5.30.1

In General

Procedural Rule P-39 authorizes Texas title insurance companies to provide express (affirmative) insurance. In the past, agents either excepted to a title problem or issued without exception. The Company will prefer to except to and insure against some matters that we previously thought were significant, but insurable, risks.  As of April 4, 2002, the Texas Insurance Approved Forms T-17 (PUD) and T-19 (Restrictions, Endorsements and Minerals).  As regards the matters insured by these forms, the express insurance authorized by P-39a can no longer be issued.  Express insurance under P-39 b&c are still allowed.

5.30.2

Encroachments

This section intentionally deleted.  Please use the T-17, T-19 and T-19.1 checklists attached for particular situations.

FORM T-17 MORTGAGEE POLICY ENDORSEMENT

GENERAL CHECKLIST

GF NO._________________

EXAMINE ALL RESTRICTIVE COVENANTS (deed or declaration) FOR ANY

OF THE FOLLOWING FEATURES (INCLUDING ANY UNRELEASED

RESTRICTIONS THAT PRE-DATE CREATION OF THE PLANNED UNIT

DEVELOPMENT) FOR THE FOLLOWING FEATURES/ISSUES:

GENERAL VIOLATIONS OF RESTRICTIONS.

_____ Title examination or survey indicates an existing significant violation of a

restrictive covenant affecting the use of the mortgaged land: UNLESS

UNDERWRITER APPROVAL IS OBTAINED, YOU MUST DELETE THE

FIRST SENTENCE OF PARAGRAPH NO. 1 IN THE T-17 ENDORSEMENT.

(Apparent violation:_________________________________________ ;

Underwriter Approval: Date__________ by______________________.)

REVERSIONARY RIGHTS.

_____Enforceable restrictive covenants provide that, as a penalty for violation, an

owner forfeits title and/or that title reverts to a prior owner: YOU MUST

DELETE THE LAST SENTENCE OF PARAGRAPH NO. 1 IN THE T-17

ENDORSEMENT.

____ Enforceable restrictive covenant contain reversionary rights that are properly

subordinated to the type of mortgage being insured: YOU MUST DELETE THE

LAST SENTENCE OF PARAGRAPH NO. 1 IN THE T-17 ENDORSEMENT.

However, with or without issuance of the Endorsement, we may be able to

provide express insurance under Procedural P-39 against loss or invalidation of

the insured mortgage. Please contact Underwriting Counsel if you have a

lender's request for the T-17 Endorsement, and your examination discloses

subordinated reversionary rights.

LIENS FOR ASSESSMENTS/CHARGES.

_____ Restrictions create a lien or liens to secure an assessment, charge, fee, or penalty, one or more of which are not subordinated to the type of mortgage being insured: YOU MUST DELETE PARAGRAPH NO. 2 IN THE T-17 ENDORSEMENT.

_____ Each lien created under restrictions is made subordinate/inferior to the type of

mortgage being insured: YOU MAY ISSUE THE T-17 ENDORSEMENT

PARAGRAPH NO. 2 INTACT.

BOUNDARY PROTRUSIONS. See “Protrusions/Encroachments Over Boundary Lines” in our T-19 Survey Checklist for application to the following:

_____ Structural improvements protrude from the mortgaged property over a boundary

line, and T-19 guidelines would require a policy exception: YOU MUST

DELETE PARAGRAPH NO. 3 FROM THE T-17 ENDORSEMENT.

_____ Structural improvements protrude from the mortgaged land over a boundary line, and T-19 guidelines would not require a policy exception: YOU MAY ISSUE

THE T-17 ENDORSEMENT WITH PARAGRAPH NO. 3 INTACT.

EASEMENT ENCROACHMENTS. See “Easement Encroachments” in our T-19 Survey Checklist for application to the following:

_____ Structural improvements encroach into the area of an easement on the land, and

T-19 guidelines would require a policy exception: YOU MUST DELETE

PARAGRAPH NO. 3 FROM THE T-17 ENDORSEMENT.

_____ Structural improvements encroach into the area of an easement on the land, and

T-19 guidelines would not require a policy exception: YOU MAY ISSUE THE

T-17 ENDORSEMENT WITH PARAGRAPH NO. 3 INTACT.

RIGHT OF FIRST REFUSAL.

