Texas Title Insurance Premium Rates - Effective February 1, 2007.

Policies        Up To And Including	Basic        Premium	Policies        Up To And Including	Basic        Premium	Policies       Up To And Including	Basic        Premium	Policies         Up To And Including	Basic        Premium
$10,000	$229	$32,500	$383	$55,000	$536	$77,500	$690
10,500	233	33,000	386	55,500	539	78,000	694
11,000	235	33,500	390	56,000	544	78,500	698
11,500	239	34,000	393	56,500	547	79,000	702
12,000	243	34,500	397	57,000	550	79,500	703
12,500	246	35,000	400	57,500	554	80,000	707
13,000	250	35,500	404	58,000	558	80,500	711
13,500	254	36,000	407	58,500	560	81,000	715
14,000	257	36,500	410	59,000	564	81,500	717
14,500	260	37,000	413	59,500	567	82,000	721
15,000	262	37,500	417	60,000	571	82,500	725
15,500	266	38,000	421	60,500	575	83,000	729
16,000	270	38,500	425	61,000	578	83,500	731
16,500	274	39,000	427	61,500	581	84,000	734
17,000	277	39,500	431	62,000	585	84,500	739
17,500	281	40,000	434	62,500	589	85,000	742
18,000	285	40,500	438	63,000	591	85,500	745
18,500	287	41,000	440	63,500	594	86,000	748
19,000	290	41,500	445	64,000	598	86,500	752
19,500	293	42,000	448	64,500	602	87,000	756
20,000	298	42,500	452	65,000	605	87,500	759
20,500	301	43,000	454	65,500	608	88,000	762
21,000	305	43,500	458	66,000	612	88,500	766
21,500	308	44,000	461	66,500	617	89,000	770
22,000	312	44,500	465	67,000	620	89,500	772
22,500	315	45,000	469	67,500	621	90,000	775
23,000	318	45,500	472	68,000	625	90,500	779
23,500	321	46,000	475	68,500	629	91,000	783
24,000	325	46,500	479	69,000	632	91,500	787
24,500	328	47,000	481	69,500	635	92,000	789
25,000	332	47,500	485	70,000	640	92,500	793
25,500	335	48,000	489	70,500	644	93,000	797
26,000	339	48,500	493	71,000	647	93,500	801
26,500	342	49,000	496	71,500	649	94,000	802
27,000	345	49,500	499	72,000	652	94,500	806
27,500	348	50,000	503	72,500	656	95,000	811
28,000	352	50,500	506	73,000	660	95,500	814
28,500	355	51,000	508	73,500	663	96,000	816
29,000	359	51,500	512	74,000	667	96,500	820
29,500	362	52,000	516	74,500	671	97,000	824
30,000	366	52,500	520	75,000	674	97,500	828
30,500	369	53,000	523	75,500	676	98,000	830
31,000	373	53,500	527	76,000	680	98,500	834
31,500	376	54,000	530	76,500	683	99,000	838
32,000	379	54,500	533	77,000	687	99,500	841
						100,000	843

Comment: The premium rates are promulgated by the Commissioner of Insurance pursuant to Article 9.07 of the Texas Insurance Code and may not be deviated form. If the amount is $0.50 or less of a dollar, you should round down to the nearest dollar; if the amount is $0.51 or more of a dollar, you should round up to the nearest dollar.

Premiums shall be calculated as follows for policies in excess of $100,000:

1. For policies of $100,001 - $1,000,000

Basic Premium

(1) Subtract $100,000 from policy amount.

(2) Multiply result in 1.(1) by $.00534 and round to nearest whole dollar.

(3) Add $843 to result in 1.(2).

2. For policies of $1,000,001 - $5,000,000

Basic Premium

(1) Subtract $1,000,000 from policy amount.

(2) Multiply result in 2.(1) by $.00439 and round to nearest whole dollar.

(3) Add $5,649 to result in 2.(2).

3. For policies of $5,000,001 - $15,000,000

Basic Premium

(1) Subtract $5,000,000 from policy amount.

(2) Multiply result in 3.(1) by $.00362 and round to nearest whole dollar.

(3) Add $23,209 to result in 3.(2).

4. For policies of $15,000,001 - $25,000,000

Basic Premium

(1) Subtract $15,000,000 from policy amount.

(2) Multiply result in 4.(1) by $.00257 and round to nearest whole dollar.

(3) Add $59,409 to result in 4.(2).

5. For policies in excess of $25,000,000

Basic Premium

(1) Subtract $25,000,000 from policy amount.

(2) Multiply result in 5.(1) by $.00154 and round to nearest whole dollar.

(3) Add $85,109 to result in 5.(2).

Comment: The premium rates are promulgated by the Commissioner of Insurance pursuant to Article 9.07 of the Texas Insurance Code and may not be deviated form. If the amount is $0.50 or less of a dollar, you should round down to the nearest dollar; if the amount is $0.51 or more of a dollar, you should round up to the nearest dollar.

Exceptions:

None.

Bulletins:

None.

Forms:

None.

R-1. Schedule of Basic Premium Rates.
The Schedule of Basic Premium Rates for Title Insurance shall apply to all policies, unless the same be specified in other applicable Rate Rules.

In no event shall two or more Rate Rules be combined in the calculation of the premium for the subject transaction, unless one Basic Rate on the policy in the largest amount is charged, except as provided for in Rules R-5 and R-14. The Basic Premium Rates for policies include the charge for title insurance, title examination and closing the transaction (see Rate Rules and Definitions in Rule P-1, Section 17.02).

No portion, split or percentage of the premium shall be paid either directly or indirectly for title insurance, title examination or closing the transaction to any person unless there shall have been timely compliance with Rule P-21 and P-22.

Comment: This rule prohibits the combination of rate rules unless the basic rate on the policy in the largest amount is charged. For example, an owner may turn in his or her prior owner policy after adding improvements to the land and receive a credit for the new owner policy under Rate Rule R-3, but may not secure a new simultaneous mortgagee policy under Rate Rule R-5A (for $100) at that time. If a lender secures a mortgagee policy on a refinance under Rule R-8 (refinance credit), the title company may not issue a simultaneous mortgagee policy to a second lien holder under Rule R-7. Rule R-1 provides that the promulgated premium includes “title insurance, title examination, and closing the transaction.” The examination is done solely for the benefit of the title company to determine the insurability of the risk. “Closing the transaction” does not include escrow services. Rule R-1 prohibits payment of a portion of the premium for title examination unless the payment is disclosed on Schedule D of the Commitment (Rule P-21), an invoice and a form T-00 are secured, and (if an attorney is paid) a written schedule of charges is received (at least 30 days before the services).

