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December 10, 2012
Notice – Significant Changes to ALTA Title Insurance Endorsements – Time to Update Your Title/Escrow Closing Checklist

December 10, 2012 - The American Land Title Association (ALTA) promulgated several new title policy endorsement forms in April 2012. Several existing endorsements were withdrawn and others were significantly modified. These new forms have been approved for use in Washington and California, and approval is pending in Oregon. Use of the new ALTA endorsements will require a careful review of their scope and coverage to ensure that you are getting the appropriate level of coverage.

Important: Review the specific wording of each 2012 endorsement carefully and do not rely on the numerical designation.

The ALTA 9 Series endorsements have been revised, in some cases substantially, to have very specific and limited application. For instance, the former ALTA 9 Lender’s endorsement, which previously provided several components of coverage (e.g. violations of CC&Rs, mineral rights, encroachments and certain “private rights” such as options/rights of first refusal) has been withdrawn (although presently still available upon request in Washington). For a lender to effectively obtain the same coverage it will need to request a series of separate endorsements, e.g. ALTA 9.6 (private rights – loan policy), ALTA 9.3 (CC&Rs – loan policy), ALTA 28.1 (encroachments – loan policy) and ALTA 35 series (mineral rights). The existing numbering has been retained in some cases even though the content of the endorsement has changed significantly, making it very easy to inadvertently order inadequate coverage. For example, and as stated above, the new ALTA 9 endorsement offers much reduced coverage as compared to the old ALTA 9 endorsement.

In some cases, the previous coverage afforded by the previous 9 Series endorsement will no longer be available. The 9.1 Owner’s endorsement for unimproved land was significantly revised and will only cover violations of CC&Rs and for a failure to show a recorded notice of violation of an environmental covenant (except of course those shown in Schedule B). The new 9.1 will not cover private rights, encroachments or mineral rights. Adding the ALTA endorsement 28 and/or 35 can restore some of this coverage, but again numerous exceptions and qualifications apply and a careful reading of each endorsement is critical.

For more information, additional materials or copies of the 2012 ALTA endorsements, please contact any member of the Foster Pepper Real Estate or Financial Institutions practice groups.