_____ In the sale producing the insured mortgage, no written release or waiver is

obtained from a person/entity entitled to exercise a right of first refusal at sale of

the property; and no documentation of implied waiver is furnished: UNLESS

UNDERWRITER APPROVAL IS OBTAINED, YOU MUST DELETE

PARAGRAPH NO. 4 FROM THE T-17 ENDORSEMENT.

(Underwriter Waiver: Date__________ by____________________.)

_____ In the sale producing the insured mortgage, a release or waiver is obtained from

the person/entity entitled to exercise a right of first refusal at sale of the property;

or satisfactory documentation of implied waiver is furnished: YOU MAY

ISSUE THE T-17 ENDORSEMENT WITH PARAGRAPH NO. 4 INTACT.

FORM T-19 MORTGAGEE POLICY ENDORSEMENT

MINERALS CHECKLIST

GF NO.________________________

EXAMINE ALL RESERVATIONS AND GRANTS OF SEVERED MINERAL

INTEREST AND ANY OUTSTANDING MINERAL LEASES.

MINERAL INTERESTS. You must except to each outstanding mineral interest in Schedule “B” of the Mortgagee Policy. You may omit exception if the interest was limited to a term of years now expired (and, if extendable by mineral production, you are satisfied that no minerals are being produced 1) from any part of the land covered by the original reservation/grant and 2) from other property with which the mortgage land has been pooled or unitized under recorded agreement/order). UNLESS AT LEAST ONE OF THE FOLLOWING CONDITIONS APPLIES TO EACH MINERAL-INTEREST EXCEPTION, YOU MUST DELETE PARAGRAPH 3(b) OF THE T-19 ENDORSEMENT:

 NOTE: You must consider P-50 and P-50.1 and the use of T-19.2 and T-19.3 in this circumstance.

Applies to B/_________: By its terms, the mineral interest is limited to a royalty right

(participating or non-participating).

Applies to B/_________: In the original reservation/grant or by subsequent recorded

agreement, the mineral owner has waived/relinquished rights to use the surface of the

land.

Applies to B/_________: The mineral owner has joined in a recorded agreement

designating a drill-site that does not include any part of the land covered by the insured

mortgage.

Applies to B/________: The land covered by the insured mortgage is located within the

municipal boundaries of an incorporated city that has enacted a drilling-permit ordinance.

Applies to B/________: No minerals of any kind are currently produced in your county

or in the adjacent county nearest to the land.

Applies to B/_________: The land covered by the insured mortgage consists of five (5)

acres or less used for single-family residential purposes, and no minerals are currently

produced on the land or in its immediate vicinity.

Applies to B/_________: You obtain Underwriter Approval (Date ____________

by _____________________).

MINERAL LEASES. You must except to each outstanding mineral lease in

Schedule “B” of the Mortgagee Policy. You may omit exception if the primary term of the mineral lease has expired and you are satisfied that no minerals are being produced from any part of the original leased tract. UNLESS AT LEAST ONE OF THE FOLLOWING CONDITIONS APPLIES TO EACH MINERAL-LEASE EXCEPTION, YOU MUST DELETE PARAGRAPH NO. 3(b) OF THE T-19 ENDORSEMENT:

 NOTE: You must consider P-50 and P-50.1, and the use of T-19.2 and T-19.3 in this circumstance.

Applies to B/_________: All minerals have been severed from the surface of the

mortgaged land, and, prior to the mineral lease's inception, all mineral owners joined in a recorded agreement that (a) generally waived/relinquished rights to use the surface or (b) designates a drill-site that does not include any part of the mortgaged land.

Applies to B/ _________: The mineral lease stipulates that no exploration or production

will occur on the surface of the land covered by the insured mortgage.

Applies to B/ ________: The mortgaged land is located within the municipal boundaries

of an incorporated city that has enacted a drilling-permit ordinance, and no permit has

been issued for drilling on the mortgaged land.

Applies to B/ _________: Subsequent to inception of the mineral lease, the lessee or its

assignee has joined in a recorded agreement that (a) generally waives/relinquishes rights

to use the surface of the mortgaged land or (b) designates a drill-site that does not include any part of the mortgaged land.

Applies to B/ _________: You obtain Underwriter Approval (Date __________ ,

By ____________________ ).

FORM T-19 MORTGAGEE POLICY ENDORSEMENT

RESTRICTIONS CHECKLIST

GF NO._____________________

EXAMINE ALL RESTRICTIVE COVENANTS (deed or declaration) FOR ANY

OF THE FOLLOWING FEATURES:

REVERSIONARY RIGHTS: Restrictions provide that, as a penalty for violating the restrictions, an owner forfeits title, and it reverts to a prior owner.