See Also: 12.12 Mechanic's Liens ;
                  12.26 Mortgagee Policies ;
                  14.12 Owner Policies ;
                  15.52.8 P-8 Issuance of Policies Prior to Completion of Improvements ;
                  17.38 Residential Owner Title Policies .

R-2. Rebates and Discounts.
No Company shall charge for a policy in one transaction and withhold issuance of a policy thereon, nor shall any Company charge a premium for a policy in one transaction and apply in the charged premium in a subsequent transaction, except when same covers identical land to that contained in the initial conveyance, and when same shall have been consented to by the parties to all conveyances involved, which consent may be provided for in the contract(s) on which the transaction is based, or may be given in a separate written instrument, or may be evidenced by the acceptance and signing of a closing statement clearly setting forth application of the premium charge as agreed by the parties to the transaction(s). The phrase ‘one transaction' as used in this rule may include more than one conveyance provided: (i) all grantors and grantees have acknowledged in writing the method of application for premium or premiums to be collected, and (ii) all instruments of conveyance relating to the subject property which is to be insured are unconditionally delivered simultaneously. Each company shall remit the portion of the premium due to the Title Insurance Company no later than the 15th day of the second month following the month in which the premium was collected. The provisions of this rule shall also apply to any escrow officer who remits directly to a title insurance company. No company shall issue or deliver a policy, binder or endorsement for which a premium is prescribed, without collecting the full charge therefore, except as follows:

Comment: A title company may not collect a premium in one transaction and apply it to another transaction except as provided in this “pass through” credit rule. The pass through credit (applying the premium in the first transaction to a subsequent transaction) may be employed if (1) both transactions cover the identical land; (2) all parties consent in writing; and, (3) all conveyances are unconditionally delivered simultaneously (date of execution is not controlling). This rule requires all parties to a transaction originally contemplating an owner policy to acknowledge that the premium payment will be applied to a later transaction covering the same land that is effective on the same day as the initial transaction. The later transaction cannot cover more land or less land than the initial transaction. This rule does not prevent parties from changing their contract to omit a required title policy ( to a middle person, who will then immediately convey to the ultimate purchaser).

This rule also requires timely payment of premium by the title insurance agent to the title insurance company; payment is due on the 15th day of the second month after the month in which the premium is collected.

A title company may not issue a policy, binder or endorsement and bill for future payment; payment must be made at time of issuance or delivery. Delay in the issuance of a mortgagee policy until a later stated date of policy in order to describe and insure an assignment may constitute a rebate by improperly withholding issuance of the policy, according to Bulletin No. 41 (September 6, 1956) by the State Board of Insurance.

a. When a Mortgagee Policy is issued in the manner provided in Rule P-8.b., the premium for the Mortgagee Policy may be paid in installments if the following conditions are met:

(1) The face amount of the policy shall be $5,000,000 or more.

(2) The premium for the Mortgagee Policy shall be determined on the date of issuance thereof. As the loan which is the subject of the policy is disbursed, a fraction of the premium for the policy equal to the fraction of the loan then funded shall be paid and upon payment thereof the amount of the coverage of the Mortgagee Policy shall increase by the amount of such funding.

(3) The down date endorsement procedure described in Rule P-9.b.(4) must be used in connection with such Mortgagee Policy.

If any one of the above conditions is not met with respect to such Mortgagee Policy, the remaining premium due and owing therefor shall be immediately due and payable.

b. When an Owner Policy meets the requirements of paragraph (a) above, and is issued in the manner provided in Rule P-8.a., and is issued simultaneously with a Mortgagee Policy as provided in Rule R-5.B., the amount of coverage of said Owner Policy shall increase in an amount equal to, and contemporaneously with, the increase in the coverage of said Mortgagee Policy.

c. When an Owner Policy is issued in the manner provided in Rule P-8.a., but is not issued simultaneously with a Mortgagee Policy as provided in Rule R-5.B., the premium for the Owner Policy may be paid in installments if the following conditions are met:

(1) The face amount of the policy shall be $5,000,000 or more.

(2) The premium for the Owner Policy shall be determined on the date of issuance there of. The premium for the Owner Policy paid upon issuance thereof shall be the portion of the total premium allocable to the liability under the Owner Policy as shown in the liability paragraph prescribed by Rule P-8.a.(1). As the contemplated improvements which are the subject of the Owner Policy are made, a fraction of the premium for the policy equal to the amount actually expended by the Insured in improvements since the last premium payment date shall be paid periodically and in no event later than completion thereof, and upon payment of said premium fraction the amount of the coverage of the Owner Policy shall increase by the said amount expended in improvements.

(3) The down date endorsement procedure described in Rule P-9.a.(3) must be used in connection with such Owner Policy.

If any one of the above conditions is not met with respect to such Owner Policy, the remaining premium due and owing therefor shall be immediately due and payable.

Comment: This is the “pay as you go” rule. The Owner or Mortgagee Policy (1) must be $5,000,000 or more; (2) must include the P-8 (mechanic's liens and pending disbursement or limited liability) exceptions; and (3) must include a provision (set forth in Rule P-8) limiting liability to the amount disbursed for which premium was paid. The liability for the policy is increased as the corresponding fraction premium is paid at time of issuance of a Down Date Endorsement. This is the only rule that allows installment payment of premium or “pay as you go.” If a mortgagee policy and an owner policy are issued simultaneously under this rule, Rule R-5B also applies and a credit may be given for a prior owner policy issued to the same owner.

Example

• New Owner Policy $6,000,000
• New Mortgage Policy $6,000,000
• Disbursement at Closing $1,000,000
• Total Premium $26,829 (excluding endorsements and tax coverages) for Mortgagee Policy
• Total Premium for Owner Policy $100 (Rule R-5b)
• Premium Paid at Closing $100 for Owner Policy; $4,471.50 for Mortgagee Policy (plus endorsements and tax coverages)
• The Owner Policy includes the following exceptions:

Mechanic's Lien Exception

“Any and all liens arising by reason of unpaid bills or claims for work performed or materials furnished in connection with improvements placed, or to be placed, upon the subject land. However, the Company does insure the Insured against loss, if any, sustained by the Insured under this Policy if such liens have been filed with the County Clerk of ________________ County, Texas, prior to the date hereof.”

