LA ALTA Endorsement Form 9 (Restrictions, Encroachments, Minerals)

Explanation:

This comprehensive endorsement is issued in conjunction with a mortgagee's policy and provides coverage regarding violations of covenants, conditions, and restrictions.

Underwriting Requirements:

The underwriting requirements are as follows:

1. Restrictions:

• Review all restrictions to verify that there are no forfeiture provisions unless the forfeiture provisions are expressly subordinate to the lien of the insured mortgage; otherwise, paragraph 1(a) and paragraph 2 must be deleted.
  
  
• Review the restrictions to verify whether the existing use materially violates applicable restrictions. If so except to the violation in Schedule B.
  
  
• Review the restrictions to verify whether the restrictions create maintenance liens, easements, options, or rights of first refusal to purchase. If so, these provisions must be separately and explicitly listed in Schedule B as noted in paragraph 1(b)(2) of the endorsement.
  
  
• You must review the restrictions to verify that any maintenance lien created therein is expressly subordinate to the lien of the insured mortgage and that prior assessments are paid before closing; if there is a maintenance lien created by the restrictions which is not expressly subordinate to the lien of the insured mortgage, then you must delete paragraphs 1(a) and 2 of the endorsement.

2. Encroachments:

• Unless local underwriting guidelines by the Company provide otherwise, secure a survey by an acceptable surveyor reflecting the current improvements. You must except in Schedule B to any encroachments over building lines, property lines, or easements reflected by the survey.
  
  
• In order to afford the coverage provided in paragraph 3(a), 4 and 5 of this endorsement as to damage by reason of removal of encroachments, the encroachments must be minor in nature and may not include an encroachment of any permanent improvements onto adjoining land unless the Company authorizes such coverage.

3. Minerals:

• In order to provide the coverage of paragraph 3(b) by reason of damage to the surface by development of minerals on commercial property, you must verify that there are no outstanding minerals or that surface rights have been waived unless the Company agrees otherwise. Other factors of relevance are as follows: per cent of minerals outstanding, zoning prohibitions, waivers of surface rights, and development in the area. On residential property consisting of single family residences within platted subdivisions in municipal limits, you may provide this coverage even if there are outstanding mineral interests unless the area is subject to actual mineral development and production; otherwise, you should delete
  paragraph 3(b).

Charge: Ten percent (10%) of the original rate, with a minimum rate of $150.