_____Reversionary rights still in force are not subordinated to the type of mortgage

being insured: YOU MUST SEPARATELY EXCEPT TO THE

REVERSIONARY RIGHTS IN SCHEDULE “B” OF THE MORTGAGEE

POLICY. UNLESS UNDERWRITER WAIVER IS OBTAINED, YOU MUST

ALSO DELETE PARAGRAPHS NOS. 1(a) AND 2 FROM THE T-19

ENDORSEMENT. (Underwriter Approval: Date__________ by______________.)

____ Original restrictions (or subsequent amendment) expressly subordinate

reversionary rights to the type of mortgage being insured: YOU MUST

SEPARATELY EXCEPT TO THE REVERSIONARY RIGHTS IN

SCHEDULE “B” OF THE MORTGAGEE POLICY, AND YOU MAY ISSUE

AN INTACT T-19 ENDORSEMENT.

____ Subsequent recorded amendment to restrictions terminates reversionary rights, but

keeps the restrictive covenants in force: YOU MUST CITE RESTRICTIONS

AND AMENDMENT UNDER NO. 1 OF SCHEDULE “B” IN THE

MORTGAGEE POLICY, BUT YOU MAY OMIT A SEPARATE EXCEPTION

TO THE REVERSIONARY RIGHTS. YOU MAY ISSUE AN INTACT T-19

ENDORSEMENT.

____ Restrictions are date-expired without extension of time, OR the sole restrictive

covenant enforceable by reversion is an illegal ownership/occupancy limitation

based on race, ethnicity, etc.: DO NOT CITE THE RESTRICTIONS UNDER

NO. 1 IN SCHEDULE “B” OF THE MORTGAGEE POLICY, AND DO NOT

MAKE OTHER EXCEPTION TO THE REVERSIONARY RIGHTS. YOU

MAY ISSUE AN INTACT T-19 ENDORSEMENT.

BUILDING SETBACKS AND EASEMENTS: If restrictions impose building

setback requirements or create utility-type or other easements, you must separately except to these features in Schedule “B” of the Mortgagee Policy. For handling of violations, protrusions, and encroachments, see “Building Setback Violations” and “Easement Encroachments” in our Form T-19 Survey Checklist.

ASSESSMENTS, CHARGES, AND LIENS: Restrictions provide for collection of a special or ongoing assessment, fee, or charge from the owner of the mortgaged property, with or without a lien against the land, and/or create a lien to enforce collection of a monetary penalty for violation of restrictions.

_____ Restrictions create a lien to enforce collection which is not made subordinate to

the type of mortgage being insured, and no loan-specific subordination

agreement is obtained from the entity entitled to collect the secured assessment,

charge, fee, or penalty: YOU MUST SEPARATELY EXCEPT TO THE

OBLIGATION AND LIEN IN SCHEDULE “B” OF THE MORTGAGEE

POLICY. UNLESS UNDERWRITER APPROVAL IS OBTAINED, YOU

MUST ALSO DELETE PARAGRAPHS NOS. 1(a) AND 2 FROM THE T-19

ENDORSEMENT. (Underwriter Approval: Date ______ by ____________.)

_____ Restrictions create a lien to enforce collection which is made expressly

subordinate to the type of mortgage being insured; or a loan-specific

subordination agreement has been obtained from the entity entitled to collect the

secured assessment, charge, fee, or penalty: YOU MUST SEPARATELY

EXCEPT TO THE OBLIGATION AND LIEN IN SCHEDULE “B” OF THE

MORTGAGEE POLICY, AND YOU MAY ISSUE AN INTACT T-19

ENDORSEMENT.

_____ Lien created by restrictions is or has become subordinated to the mortgage being

insured, BUT secured assessments, charges, etc., have not been paid through date

of the Mortgagee Policy: YOU MUST SEPARATELY EXCEPT TO THE

OBLIGATION AND LIEN IN SCHEDULE “B” OF THE MORTGAGEE

POLICY. UNLESS UNDERWRITER APPROVAL IS OBTAINED, YOU

MUST ALSO DELETE PARAGRAPHS NOS. 1(a) AND 2 FROM THE T-19

ENDORSEMENT: (Underwriter Approval: Date ______ by ____________.)

