Endorsements: Form 2060-06 Instructions

NOTES:

Coverage: This endorsement contains the same basic insurance coverages as detailed in ALTA Endorsement 5-06. The only difference is that ALTA Endorsement 5.1-06 does not insure the priority of the lien of the insured mortgage over future owner’s assessments. Rather, it insures against loss or damage by reason of any homeowner’s charges or assessments which are due and unpaid at date of policy.

Planned unit developments may contain detached single family residences, as well as town homes and condominiums. This endorsement

1.      Provides coverage against loss caused by a present violation of certain restrictions;

2.      Insures against loss arising from lack of priority of the insured mortgage lien over the lien for homeowner’s association assessments;

3.      Covers losses due to the enforced removal ov an existing structure because of an encroachment; and

4.      Covers losses from failure of title caused by the exercise of any right of first refusal.

If after reviewing the relevant documentation, if it is determined that one or more of the coverages may not be provided, it is possible to issue a modified version of this endorsement which deletes those coverages that may not be provided.

Procedure: This endorsement may be issued on Loan or Owner’s Policies. To issue this endorsement, determine that each insuring clause has, in fact, been satisfied. You must:

1.      Examine any covenants, conditions and restrictions of record to determine that there are no violations and no forfeiture or right of reversion (paragraph 1);

2.      Obtain a letter from the managing association that all assessments that may be levied against the premises have been paid through the date of recording the deed or mortgage (paragraph 2) and that any right of first refusal has been waived (paragraph 4); and

3.      Examine the survey evidence that is required for the transaction, either a current survey or an Affidavit in Lieu of Survey, (paragraph 3) for encroachments onto either adjoining land or onto easements. Raise Schedule B exceptions for any encroachments you find. Determine whether those encroachments may be insured through a review of our Encroachment Underwriting Guidelines for Loan Policies or for Owner's Policies, and/or contacting the Underwriting Department. If all encroachments onto adjoining land or onto easements are insurable, then this endorsement may be issued.

Questions? Contact an Underwriter.