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STANDARD EXCEPTIONS AND EXTENDED COVERAGE

Continuing last month's Underwriters' Bulletin topic of Extended Coverage, this issue details each of ATG's requirements for providing Extended Coverage:

ALTA Statement (ATG Form 3004) or Construction Lien and Possession Affidavit (ATG Form 3033-WI):
1. The ALTA Statement is signed by the seller(s), buyer(s), and lender (or the closer as the agent of the lender).
2. Make sure each signature on the ALTA Statement is notarized.
3. Read the completed and signed ALTA Statement and raise Schedule B exceptions for any adverse matters it reveals.
4. Raise Schedule B Exceptions for any new information revealed on the ALTA Statement pertaining to liens for management fees, commercial broker's fees, security agreements, financing statements, chattel mortgages, unrecorded contracts of options to purchase the land, leases, or easements.
5. Have the seller produce copies of all unrecorded leases the ALTA Statement reveals for inspection, and raise exceptions for their terms and conditions.
6. Consider the risk of mechanic's liens. If the ALTA Statement reveals work on the land completed within the prior six months that could result in a mechanic's lien, require affidavits from the owner and general contractor indicating all persons who worked on the property. Obtain final lien waivers for all the work completed. See the chapter on Mechanic's Liens for more information on this process.

ALTA Survey:
1. An ALTA Survey is a survey that has been prepared in compliance with the Minimum Standard Detail Requirements for Land Title Surveys as adopted by the American Land Title Association and the American Congress on Surveying and Mapping.
2. ALTA Surveys must be no more than six months old and name ATG as an addressee.
3. Look on the ALTA Survey for easements, setback lines, encroachments, possible boundary line disputes, etc. Raise all easements, setback lines, boundary line disputes, encroachments onto easements, violations of setback lines, encroachments onto adjoining property, encroachments from adjoining property onto the insured land, etc., as Special Exceptions on Schedule B.
4. Raise exceptions for unrecorded easements where you see any equipment for utility companies that is not located within a recorded easement.
5. You have the authority to waive the Standard Exceptions for condominiums without a survey if you are insuring a single unit in a condominium. However, you must first review the plat of condominium and raise exceptions for items it reveals.

Affidavit in Lieu of Survey (ATG Form 3001):
1. Check the table (see reverse) to see whether you may rely on an Affidavit in Lieu of Survey for your transaction.
2. The sellers sign this affidavit.
3. The sellers' signatures must be notarized.
4. The sellers swear that there are no encroachments of any kind on their land. If there are any, the sellers must indicate what encroachments exist in the space provided on the form.
5. Once this form is signed, read it and raise Schedule B exceptions for any adverse matters it reveals.

Current Survey:
1. Your survey should be dated within six months of the commitment's effective date. If it is older than that but less than five years old, you may nonetheless rely upon it by obtaining an Affidavit of No New Improvements (ATG Form 3030) from the sellers. In this affidavit, the sellers verify the old survey and provide information about any changes to the structures on the property, any additional structures on the property, or any new encroachments that the sellers know of.
2. Once you receive the survey, look for and raise as Special Exceptions on Schedule B all easements, setback lines, encroachments onto easements or adjoining property, violations of setback lines, encroachments from adjoining property onto the insured land, boundary line disputes, etc. If you have also obtained an Affidavit of No New Improvements, review it and add exceptions to Schedule B for new easements, setback lines, or encroachments it reveals.
3. You have the authority to waive the Standard Exceptions for condominiums without a survey if you are insuring a single unit in a condominium. However, you must review the plat of condominium and raise exceptions for items it reveals.
4. Many residential real estate contracts require a survey be provided. Providing a mortgage inspection may violate the contract. To comply with the contract and obtain details of lot lines, set backs, easements and encroachments, ATG strongly recommends that you always request a survey and not accept a mortgage inspection. This will avoid potential problems at closing and help reduce title insurance claims.

Public Utility Letters:
1. Obtain public utility letters from all local utility companies stating whether they have easements, equipment, etc., on the land, and where they are located.
2. Obtain a letter from the official of the municipality in charge of water mains, sewer, etc., such as the village engineer, stating if there are water mains, sewers, etc., on the land, and where they are located.
3. If you cannot obtain public utility letters, then provide ATG with a $75 waiver premium.

Special Assessment and Tax Search:
At the time of the initial search, instruct the search provider to search for special assessments and taxes. If you conduct your own searches, add this requirement to your search sheet.

Special Risk Premium:
There may be a special risk premium due ATG when providing Extended Coverage on an Owner Policy or when waiving the five Standard Exceptions on a Commercial Mortgagee Policy. Please contact ATG's Underwriting Department in these situations to discuss the premium.

Please review the following table to identify which of the Standard Exceptions may be waived with the requirements described above. If you have questions about the Standard Exceptions, Extended Coverage, or ATG's guidelines, please contact the Underwriting Department, 800.252.0402, 312.372.8361, or [email protected].
 

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