_____ Restrictions create an assessment, charge, fee, or penalty, but do not impose any

lien to enforce collection: YOU MUST SEPARATELY EXCEPT TO THE

OBLIGATION IN SCHEDULE “B” OF THE MORTGAGEE POLICY, AND

YOU MAY ISSUE AN INTACT T-19 ENDORSEMENT.

OPTION OR RIGHT OF FIRST REFUSAL OR PRIOR APPROVAL: Restrictions create a purchase-option, right of first refusal, or right of prior approval in favor of a third party, exercisable when an owner contracts to sell the property being mortgaged.

_____ In the sale producing the insured mortgage, no written release/waiver is obtained

from the party entitled to enforce the option/right, and no documentation of

implied waiver is furnished: YOU MUST SEPARATELY EXCEPT TO THE

OPTION/RIGHT IN SCHEDULE “B” OF THE MORTGAGEE POLICY.

UNLESS UNDERWRITER WAIVER IS OBTAINED, YOU MUST ALSO

DELETE PARAGRAPH NO. 1(a) FROM THE T-19 ENDORSEMENT.

(Underwriter Approval: Date ________ by __________________.)

_____ In the sale producing the insured mortgage, a written waiver or release is obtained from the party entitled to enforce the option/right, OR satisfactory documentation of implied waiver is furnished: YOU MUST SEPARATELY EXCEPT TO THE OPTION/RIGHT IN SCHEDULE “B” OF THE MORTGAGEE POLICY, AND YOU MAY ISSUE AN INTACT T-19 ENDORSEMENT.

FORM T-19 MORTGAGEE POLICY ENDORSEMENT

SURVEY CHECKLIST

GF NO.________________

CHECK ANY APPLICABLE ITEM, and note date and source of any required underwriter

waiver [NWR = No Waiver Required].

(Note Underwriter

Waiver)

BUILDING SETBACK VIOLATIONS (plat or restrictions).

NWR                ____Newer structure (less than four years old) encroaches over a setback line

by less than 10% of the setback distance: YOU MAY ISSUE THE

MORTGAGEE POLICY AND INTACT T-19 ENDORSEMENT

WITHOUT EXCEPTING TO THIS ENCROACHMENT IN

SCHEDULE “B”.

Date:__                ____Newer structure (less than four years old) encroaches over a setback line

By:____by more than 10% of the setback distance: UNLESS UNDERWRITER

WAIVER IS OBTAINED, YOU MUST EXCEPT TO THE

ENCROACHMENT IN SCHEDULE “B” OF THE MORTGAGEE

POLICY, AND PARAGRAPH NO. 5 MUST BE DELETED IN THE

T-19 ENDORSEMENT.

NWR                ____Older structure (more than four years old) encroaches over a setback line

by up to 100% of the setback distance, without overlapping any

boundary line: YOU MAY ISSUE THE MORTGAGEE POLICY AND

INTACT T-19 ENDORSEMENT WITHOUT EXCEPTING TO THIS

ENCROACHMENT IN SCHEDULE “B”. (Structure is _____ years

old.)

NWR                ____Structure encroaching into the setback width is not permanent (e.g.,

outbuilding erected on wood or dirt floor), OR encroaching feature is not

structural (e.g., in-ground pool, uncovered patio, walkway, driveway,

fence, or retaining wall): YOU MAY ISSUE THE MORTGAGEE

POLICY AND INTACT T-19 ENDORSEMENT WITHOUT

EXCEPTING TO THIS ENCROACHMENT IN SCHEDULE “B”.

EASEMENT ENCROACHMENTS.

NWR             ____Above-ground structure encroaches into less than 50% of the width of an

easement created by plat or restrictions: YOU MAY ISSUE THE

MORTGAGEE POLICY AND INTACT T-19 ENDORSEMENT

WITHOUT EXCEPTING TO THIS ENCROACHMENT IN

SCHEDULE “B”.

NWR                ____Structure encroaching into the easement is not permanent (e.g.,

outbuilding erected on wood or dirt floor), OR encroaching feature is not

structural (walkway, driveway, uncovered patio, fence, or retaining

wall): YOU MAY ISSUE THE MORTGAGEE POLICY AND

INTACT T-19 ENDORSEMENT WITHOUT EXCEPTING TO THIS

ENCROACHMENT IN SCHEDULE “B”.

