As of January 2013, all Illinois title insurance underwriters have entered into the Inter-Underwriter Indemnification Agreement (Agreement). In a limited set of circumstances, an exception can be waived pursuant to the Agreement without obtaining a hold harmless letter. Though the application is limited, we anticipate that this Agreement will allow transactions that have exceptions that fall within the scope of this Agreement to close more quickly.

The Agreement applies only to unreleased mortgages or trust deeds. The Agreement cannot be used to waive an unreleased line of credit, a future advance mortgage, or a revolving credit mortgage. It also cannot be used to waive an unreleased mortgage if that mortgage was recorded within three months prior to the effective date of the prior policy. Finally, the Agreement cannot be used if the unreleased mortgage was insured over by an endorsement or affirmative language, rather than not appearing on the policy at all.

The Agreement can be used only if ATG is in possession of the prior policy. The prior policy must be an owner’s policy or a lender’s policy that converted to an owner’s policy pursuant to terms and conditions of the policy. Additionally, the amount of insurance of the prior policy must not be more than $500,000.

While the Agreement is limited in scope, a large percentage of the hold harmless letters that ATG and ATG title agents seek from other underwriters are for unreleased mortgages. The Agreement will allow the unreleased mortgage to be waived without having to wait for the other underwriter to process the hold harmless request. If the exception does not fall within the above parameters, a hold harmless letter must still be obtained.

In the event that you have an exception that you believe can be waived pursuant to the Agreement, please forward a copy of the prior policy and your current title commitment to ATG’s Hold Harmless Department. The Agreement has stringent notice requirements so it is imperative that ATG maintain adequate records. ATG’s Hold Harmless Department will quickly review the request and send you written confirmation for your file that the exception can be waived pursuant to the Agreement.

Questions? Contact me or the ATG Hold Harmless Department at 800.252.0402 or Hold_Harmless@atgf.com.

Christine M. Sparks
Vice President – Managing Attorney, Claims and Audit
Office of the General Counsel
Attorneys' Title Guaranty Fund, Inc.