Bulletin: AL2012001

Dear Associates:

When performing title examinations, searches often do not cover a sufficient period of time to discover the severance of rights in minerals and other substances, or because the title insurance agent relies on a prior title insurance policy that does not take exception to minerals and other substances.

Company Policy:

Use the following exception in Schedule B of each Commitment, Binder, or Policy, other than a Short Form Loan Policy, unless you secure Underwriter approval to remove or modify the exception. Deletion or modification of the exception generally will be based upon an extended search and examination required by the Underwriter and/or consideration of any state law reserving mineral or similar rights apart from patent reservations. 

"Minerals of whatsoever kind, subsurface and surface substances, including but not limited to coal, lignite, oil, gas, uranium, clay, rock, sand and gravel in, on, under and that may be produced from the Land, together with all rights, privileges, and immunities relating thereto, whether or not appearing in the Public Records or listed in Schedule B. The Company makes no representation as to the present ownership of any such interests. There may be leases, grants, exceptions or reservations of interests that are not listed."

A prior policy that does not take exception to minerals and other subsurface substances is not sufficient for removal of this exception. A complete search back to the patent and forward that either reveals no severance of the mineral interest or the reunification of the title to the surface and mineral estate after a severance is required to remove this exception.

This exception is intended to replace the standard mineral exception that you may be currently using.

Always include in Schedule B any specific grant, reservation, or lease of minerals or other substances (such as caliche, gravel, rock, coal, lignite) that your search reflects. You should also add the following at the end of the specific exception (although the policy does not insure the title to any interest that is excepted): "The Company makes no representation as to the present ownership of any such interests. There may be leases, grants, exceptions or reservations of interests that are not listed."

The foregoing policy does not affect the potential availability of endorsements that provide coverage for damage to buildings or improvements on the land resulting from the future exercise of any right to use the surface of the land for the extraction or development of minerals or any other subsurface substances, such as the ALTA 9-06 series and the ALTA 35-06 series, pursuant to applicable Guidelines.

Production Impact

Please compare this exception to the standard mineral exception you are currently using. If it is not identical to what you are using, it will need to be changed in your production system. If you are unable to make the change in your production system, please contact your software provider so that the exception can be updated in your system.

If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.

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