Date:__                 ____Permanent above-ground structure encroaches into more than 50% of

By:____the width of an easement created by plat or restrictions: UNLESS

UNDERWRITER WAIVER IS OBTAINED, YOU MUST EXCEPT TO

THE ENCROACHMENT IN SCHEDULE “B” OF THE MORTGAGEE

POLICY, AND PARAGRAPH NO. 3(a) MUST BE DELETED IN THE

T-19 ENDORSEMENT.

Date:__                 ____Swimming-pool basin encroaches any distance into the area of an ease-

By:____ment: UNLESS UNDERWRITER WAIVER IS OBTAINED, YOU

MUST EXCEPT TO THE ENCROACHMENT IN SCHEDULE “B” OF

THE MORTGAGEE POLICY, AND PARAGRAPH NO. 3(a) MUST

BE DELETED IN THE T-19 ENDORSEMENT.

Date:__                ____Structure encroaches any distance into the area of a pipeline easement

By:___   or more than 10% of the width of another separately-recorded easement

specifically granted to a named user: UNLESS UNDERWRITER

WAIVER IS OBTAINED, YOU MUST EXCEPT TO THE

ENCROACHMENT IN SCHEDULE “B” OF THE MORTGAGEE

POLICY, AND PARAGRAPH NO. 3(a) MUST BE DELETED IN THE

T-19 ENDORSEMENT.

PROTRUSIONS/ENCROACHMENTS OVER BOUNDARY LINES.

NWR                ____Seller's/borrower's fence protrudes onto neighboring public or private

land OR is inset any distance from a boundary shared with a public

road/street/alley: YOU MAY ISSUE THE MORTGAGEE POLICY

AND INTACT T-19 ENDORSEMENT WITHOUT EXCEPTING TO

THIS PROTRUSION OR INSET IN SCHEDULE “B”.

Date:__                ____Adjoining owner's fence encroaches into and encloses a strip exceeding

By:____three feet (3') in width out of the land being insured: UNLESS

UNDERWRITER WAIVER IS OBTAINED, YOU MUST EXCEPT TO

RIGHTS AND CLAIMS OF THE ADJOINING OWNER IN

SCHEDULE “B” OF THE MORTGAGEE POLICY.

Date:__                 ____Permanent structural improvement (e.g., house, garage, carport, patio,

By:___                 outbuilding, deck, or unfinished slab) or permanent non-structural

improvement (e.g., walkway, driveway, planter, or retaining wall)

protrudes from land being insured onto adjoining property: UNLESS

UNDERWRITER WAIVER IS OBTAINED, YOU MUST EXCEPT TO

THE PROTRUSION IN SCHEDULE “B” OF THE MORTGAGEE

POLICY (NO DELETION IS REQUIRED IN THE T-19

ENDORSEMENT).

NWR                 ____Permanent structural improvement (see above) or non-structural

improvement (see above) from adjoining property encroaches a distance

of less than two feet (2') onto the land being insured: YOU MAY

ISSUE THE MORTGAGEE POLICY AND INTACT T-19

ENDORSEMENT WITHOUT EXCEPTING TO THIS

ENCROACHMENT IN SCHEDULE “B”.

Date:__                 ____Permanent structural improvement (see above) or non-structural im-

By:___                 provement (see above) from adjoining property encroaches a distance of

more than two feet (2') onto the land being insured: UNLESS

UNDERWRITER WAIVER IS OBTAINED, YOU MUST EXCEPT TO

THE ENCROACHMENT IN SCHEDULE “B” OF THE MORTGAGEE

POLICY, AND YOU MUST DELETE PARAGRAPH NO. 4 IN THE

T-19 ENDORSEMENT.

FORM T-19.1 OWNER POLICY ENDORSEMENT

COMBINED CHECKLIST

(7/1/04)

GF NO.                                                             

This Endorsement is an IMPROVED NON-RESIDENTIAL endorsement.  Do NOT issue this Endorsement if the insured land qualifies as “residential real estate” under Procedural Rule P-1(u), Basic Manual, or if the land is otherwise unimproved.  Issuance of this Endorsement is limited to the Form T-1 Owner Policy and requires review of the following:  1)  a current survey of the insured land (which can include prior survey evidence updated by acceptable affidavit); 2) all restrictive covenants affecting the insured land; and 3) all recorded mineral severances and leases occurring in the chain-of-title to the insured land.