Limited Liability Exception

“Liability hereunder at the date hereof is limited to $_______________. Liability shall increase as contemplated improvements are made, so that any loss payable hereunder shall be limited to said sum plus amount actually expended by the Insured in improvements at the time the loss occurs. Any expenditures made for improvements, subsequent to the date of this policy, will be deemed made as of the date of this policy. In no event shall the liability of the Company hereunder exceed the face amount of this policy.

Pay As You Go Provision

“Notwithstanding the foregoing, liability hereunder shall only increase as own-date endorsements are issued pursuant to expenditures made for improvements and as the corresponding fractional premium for the policy and the full premium for the down-date endorsement are paid”.

• The Mortgagee Policy includes the following exceptions:

Mechanic's Lien Exception

“Any and all liens arising by reason of unpaid bills or claims for work performed or materials furnished in connection with improvements placed, or to be placed, upon the subject land. However, the Company does insure the Insured against loss, if any, sustained by the Insured under this Policy if such liens have been filed with the County Clerk of _______________ County, Texas, prior to the date hereof.”

Pending Disbursement Clause

“Pending disbursement of the full proceeds of the loan secured by the lien instrument set forth under Schedule A hereof, this policy insures only to the extent of the amount actually disbursed, but increases as each disbursement is made in good faith and without knowledge of any defects in, or objections to, the title up to the face amount of the policy. Nothing contained in this paragraph shall be construed as limiting any exception under Schedule B, or any printed provision of this policy.”

Pay As You Go Provision

“Notwithstanding the foregoing, liability hereunder shall only increase as down-date endorsements are issued pursuant to construction advances and as the corresponding fractional premium for the policy and the full premium for the down-date endorsement are paid.”

• At the time of the second disbursement for $500,000, the Down Date endorsements may be issued to the owner and the mortgagee, increasing coverage to $1,500,000 at the following premium charges:
  • $50 for Owner's Down Date
  • $50 for Mortgagee's Down Date
  • $2,725 for prorata premium

 

See Also: 1.56 Amount Of Policy ;
                  3.36 Condemnations ;
                  12.12 Mechanic's Liens ; 
                  14.12 Owner Policies ; 
                  15.50 Pro-Forma Policies ;
                  17.38 Residential Owner Title Policies ;
                  20.12 United States Of America Policy Forms .

Bulletins: TX000004 Sales Prior to Completion of Improvements;
                   TX000022 Mechanic's Lien Procedures;
                   TX000044 Commissioner's Order for 1996 Rate Hearing;
                   MU000007 New ALTA 1992 Owner's and Loan Policies;
                   NL000017 Use of Starter Files.

Forms: TX Increased Value Endorsement for Owner Policy T-34 ;
              TX Owner Policy T-1 ;
              TX Owner Policy Schedule A T-1 ;
              TX Owner Policy Schedule B T-1 ; 
              TX Residential Owner Policy T-1R ;
              TX Residential Owner Policy Schedule A T-1R ;
              TX Residential Owner Policy Schedule B T-1R ;
              TX Owner Title Insurance Policy (U.S.A.) T-11 ;
              TX Owner Title Insurance Policy Endorsement (U.S.A.) T-12 .

R-3. Owner Policy.
Owner Policies shall be written to protect the estate or interest in the land, e.g., fee simple, leasehold or easement. Except as otherwise provided in this rule, all Owner Policies shall be issued for the amount of the current sales price of the land and any existing improvements appurtenant thereto, plus, at the option of the insured, the cost of improvements immediately contemplated to be erected thereupon; or, if no sale is being made, all Owner Policies shall be issued for an amount equal to the value of the land and any existing improvements appurtenant thereto, plus, at the option of the insured, the cost of the improvements immediately contemplated to be erected thereupon. In the last instance, such policy is permitted only if the applicable exception and clause provided for in Rule P-8 are placed in the policy. If improvements are subsequently added, a new Owner Policy may be issued in the aggregate amount of the original Owner Policy, plus the cost of improvements. The premium for such policy shall be the Basic Rate less the premium which was paid for the surrendered, original policy.

a. Leasehold: The amount of the Owner Policy covering a leasehold estate shall, at the option of the Insured, be based upon:

(1) the total amount of the rentals payable under the lease contract, or

(2) the value of the land and any existing improvements, or

(3) the value of the land and any existing improvements and the cost of improvements immediately contemplated to be erected thereupon.

In number 3 above, the policy must contain the applicable exception and clause provided for in Rule P-8.

b. Easement: An Owner Policy covering an easement estate shall be written for the amount of the value of the easement at the time the policy is issued.

c. Increased Value Endorsements: When requested by the Insured, and upon compliance with Rule P-9.a.(2), endorsement form T-34 shall be attached to the Owner Policy upon payment of a premium for such endorsement which shall be the Basic Rate computed on the new amount less the premium paid for the Owner Policy and any form T-34 endorsements previously attached thereto, but in no event less than the then applicable minimum policy Basic Premium Rate.”

Comment: The amount of the Owner Policy may be the sales price or value of land. If improvements are contemplated, the Owner Policy may be issued for the sales price and contemplated cost of improvements. If the policy amount includes contemplated improvements, the policy must include a mechanic's lien exception and a limit of liability exception (pursuant to Rule P-8). If the Owner Policy insures a leasehold, the policy amount may be the total amount of the rents (at least the initial term) or the value of the land. The title company will rely on a reasonable estimate of value (e.g., by a broker, tax assessed value, or other credible source) to determine the value of the leasehold.

Rate Rule R-3 allows a title company to issue a new Owner Policy for the original amount of the Owner Policy plus the cost of added improvements. The premium for the new Owner Policy is the basic rate less the premium previously paid. In applying the credit this rule does not require charge of the minimum promulgated rate.

Example

• Owner Policy issued February 1, 2005 to Jones on unimproved land for $50,000 for $520 premium:
• Improvements of $100,000 are added after February 1, 2007
• New Owner Policy is issued for $150,000 on February 1, 2007 (after completion and proof of payment of bills)
• New premium is $590 ($1,110 - $520 credit)
• Old policy is turned in and canceled
• A Mortgagee Policy may not be issued for $100 under Rule R-5A because Rule R-1 prohibits combination of rules.

