Bulletin: NJ000025

Dear Associates:

The GOLD POLICY represents a significant departure from the traditional ALTA owners and loan policies. The owners GOLD POLICY provides affirmative coverage previously only given in loan policies. It provides coverage for post policy events not previously available in any policy. Therefore it is very important that these policies only be issued when you are insuring a presently occupied one-to-four family residential dwelling. These policies may not be issued on vacant land, commercial structures or multi-family residential structures.

Except where specifically provided, the owners GOLD POLICIES do not include survey coverage. Our underwriting requirements for providing survey coverage in an owners policy is unchanged.

OWNERS GOLD POLICY

The new coverages provided in the owners GOLD POLICY are:

1. The liability under the policy increases by 5% of the face value each year for a period of five years to a maximum of 125% of the original face amount of the policy.
   
   
2. The policy adds coverage for losses by reason of any future forgery of any document by which a third party claims an interest in the insured property. (new insuring provision 3 b)
   
   
3. The insurance as to access to and from the insured premises to a public road, is enlarged to include pedestrian and vehicular access. (new insuring provision 5)
   
   
4. The policy indemnifies the insured for loss up to $25,000.00 (after a 1% deductible) by reason of the forced removal of the house or any part of it, as it existed when the house was purchased, if such forced removal is due to the house being built without a building permit. (new insuring provision 12 d)
   
   
5. The policy insures against loss by reason of the loss of title due to a claim that title reverts to a former owner due to a violation of a restriction. (new insuring provision 14)
   
   
6. The policy insures against loss (after a 1% deductible) by reason of a third party seeking damages for the violation of a restriction which occurred before the insured acquired title. (new insuring provision 15)
   
   
7. The policy insures against loss by reason of a purchaser refusing to purchase the insured premises due to a violation of a restriction that occurred before the insured acquired title. (new insuring provision 16)
   
   
8. The policy adds coverage by indemnifying the insureds against loss by reason of an adjoining land owner attempting to build a structure (other than a fence or boundary wall) on a portion of the insured land without the insured's consent. (new insuring provision 17)
   
   
9. The policy insures, up to $10,000.00 (after a deductible of 1%) against the insured suffering a loss due to the insured (i) not being able to obtain a building permit for an addition or remodeling of the house, (ii) or a buyer refuses to purchase the premises from the insured, (iii) or a lender refuses to make a mortgage on the insured premises, all by reason of the premises being in violation of the subdivision laws. (new insuring provision 18)
   
   
10. The policy insures against loss by reason of damage to any improvements on the insured premises (or any replacements of such improvements) by reason of future surface extraction of minerals from the insured premises. (new insuring provision 19)

LOAN GOLD POLICY

The loan GOLD POLICY provides even more new insuring provisions than the owners policy. The new insuring provisions in the loan policy are:

1. The policy amount increases up to 125% of the face amount to provide coverage for accrued interest, including negative amortization on certain loans and other matters which would increase the amount due the lender insured.
   
   
2. The insurance as to access to and from the insured premises to a public road is enlarged to include pedestrian and vehicular access. (new insuring provision 4)
   
   
3. The policy provides mechanic lien coverage. (new insuring provision 7)
   
   
4. The policy insures against loss due to invalidity or unenforceability of the mortgage based upon a violation of the usury laws. (new insuring provision 10)
   
   
5. The policy insures against loss if the street address set forth in Schedule A of the policy is incorrect. (new insuring provision 11)
   
   
6. The policy insures against loss if the insured premises does not contain a one to four family structure on it (or a condominium unit in the case of a policy covering a condominium unit). (new insuring provision 12)
   
   
7. The policy insures against loss by reason of the insured premises not being zoned to permit a one to four family residence (or condominium). (new insuring provision 13)
   
   
8. The policy insures against loss if the land has not been properly subdivided. (new insuring provision 14)
   
   
9. The policy insures against loss by reason of the structure not being built pursuant to a valid building permit. (new insuring provision 15)
   
   
10. The policy incorporates by reference the insuring provision of the ALTA 9 endorsement previously approved by the Department (NJRB form 5-24). (new insuring provision 16)
    
    
11. The policy incorporates by reference the survey endorsement (without survey) previously approved by the Department (NJRB form 5-37). (new insuring provision 17)
    
    
12. The policy insures against loss by reason of a restriction prohibiting the use of the insured premises for residential purposes. (new insuring provision 18)
    
    
13. The policy insures against loss by reason of an encroachment after the date of the policy to which the owner has not consented. (new insuring provision 19)
    
    
14. The policy insures against loss due to damage to improvements due to surface extraction of minerals. (new insuring provision 20)
    
    
15. The policy incorporates by reference the ALTA 6 or 6.2 negative amortization endorsements previously approved by the Department (NJRB forms 5-12 and 5-13). (new insuring provision 21)
    
    
16. The policy insures against loss for forged releases or assignments of the insured mortgage after the date of the policy; or if the insured acquires title, forged instruments after the date of the policy claiming an interest in the insured premises. (new insuring provision 22)
    
    
17. The policy insures against loss due to a lack of priority of the insured mortgage by reason of an environmental lien being recorded after the date of the policy. (new insuring provision 23)
    
    
18. The policy insures against loss by reason of the invalidity, unenforceability or lack of priority of the insured mortgage due to (i) advances made after the date of the policy made pursuant to the terms of the mortgage, or (ii) changes in interest rate after the date of the policy made pursuant to the terms of the mortgage. (new insuring provision 24)

In order to conform our commitment with the issuance of these policies, it will be necessary to amend Schedule A, item 2a and/or 2b. This amendment should provide that either a Standard ALTA Residential Owners Policy and/or Loan Policy or a Gold Policy will be issued.

As you have noted from the above, the loan GOLD POLICY incorporates by reference or provides coverage similar to the ALTA 9 Endorsement, the Survey Endorsement (without survey), the ALTA 6 Endorsement (or ALTA 6.2 Endorsement, as applicable) and the Revolving Loan Endorsement. The inclusion of these endorsements partially accounts for the additional $75.00 rate for the GOLD POLICY. Since these endorsements are included in the policy, they should be added to the policy and may not be charged for separately.

These policies have been designed and rated based on insuring customary and usual residential transactions. Where you have actual notice prior to closing that circumstances exist that would make the issuance of the GOLD POLICY imprudent, you should seek the approval of the Company before issuing a GOLD POLICY. Such circumstances would include, but not be limited to, matters where you have actual knowledge of pending litigation or ongoing controversy involving zoning, issuance of building permits, certificates of occupancy, enforcement of restrictions or reversions, extraction of minerals or access.