BUILDING SETBACK VIOLATIONS.   UNLESS ONE OF THE FOLLOWING APPLIES, YOU MUST EXCEPT IN T-1 SCHEDULE “B” TO ANY SETBACK VIOLATION AND ALSO DELETE PARAGRAPH NO. 4 IN THE T-19.1 ENDORSEMENT:

        Permanent structure of any age extends over a setback line (from plat or restrictions) by a distance of one foot (1.00') or less.

         Improvement occupying or extending into the setback width is not permanent (e.g. portable sign) OR is a non-structural improvement (e.g., driveway, parking lot, fence, or landscaping element).

        You obtain underwriter approval.

                    Describe apparent violation:                                                                Approved by:                                       Date:                                       

EASEMENT ENCROACHMENTS (including non-structural improvements).  UNLESS ONE OF THE FOLLOWING APPLIES, YOU MUST 1) EXCEPT TO THE EASEMENT ENCROACHMENT IN T-1 SCHEDULE “B” AND 2) IN THE INSTANCE OF AN ENCROACHING BUILDING, YOU MUST ALSO DELETE PARAGRAPH NO. 2(a) IN THE T-19.1 ENDORSEMENT:

         Encroaching building or other improvement occupies no more than 50% of the total easement width.

___  You obtain underwriter approval.

         Describe apparent encroachment:                                                    

         Approved by:                                 Date:                                     

BOUNDARY PROTRUSIONS/ENCROACHMENTS (including non-structural improvements).  UNLESS YOU OBTAIN UNDERWRITER APPROVAL TO DO OTHERWISE, YOU MUST 1) SPECIFICALLY EXCEPT IN T-1 SCHEDULE “B” TO ANY PROTRUSION OR ENCROACHMENT OF AN IMPROVEMENT ONTO OR FROM ADJOINING PUBLIC OR PRIVATE LAND, AND 2) IN THE INSTANCE OF A BUILDING PROTRUDING ONTO ADJACENT LAND, YOU MUST ALSO DELETEPARAGRAPH NO. 3 IN THE T-19.1 ENDORSEMENT.

____  Underwriter approval given to      omit exception and/or ____ omit deletion.

          Describe protrusion/encroachment:                                                       

          Approved by:                                          Date:                          

RESTRICTIONS.   UNLESS YOU OBTAIN UNDERWRITER APPROVAL TO DO OTHERWISE, YOU MUST SPECIFICALLY EXCEPT IN T-1 SCHEDULE “B” TO ANY OF THE FOLLOWING MATTERS ARISING UNDER/FROM RESTRICTIVE COVENANTS:  1)  Easement right; 2) option to purchase; 3) right of first refusal or prior approval at sale or lease; 4) reversionary right or other potential loss of title as penalty for violation; and/or 5) significant existing violation disclosed by survey or other information known to you at or before closing.

____  Underwriter approval given to omit exception.

            Describe omitted item:                                                             

           Approved by:                                    Date:                   

MINERALS.  IN ALL INSTANCES, YOU MUST SPECIFICALLY EXCEPT IN T-1 SCHEDULE “B” TO ALL OUTSTANDING MINERAL INTERESTS AND LEASES.  UNLESS ONE OF THE FOLLOWING APPLIES, YOU MUST ALSO DELETE  PARAGRAPH NO. 2(b) FROM THE T-19.1 ENDORSEMENT:

____  Other than royalty grants/reservations, all minerals are intact with the surface and are not the subject of any unexpired/producing mineral lease.

____  All owners of outstanding, non-royalty mineral interest, including operating interest under any producing mineral lease, have relinquished surface rights by recorded waiver/nondisturbance agreement or drillsite designation of other land.

____  The insured land lies in the developed area of an incorporated municipality, but not in the immediate vicinity of any current mineral exploration/production, and is currently occupied by multi-tenant apartment, office, or retail buildings/centers. 

____ You obtain underwriter approval to retain Paragraph No. 2(b) in the T-19.1 Endorsement.

           Describe covered mineral interest(s):                                                 

            Approved by:                                                              Date:                                      



Tx 2011001

The Commissioner's order in the 2008 rate case provided for a 2% credit against the basic premium rate for an Owner's Policy of Title Insurance when a general exception for minerals is made. The Commissioner by letter affirmed that the reduction was based on the premium for an owner policy and not on Loan Policies or any endorsements. Recall that the endorsement is issued when you take a general exception to minerals instead of doing a complete mineral search and taking exception to the matters found. The order became effective January 1, 2011.