Rate Rule R-3 does not prohibit the issuance of an Owner Policy to multiple owners. For example, if two affiliates (A and B) acquire adjoining sites, the title company may issue one policy to A and B for the aggregate price. Bulletin No. 120 by the State Board of Insurance (February 21, 1969) (which is critical of the collection of one premium if two separate transactions vest title in separate tracts in the insured) should not apply because of the additional chain charge ($229) that is made (R-9) and because of the instructions of the parties. Similarly, one policy may insure different estate or interests in the land. For example, one policy may name the optionee and the fee simple owner as insureds. One policy may insure the fee simple and an equitable interest to purchase the land and may show the purchaser as the insured. If multiple parties are named as insureds, it is sometimes the practice to identify the insured that will receive payment in the event of loss, unless there is agreement otherwise.

Bulletin No. 154 (April 15, 1991) by the State Board of Insurance prohibits issuance of “preliminary title policies” or “specimen title policies.”

Rate Rule R-3c authorizes issuance of an Increased Value Endorsement (T-34) to the owner policy (see P-9a(2)). The minimum charge is the minimum policy basic premium rate ($229). The endorsement does not down date the policy. As a matter of caution, the title insurance agent should down date the title and secure an affidavit from the owner certifying that the owner is not aware of any claim. The Company will accept reasonable evidence of value to issue this endorsement: assessed value for taxes, broker's estimate of value, approval, cost of improvements, or other credible statement.

Example

• Owner Policy issued February 1, 2005 to Jones on unimproved land in the amount of $25,000 for $343
• Property appreciates to $50,000
• Increased Value Endorsement increases liability to $50,000 on February 1, 2007 (after evidence of value furnished or evidence of cost of improvements furnished)
• New premium is $229 (basic premium for $50,000 is $503, less credit of $343, but this is less than minimum basic premium rate $229)
• A mortgagee policy may not be issued simultaneously for $100 under Rate Rule R-5A

Bulletin No. 152 (July 1, 1980) by the State Board of Insurance states that the date of policy must be the date of recording of the vesting instrument or date of search and examination of title. _____ _____ you may rely upon a starter (such as ____ policy in base) if our requirements are met.

d. Acquisition by the United States of America: Where improvements are located on land acquired by the United States of America and such improvements will be removed or destroyed, at the option of the United States, an Owners Policy (Form T-11) shall be issued for the stated amount of the sales price of the land only, which price shall not include the amount paid for the existing improvements which are to be removed or destroyed.

Comment: Rate Rule R-17 applies to the issuance of a title insurance policy to the USA (T-11). This is not the current ALTA USA Policy (1991). That ALTA policy is not available in Texas. The Texas Policy (T-11) is normally issued before acquisition by the U.S. and the Endorsement USA (T-12) is issued upon acquisition.

See Also: 1.56 Amount Of Policy ;
                  12.26 Mortgagee Policies ;
                  15.50 Pro-Forma Policies .

Bulletins: TX000024 Home Office Issue Policies;
                  MU000007 New ALTA 1992 Owner's and Loan Policies.

Forms: TX Mortgagee Policy T-2 ;
              TX Mortgagee Policy Schedule A T-2 ;
              TX Mortgagee Policy Schedule B T-2 ;
              TX Adjustable Mortgage Loan Endorsement T-33 ;
              TX Partial Release, Release of Additional Collateral, Modification Agreement, Reinstatement Agreement, or   Release from Personal Liability Endorsement T-38 .

R-4. Mortgagee Policy.
All Mortgagee Policies shall be for the amount of the loan(s) insured. When the land covered in the policy represents only part of the security of the loan(s), then the policy shall be written in the amount of the value of such land or the amount of the loan, whichever is the lesser. (See Rule P-8 for additional exceptions.)

When requested by the insured, the policy may be issued in an amount equal to the original principal amount of the indebtedness plus legal interest (capitalized or otherwise) not to exceed twenty-five percent (25%) of the said principal amount. The premium for the policy in such case shall be the Basic Rate for the amount of the policy. A previously issued mortgagee policy insuring an adjustable mortgage loan may, when providing for negative amortization, be reissued (or endorsed), effective as of the date of the original Mortgagee Policy, increasing the face amount of the Mortgagee Policy from the original principal amount of the loan to an amount not to exceed one hundred twenty-five percent (125%) of the original principal amount upon the payment of additional premium calculated as follows: The premium calculated at the Basic Rate (existing on the date of the original Mortgagee Policy) but less the greater of the amount of the premium charged for: (i) the original Mortgagee Policy, or (ii) the Owner Policy, if such original Mortgagee Policy was issued as a simultaneous issue; no credit shall be given for the simultaneous issue premium charge.

Comment: This Rule requires the title company to issue the Mortgagee Policy for the amount of the loan or the value of the land. If the value of the land is less than the amount of the loan, the policy may be issued for the lesser amount. This Rule does not prohibit issuance of a subsequent Mortgagee Policy on a later advance or note. If multiple policies relating to one loan are issued on separate tracts, the policies are sometimes issued for a pro rata amount; in the alternative, a “Home Office” Issue can cover all tracts.

The Mortgagee Policy may be issued in an amount, including interest, not to exceed 25 percent of the principal. There is no additional charge for this amount if the mortgagee policy does not exceed the owner policy. An insured may request that a policy later be reissued or endorsed to increase the policy to an amount not exceeding 125 percent of the original loan. This increase may be requested, for example, if an adjustable mortgage loan is later modified and interest is capitalized. The Company also may issue a T-38 (Modification) Endorsement if a fixed rate loan becomes a variable rate loan and may then issue the Adjustable Mortgage Loan Endorsement (T-33).

According to Bulletin No. 157 (July 31, 1992) of the State Board of Insurance, the policy may expressly state that it inures to successors and assigns by the following language: “ABC Mortgage Company and each successor in ownership of the indebtedness secured by the insured mortgage, except a successor who is an obligor under the provisions of Section 12(c) of the Conditions and Stipulations.” The Mortgagee Policy states in Section 1(e)(i) and Section 12(c) that it does not inure to the benefit of obligors (except government insurers). According to Staff Letter (March 30, 1994) of the Department of Insurance the limitations of Bulletin No. 157 to not apply to FHA, VA or FNMA as a named insured; Bulletin No. 157 applies only to conventional lenders. It is customary under Procedural Rule P-7 to name HUD or VA and their successors and assigns as their interest may appear.

