroachments or mineral rights. In order to provide this endorsement, the title office needs a specifically identified set of building plans and specifications that it can compare against any recorded restrictions.

ALTA 9.9-06    Private Rights — Owners policy: This endorsement provides coverage to the owner against loss that results from the invalidity of the insured title arising from “private rights” such as options to purchase, right of first refusal or right of prior approval of a future purchaser or occupant.

Overall, the revised ALTA 9 series is designed to provide owners and lenders with flexibility in being able to choose their desired coverage based on the specifics of the real estate transaction.

*   *   *

 

In a future blog post, Fidelity National Title will review the new ALTA 28 and ALTA 35 endorsements.

 

If anyone has questions about any of the endorsements discussed in this blog article, they can contact Jeremy Freed, Commercial Underwriter on the National Commercial Services Team at Fidelity National Title (Jeremy.freed@fnf.com) or 800.626.9881 or 614.818.4822.

__________________