Our prior bulletin TX2009005 dealing with language in the commitment, the exception language to be used and the specifics of T-19.2 and T-19.3 are unchanged and remain in effect. Specifically, we believe that if you take exception to a specific document(s) that reserves all of the minerals, no credit is applicable and no T-19.2 or T-19.3 endorsements are allowed. If you do take a general exception and the customer insists upon a T-19.2 or T-19.3 or even a T-19 and a T-19.2 or T-19.3, you may issue them. You may insure "surface only" without searching minerals but taking exception to the contract or deed in the current transaction that reserves minerals if the sale contract specifies that the sale is of the surface only.

As of January 1, 2012, the premium for the T-19.2 and T-19.3 approved by the Commissioner in 2009 remains $50 for owner’s policies until the commissioner implements the requirements of  HB 2402 (2011) which amended  Sections 2703.055 and 2703.056 to  provide that title companies may not be forced to insure the mineral estate but may make a general exception and which further prohibits the Insurance Commissioner from imposing  a credit against owner policies.  Additionally Section 2703.0515 prohibits a charge for the T-19.2 or T-19.3 endorsements to Loan Policies.

5.30.3

Defects in Title

• Rule
  
  Rule P-39b allows the title company to expressly insure against defects in title if the risk is acceptable. You should not recite all minor title problems in your Commitment where we are willing to assume the title risk.
• Recent Gaps in Chain
  
  Sometimes we are willing to insure based on use and occupancy affidavits. If we do not have a record chain of title for 35 years or more and we have not previously insured the seller or borrower, describe the adverse interest reflected in the prior chain of title. If we are satisfied by use and occupancy affidavits, then add the express insuring language of P-39 to the Mortgagee Policy.
  
  Example: There is a gap in the chain of title of Lot 2, Sunny Acres. In 1940 there was a deed to Margaret Jones. In 1950 there was a deed from James Doe to Regina Roe. There is no deed from Jones to Roe. We are satisfied that the successors of Regina Roe have title, based on use and occupancy affidavits and on other facts in the transaction. You should except as follows:
  
  “Any adverse right, claim or interest of Margaret Jones and her spouse, if any, or those claiming by, through, or under her or her spouse. Company insures the insured against loss, if any, sustained by the insured under the terms of this policy by reason of a final, nonappealable judgment of a court of competent jurisdiction that divests the insured of its interest as insured because of this right, claim, or interest. Company agrees to provide defense to the insured in accordance with the terms of this policy if suit is brought against the insured to divest the insured of its interest as insured because of said rights to the land.”
• Other Defects
  
  If the customer requests that you provide express insurance against easements, ancient unreleased deeds of trust (apparently paid), restrictions, or other matters, please call a Texas Underwriter.

5.30.4

Liens

• Rule
  
  Rule P-39c allows the title company to expressly insure against liens on the title if we comply with P-11 and if we consider the risk acceptable.
• Prior Liability
  
  If we have prior policy liability to a seller or borrower under an Owner Policy without exception to the lien and Stewart decides to reissue a Policy, we will not expressly insure under this rule. We will follow prior practice: we will issue the new policy without exception and secure a P-11 disclosure letter from the new insured.
• New Liability
  
  If we do not have prior policy liability for a lien, we must decide whether to rely upon an acceptable indemnity from another title insurer, escrow of money (and agreement), indemnity (where allowed by P-11), or bond. If we then decide to assume the risk, we will except to the lien and then add the express insurance language of P-39.
  
  Example: We decide to insure against a mechanic's lien claim based on an indemnity and escrow of funds. We should except to the mechanic's lien affidavit and then add the following:
  
  “Company insures the insured against loss, if any, sustained by the insured under the terms of this policy by reason of a final, nonappealable judgment of a court of competent jurisdiction that orders foreclosure of said lien on the land. Company agrees to provide defense to the insured in accordance with the terms of this policy if suit is brought against the insured to foreclose said lien on the land.”
  
  Example: We decide to insure against a prior deed of trust based on an acceptable indemnity from another title insurer. We should except to the deed of trust and then add the following:
  
  “Company insures the insured against loss, if any, sustained by the insured under the terms of this policy by reason of a foreclosure of said lien on the land. Company agrees to provide defense to the insured in accordance with the terms of this policy if suit is brought against the insured to foreclose said lien on the land and to take action in accordance with the terms of the policy if the holder of the lien commences a foreclosure action based on said lien.”