A collateral assignee may be named as an insured on a binder or a Mortgagee Policy. The policy may show the collateral assignor and the collateral assignee “as their interests may appear.” We prefer to except to the collateral assignment in Schedule B and not to describe the assignment in Schedule A. Sometimes a single Mortgagee Policy is requested when multiple mortgagesdeeds of trust (notes) are being collaterally assigned or assigned. While this can be done, a single Mortgagee Policy covering multiple mortgagesdeeds of trust will generally require additional chain charges under R-9 since separate mortgagors own the different tracts of land.

Bulletin No. 154 (April 15, 1991) by the State Board of Insurance prohibits “preliminary title policies” or “specimen policies.”

Bulletin No. 152 (July 1, 1980) by the State Board of Insurance states that the date of policy must be the date of recording of the insured instrument or date of search and examination of title.

See Also: 1.56 Amount Of Policy ;
                  12.12 Mechanic's Liens ;
                  12.26 Mortgagee Policies ;
                  14.12 Owner Policies ;
                  17.38 Residential Owner Title Policies .

Bulletins: TX000004 Sales Prior to Completion of Improvements;
                  TX000022 Mechanic's Lien Procedures;
                  TX000044 Commissioner's Order for 1996 Rate Hearing;
                  NL000017 Use of Starter Files.

Forms: TX Mortgagee Policy T-2 ; 
             TX Mortgagee Policy Schedule A T-2 ;
             TX Mortgagee Policy Schedule B T-2 ;
             TX Owner Policy T-1 ;
             TX Owner Policy Schedule A T-1 ; 
             TX Owner Policy Schedule B T-1 ;
             TX Residential Owner Policy T-1R ;
             TX Residential Owner Policy Schedule A T-1R ;
             TX Residential Owner Policy Schedule B T-1R .

R-5. Simultaneous Issuance of Owner and Mortgagee Policies.
A. Except as otherwise provided in this rule, when an Owner Policy and Mortgagee Policy(ies) are issued simultaneously, bearing the same date, and covering the same land, or a portion thereof, covered by the Owner Policy and covering no other land, the Owner Policy showing the lien(s) as an exception therein, the Owner Policy shall be issued at the Basic Rate, and the premium for the Mortgagee Policy(ies) shall be $100.00 each. Should the amount of the Mortgagee Policy(ies) exceed the amount of the Owner Policy, the Basic Rate shall be charged for the Owner Policy, and the premium for the Mortgagee Policy(ies) shall be at the Basic Rate plus $100.00 for each Mortgagee Policy, less the Basic Rate for the Owner Policy. (In the application of this rule, if an Owner Policy has been previously issued covering the identical property to be covered by the Owner Policy to be issued and provided that the Owner Policy is to be issued in accordance with P-8.a and within four (4) years after the date of the previously issued Owner Policy and that there has been no change in ownership of such property, credit shall be given against the premium of the Owner Policy to be issued for the amount of the premium paid by any party for said previously issued Owner Policy. In no event shall the premium collected for such Owner Policy be less than the regular minimum promulgated rate for an Owner Policy.)

THIS RULE MAY NOT BE APPLIED in connection with the issuance of a series of Mortgagee Policies issued by reason of notes being apportioned to individual units in connection with a master policy covering the aggregate indebtedness, including improvements. Individual Mortgagee Policies must be issued at the Basic Rate.

Comment: Under Rule R-5 A, multiple Mortgagee Policies may be issued simultaneously with the Owner Policy. If the total amount of insurance on the Mortgagee Policies exceeds the amount of the Owner Policy, then we must charge the extra premium for the additional insurance at the basic rate.

Example

• Owner Policy on three lots in same subdivision for $100,000 total
• Premium for Owner Policy is $843
• Three mortgagee policies at $40,000 each or $120,000 is a premium of $407 ($950 plus $300 ($100 for each MTP) less $843 (for the OTP)).  
• Each MTP should bear Rate Code 3255.

An Owner Policy may be reissued within four years after the date of the previous Owner Policy if there has been no change of ownership, if the new Owner Policy covers the identical land, and if the new Owner Policy includes contemplated improvements. The Owner Policy must contain the P-8 (mechanic's lien and limit of liability) exceptions. The Mortgagee Policy may be issued at the simultaneous rate charge. This credit is not available upon the permanent loan closing after the completion of construction. It is only available if the Owner Policy for contemplated improvements is secured while construction is ongoing. Upon the refinance of the construction loan covered by the simultaneously issued Mortgagee Policy, the title insurance company may issue a new Mortgagee Policy under Rule R-18 for the minimum promulgated rate (if the amount of insurance does not increase).

Example

• Owner Policy for $30,000 land purchase issued for $378 premium on January 2, 2005
• Construction loan on February 1, 2007 covered by Mortgagee Policy for $70,000
• New Owner Policy for $100,000 can be issued on February 1, 2007 for $465 ($843 for $100,000 less $378 previously paid for Owner Policy)
• New Mortgagee Policy for $70,000 on February 1, 2007 for $100 simultaneous premium
• New Mortgagee Policy on June 1, 2007 on permanent refinance of $70,000 for $229 premium under R-18.

The Mortgagee Policy may not cover more land than the Owner Policy covers when the Mortgagee Policy is issued under R-5A for the simultaneous charge ($100). However, the Owner Policy may cover not only land being purchased but also land previously owned by the Mortgagor. The amount of the Owner Policy could then be the value of the land already owned and the sales price of the land being purchased.

Example

• Buyer acquires Lot 2 for $50,000 and will secure an Owner Policy for $50,000. Lender advances $50,000 for purchase but also requires mortgage on Lot 1 (nonhomestead) covered by one policy.
• If Owner Policy covers only Lot 2 then owner policy for $50,000 costs (at seller's expense) $503 and Mortgagee Policy for $50,000 on Lots 1 and 2 costs an additional $503 (plus endorsements and tax coverages) because R-5A does not apply.
• If Owner Policy covers both Lots 1 and 2 in total amount of $78,000 (value of Lot 1 is $28,000) with consent of seller, then the owner policy premium is $694 and the Mortgagee Policy premium is $100 (plus endorsements and tax coverage).

Comment: You may rely upon a starter (such as a prior policy or base) requirements are met.

