Title Tips: Comprehensive Endorsement or Extended Coverage?

As a reminder to ATG members, comprehensive endorsement and extended coverage are two different types of coverage on the policies. Sometimes, lenders get the two different coverages confused.

Extended Coverage

Extended Coverage consists of waiving the five Standard Exceptions, listed below.

  1. Rights or claims of parties in possession not shown by the public records.
  2. Encroachments, overlaps, boundary line disputes, and any matters that would be disclosed by an accurate survey and inspection of the premises.
  3. Easements, or claims of easements, not shown by the public records.
  4. Any lien, or right to a lien, for services, labor, or material heretofore or hereafter furnished, imposed by law, and not shown by the public record.
  5. Taxes or special assessments that are not shown as existing liens by the public records.

Generally, these survey, easement, mechanics lien and tax exceptions may be waived upon executed ALTA Statements and a current boundary survey. The reason for the boundary survey is so that all evidence of possession, boundary lines and easements may be raised as specific exceptions to coverage on Schedule B of the policies. The survey and ALTA statements allow ATG to minimize its risk and insure over these general exceptions, subject to certain items on Schedule B. For more information, see our full underwriting guidelines on Extended Coverage.

Comprehensive Endorsement

The Comprehensive Endorsement, also known as ALTA 9 coverage, contains different insuring provisions. ALTA 9 endorsement provides coverage over what are called Covenants, Conditions and Restrictions (“CCRs”). CCRs can be found in the Plat of Subdivision or in the first deed from the time the subdivision was created. Sometimes, CCRs are found in a recorded Declaration of Covenants, Conditions and Restrictions. Some examples of the type of coverage offered by an ALTA 9 endorsement include:

  1. CCRs are not violated;
  2. CCRs do not interfere with or impair the mortgage;
  3. No encroachment onto adjoining land or adverse encroachment;
  4. No encroachment of an easement created by the CCRs;
  5. Future violations will not impair future title or mortgage; and
  6. Violation of CCRs can be insured against court orders requiring an encroachment be removed;
  7. CCRs do not create an option or right of first refusal.

The above is not a comprehensive list of all coverages contained in this endorsement. There are multiple versions of the ALTA 9 endorsement to choose from. The two most common are the ALTA 9-06 and the ALTA 9.3. For a full explanation, see Restrictions, Encroachments, Minerals - Loan Endorsement (ALTA 9-06), and its instructions, and the Covenants, Conditions and Restrictions - Loan Endorsement (ALTA 9.3), and its instructions. The Covenants, Conditions and Restrictions - Loan Endorsement (ALTA 9.3), is the endorsement referred to as the "Comprehensive Endorsement," and is the endorsement that is printed when you select the "END Comprehensive (ALTA 9.3)" in RESource.

Similar to Extended Coverage, a current survey is required to ascertain whether improvements on the land violate any of the CCRs. Any violations must be raised as specific exceptions on Schedule B of the final policies.

In conclusion, Extended Coverage gives general coverage over adverse possession, encroachments, easements, mechanics liens and taxes. ALTA 9 or 9.3, however, gives much more coverage in that it insures over present and future violations of things such as encroachments, rights of first refusal, easements and court-ordered removal of an improvement, among other things.

Questions? Contact an Underwriter

Posted on: Mon, 04/07/2014 - 2:34pm