B. When an Owner Policy meeting the requirements of Rule R-2(b) is issued in the manner provided in Rule P-8.a., and is issued simultaneously with a Mortgagee Policy described in Rule R-2(a), bearing the same date, and covering the same land covered by the Mortgagee Policy, or a portion thereof, and covering no other land, the premium for the Owner Policy shall be $100.00. Should the amount of the Owner Policy exceed the amount of the Mortgagee Policy, the premium for the Owner Policy shall be at the Basic Rate plus $100.00 less the Basic Rate (to be paid as provided in Rule R-2(a)) for the Mortgagee Policy. In the application of this rule, if an Owner Policy has been previously issued covering the identical property to be covered by the Owner Policy to be issued and provided there has been no change in ownership of such property, credit shall be given against the premium for the Mortgagee Policy to be issued for the amount of the premium paid for said previously issued Owner Policy.

Comment: Under Rule R-5B a credit may be applied to the Mortgagee Policy for a prior Owner Policy to the mortgagor covering the identical land in the new Owner Policy so long as the Owner Policy does not include land not covered by the Mortgagee Policy. The Mortgagee Policy may include additional land. Unlike the four-year limit set in Rule R-5A, there is no time limit for this credit. There is no requirement that the prior Owner Policy has been by the same title company.

In the application of a credit for a prior owner policy under R-5A and R-5B, the requirement that "there has been no change in ownership "is sometimes construed to mean no change in ownership except that contemplated by the Owner Policy definition of the insured. The Owner Policy includes within the definition of the insured certain changes by operation of law, such as a distribution of corporate assets. If that event has transpired after issuance of the prior Owner Policy, the credit may still be available under R-5 A or R-5 B.

You may rely upon a starter (such as a prior policy or base) requirements are met.

See Also: 12.26 Mortgagee Policies .

Bulletins: NL000017 Use of Starter Files;
                  TX000044 Commissioner's Order for 1996 Rate Hearing.

Forms: TX Mortgagee Policy T-2 ; 
             TX Mortgagee Policy Schedule A T-2 ;
             TX Mortgagee Policy Schedule B T-2 ;
             TX Partial Release, Release of Additional Collateral, Modification Agreement, Reinstatement Agreement, or Release   from Personal Liability Endorsement T-38 .

R-6. Subsequent Issuance of Mortgagee Policy.
a. Subsequent to Owner Policy - When a Mortgagee Policy(ies) is requested, subsequent to the issuance of an Owner Policy which excepted to the Vendor's Lien, the premium shall be one-half the Basic Rate. The lien to be insured must be as originally created, and excepted to in the Owner Policy, and not an extension or rearrangement thereof. Such Mortgagee Policy(ies) shall be issued in the amount of the current unpaid balance of said indebtedness. The Company shall be furnished such evidence as it may require verifying such unpaid balance, that the indebtedness is not in default and that there has been no acceleration of maturity.

THIS RULE MAY NOT BE APPLIED in connection with the issuance of a series of Mortgagee Policies issued by reason of notes being apportioned to individual units in connection with a master policy covering the aggregate indebtedness, including improvements. Individual Mortgagee Policies must be issued at the Basic Rates.

Comment: This Rule applies even if a prior Mortgagee Policy has been issued, covering the same mortgage, so long as an Owner Policy was issued to the mortgagor and the mortgage was a purchase money mortgage excepted in the Owner Policy. The credit may not be given if the mortgage is extended or rearranged; however, this rule allows issuance of a new policy with an effective date prior to any extension or rearrangement. A separate T-38 endorsement may then describe the extension or rearrangement. Both R-6a and R-6b may be available when multiple mortgagesdeeds of trust are being assigned to a single assignee. However, if there are multiple chains, R-9 requires additional chain charges.

b. Subsequent to Mortgagee Policy - When a Mortgagee Policy(ies) is requested, for any reason whatsoever, on a lien already covered by an existing Mortgagee Policy(ies), but not on a renewal or extension thereof, the new policy being in the amount of the current unpaid balance of the indebtedness, the premium for the new policy shall be at the Basic Rate, but a credit for three-tenths (3/10) of said premium may be allowed.

Comment: This Rule applies if a Mortgagee Policy has already been issued insuring the lien. If the lien has been renewed and extended, the credit may be given so long as the Mortgagee Policy has an effective date prior to the extension or rearrangement. A separate T-38 endorsement may then describe the extension or rearrangement. Both R-6a and R-6b may be available when multiple mortgagesdeeds of trust are being assigned to a single assignee. However, if there are multiple chains, R-9 requires additional chain charges.

You may rely upon a starter (such as a prior policy or base) if our underwriting requirements are met.

c. Subsequent to Mortgagee Policy - When an insolvent insurer is placed in permanent receivership by a court of competent jurisdiction and a Mortgagee Policy(ies) is requested on a lien already covered by an existing Mortgagee Policy(ies) of said insolvent insurer, but not on a loan to take up, renew, extend or satisfy an existing lien, the new policy being in the amount of the current unpaid balance of the indebtedness, the premium for the new policy shall be at the basic rate, but a credit for one-half of said premium shall be allowed, unless such credit would reduce the premium to less than the minimum Basic Rate, in which case the rate shall be the minimum Basic Rate. The insured shall surrender the existing Mortgagee Policy(ies) to the Company when placing the order for a new Mortgagee Policy(ies). The date of Policy for the new policy(ies) shall be the same Date of Policy as the existing Mortgagee Policy(ies).

Comment: This is the “Title U.S.A.” rule. This rule contains the only credit provision that requires that the new policy have the same date as the original date of policy. Under R-6a and R-6b the new policy may contain the original date of policy or a subsequent date of policy. Bulletin No. 152 (July 1, 1980) by the State Board of Insurance requires that policies be dated as of date of recording or as of date of a “search and examination.

Effective December 1, 1993, the Texas Title Insurance Guaranty Association and the Receiver for Title USA entered into limited reinsurance agreement with Alamo Title Insurance Company relating to basic title risks on Title USA policies on Texas properties only. Limitations on liability assumed include the following:

1. endorsements cannot be issued;

2. Alamo cannot issue letters of indemnity to another title insurer relating to a Title USA policy;

3. insureds who had knowledge of claims prior to December 1, 1993 cannot made a claim under the contract of assumption; and

4. Alamo does not assume more than $250,000 on any one claim or any one claimant. Certain other risks are not assumed.

See Also: 12.26 Mortgagee Policies .

R-7. Mortgagee Policies Covering First and Subordinate Liens Issued Simultaneously.
When a Mortgagee Policy is issued on a First Lien, and other policy(ies) is issued on Subordinate Lien(s), created in the same transaction, covering the same land or a portion thereof, the premium shall be computed on the total of the combined liens, to which shall be added $5.00 for each additional policy.”

Comment: This rule allows the calculation of premium for multiple Mortgagee Policies by combination of the amount of insurance under both policies. The mortgagesdeeds of trust must be created in the “same transaction.” They must include some (but not solely) identical land.

Example

• First mortgage for $100,000 covers Lots 1 and 2; second mortgage for $100,000 covers Lot 1.
• The separate premium for each policy would be $843 (plus endorsements and tax coverage) or a total of $1,686.
• Under Rule R-7 the premium is $1,382 (premium of $1,377 for $200,000 coverage, plus $5) (plus endorsements and tax coverage).

 

See Also: 12.26 Mortgagee Policies .

Bulletins: TX000014 New Rules Effective October 30, 1992;
                   TX000017 Refinancing Loans on Homestead;
                   TX000030 New Rules and Forms; Effective August 1, 1995;
                   TX000034 (1) Owelty Liens; (2) Federal Tax Liens; (3) Homestead Designations; and (4) Pretended Sites of   Homestead;
                   TX000044 Commissioner's Order for 1996 Rate Hearing;
                   TX000048 Purchase Money and Refinance Issues;
                   MU000018 Title Search Requirements;
                   NL000017 Use of Starter Files.

Forms: TX Mortgagee Policy T-2 ;
             TX Mortgagee Policy Schedule A T-2 ; 
             TX Mortgagee Policy Schedule B T-2 .

R-8. Mortgagee Policy on a Loan to Take Up, Renew, Extend or Satisfy an Existing Lien(s).
On a Mortgagee Policy, issued on a loan to fully take up, renew, extend or satisfy an old mortgage(s) that is already insured by a Mortgagee Policy(ies), the new policy being in the amount of the note of the new mortgage, the premium for the new policy shall be at the Basic Rate, but a credit shall reduce the premium by the following amount:

a. 40% of the premium calculated at the current rate on the written payoff balance of the old mortgage, such renewal occurring within two (2) years from the date of the Mortgagee Policy insuring the old mortgage;

b. 35% of the premium calculated at the current rate on the written payoff balance of the old mortgage, such renewal occurring more than two (2) years but less than three (3) years from the date of the Mortgagee Policy insuring the old mortgage;

c. 30% of the premium calculated at the current rate on the written payoff balance for the old mortgage, such renewal occurring more than three (3) years but less than four (4) years from the date of the Mortgagee Policy insuring the old mortgage;

d. 25% of the premium calculated at the current rate on the written payoff balance of the old mortgage, such renewal occurring more than four (4) years but less than five (5) years from the date of the Mortgagee Policy insuring the old mortgage;

e. 20% of the premium calculated at the current rate on the written payoff balance of the old mortgage, such renewal occurring more than five (5) years but less than six (6) years from the date of the Mortgagee Policy insuring the old mortgage; and

f. 15% of the premium calculated at the current rate on the written payoff balance of the old mortgage, such renewal occurring more than six (6) years but less than seven (7) years from the date of the Mortgagee Policy insuring the old mortgage.

After the lapse of seven (7) years from the date of the Mortgagee Policy insuring the old mortgage, the Basic Rate shall apply.

Where more than one chain of title, as the term 'chain of title' is from time to time defined by the Commissioner, was involved in the issuance of the original policy(ies), and the new policy includes one or more of such additional chains of title involved in the issuance of the original policy(ies), an additional premium charge as established by the Commissioner shall be added for each additional chain of title involved. (See Rule R-9 for definition of "additional chain.")

On Mortgagee Policies, issued on multiple loans to fully take up, renew, extend or satisfy an old mortgage insured by a single Mortgagee Policy, the new policies being in the amount of the new mortgages, the premium for the larger Mortgagee Title Policy shall be at the Basic Rate, but a credit shall be allowed upon the premium as set forth previously in this rule. The premium for the remaining new Mortgagee Title Policy(ies) shall be at the Basic Rate.

The reduction in rate as herein prescribed shall not apply in any case where any additional property not covered by the original policy(ies) is included in the policy to be issued.

In calculation of the credit, the amount of the written payoff balance shall not exceed 100% of the original amount of the old mortgage. In no event shall the premium collected be less than the regular minimum promulgated rate for a Mortgagee Policy.

THIS RULE MAY NOT BE APPLIED in connection with the issuance of a series of Mortgagee Policies issued by reason of notes being apportioned to individual units in connection with a master policy covering the aggregate indebtedness, including improvements. Individual Mortgagee Policies must be issued at the Basic Rate.

Comment: The finance credit is available even if a new title company issues the second policy. You may assume that the refinanced mortgage was insured by a title policy if (1) it has a GF number, (2) it is returned to a title company, or (3) it is a first lien in favor of an institutional lender. This rule requires that the preexisting mortgage be fully taken up, renewed, extended or satisfied. A partial refinance is not subject to a credit under this rule. This rule does not apply if additional land, not covered by a prior Mortgagee Policy, is included in the new policy. However, if multiple mortgagesdeeds of trust are being fully refinanced and these mortgagesdeeds of trust covered different land, the credit is available so long as the current collateral is covered by at least one prior policy. The title company must charge at least the minimum charge ($229). The calculation of the credit is based upon the date of the most recent Mortgagee Policy (not including any endorsements to that policy) insuring the mortgage that is being renewed and extended. Thus, if there have been several refinances and several Mortgagee Policies, the title company should use the most recent policy date for calculation of the refinance credit.  The Date of the Original Indebtedness is the date of the mortgagee policy insuring the existing lien to be refinanced. Refinances on homestead may include "reasonable costs necessary to refinance" debt without becoming home equity loans.

See Also: 13.12 Notice ;
                 17.16 Recording Acts .

Bulletins: MU000018 Title Search Requirements;
                   NL000017 Use of Starter Files;
                   TX000044 Commissioner's Order for 1996 Rate Hearing.

R-9. Additional Chains of Title.
In the event more than one chain of title is involved in the issuance (including determination of insurability of access) of any policy, the Company shall charge the minimum policy Basic Premium Rate for each additional chain. For purpose of applying this rule, contiguous parcels of land in one county shall be treated as one chain, provided record title to the land and record title to the access is vested in one owner at the time application is made. Each noncontiguous parcel having a separate chain shall be treated as a separate chain, except where two or more lots in the same platted subdivision, and having the same plat recording date, belong to the same owner, then such shall be treated as one chain. If the parcels of land lie in more than one county, there are separate chains of title in each county. No additional chain charge may be made for determination of insurability of access to land located within a subdivision, provided: (i) the subdivision is located in only one county, and (ii) the plat of the subdivision has been lawfully approved by an authorized governmental entity, is duly recorded, and the roads shown thereon have been dedicated for public use or for the use of the owners of lots located in the subdivision.

Comment: As stated in R-9, charge the minimum policy Basic Premium Rate for each additional chain. This rule does not apply to binders. The title company may not collect an additional chain charge for access if (1) the land is in a recorded subdivision within one county, the plat is lawfully approved, and the road is dedicated or (2) owned by the owner of the proposed insured land at the time of the application. The title company may not collect an additional chain charge for access if an appurtenant easement already creates access at the time the application is made. If easements are described in Schedule A and exist at the time of the application, an additional chain charge may not be collected for those easements so long as they are contiguous to the fee or leasehold tract. The title company may not charge the additional chain charge if (1) the separate tracts have a common chain during the period of examination, (2) the tracts are contiguous and are vested in one owner at the time of application for title insurance, or (3) the parcels are lots in the same platted subdivision and are owned by one insured at date of policy. Examples of additional chains would include a mortgage policy insuring mortgagesdeeds of trust executed by different owners of multiple tracts.

You may rely upon a starter (such as a prior policy or base) requirements are met.

Example

• Purchaser Smith buys three lots in subdivision 1 and four lots in subdivision 2 covered by one Owner Policy. There is one additional chain charge (Minimum Basic Premium Rate [R-1]) because of the second subdivision property.
• Purchaser Smith buys noncontiguous tracts 1, 2, and 3 covered by one Owner Policy and the parcels had separate ownership during the period of examination. There are two additional chain charges (2 x Basic Premium Rate [R-1]).
  

R-10. Owner Policies - City Subdivision, Acreage Subdivisions, Industrial Tracts.
Where the owner of twenty-five (25) or more unsold vacant city lots, acreage tracts or industrial tracts, all in the same subdivision or development, with a map or plat duly approved by proper statutory authority and recorded in the County Records, contracts with one Company to purchase an Owner Policy from that Company on each and every sale made by said owner, the first Owner Policy shall be issued at the Basic Rate, and the premium for all subsequent policies shall be:

a. City Subdivisions - 25 to 49 lots - One-half of 1% of the sale price of the lot(s) covered thereby, with a minimum of $10.00 per policy. 50 lots or more - One-half of 1% of the sale price of the lot(s) covered thereby, with a minimum of $7.50 per policy.

b. Acreage Subdivisions - Comprised of 100 acres or more - One-half of 1% of the sale price of the tract(s) covered thereby, up to $10,000.00, and one-fourth of 1% of the portion of the sale price above $10,000.00, with a minimum of $15.00 per policy. Where an acreage subdivision is made up of tracts containing less than two acres, such subdivision shall be treated as a City Subdivision in accordance with Rule R-10a.

c. Industrial Tracts - One-half of 1% of the sale price of the tract(s) covered thereby, or one-half of the Basic Rate, whichever is the lesser, with a minimum in either case of $20.00 per policy.

Should the premium in the application of this Rule R-10 exceed the Basic Rate, the Basic Rate shall then apply.

In connection with the above Rule R-10, the simultaneous issue rate for the Mortgagee Policies will not apply.

Comment: This rule is no longer used.

See Also: 5.08 Environmental Laws ;
                 12.24 Mobile And Manufactured Homes ; 
                 12.26 Mortgagee Policies ;
                 12.27 Mortgagee Title Policy Binder On Interim Construction Loan (Interim Construction Binder) .

Bulletins: TX000015 New Forms Effective January 1, 1993;
                   TX000030 New Rules and Forms; Effective August 1, 1995;
                   TX000032 1995 Texas Legislation;
                   TX000037 Home Equity Constitutional Amendment (HJR 31, Proposition 8);
                   TX000040 Home Equity Mortgages; Constitutional Amendment TX000043 Current Home Equity Questions;
                   (HJR 31; Proposition 8) (Effective January 1, 1998);
                    MU000002 Balloon Mortgage Rider.

Forms: TX Assignment of Lien Endorsement T-3 ;
             TX Partial Release, Release of Additional Collateral, Modification Agreement, Reinstatement Agreement, or Release  from Personal Liability Endorsement T-38 ;
             TX Date Down Endorsement for Mortgagee Policy T-3 ;
             TX Date Down Interim Construction Loan Endorsement T-3 ;
             TX Adjustable Mortgage Loan Endorsement T-33 ;
             TX Manufactured Housing Endorsement T-31 ;
             TX Revolving Credit Endorsement T-35 ;
             TX Environmental Protection Lien Endorsement T-36 ;
             TX Balloon Mortgage Endorsement T-39 .

R-11. Mortgagee Policy Endorsement.
Applicable only as provided in Rule P-9.

a. Endorsement issued as provided in Rules P-9b(1) and P-9b(2) - The minimum Basic Premium Rate shall be charged for each Endorsement issued after the date of the original policy. In no event, however, shall such premium exceed 50% of the premium applicable to the original Mortgagee Policy under the Schedule of Basic Rates.

Comment: This rule is the rate rule for the Assignment Endorsement to the Mortgagee Policy. The form is Endorsement Instruction III (T-3). The applicable Procedural Rules are P-9(b)(1) and P-9(b)(2). The endorsement may be issued only to FNMA, GNMA, VA, or HUD on one-to-four family property. The endorsement may be issued to any assignee on commercial property. The premium is the minimum basic premium rate ($229) or 50 percent of the premium for the original mortgagee policy, whichever is less. If the mortgagee policy is $43,000 or less the premium is one-half of the current basic promulgated premium for the mortgagee policy, since that amount is less than $229 Since the endorsement down dates the Mortgagee Policy, you must down date the examination and tax search. This endorsement may be used on a home equity loan.

b. Endorsement issued as provided in Rule P-9b(3) - A premium of $100.00 shall be charged for each Endorsement issued within one year after the date of the original policy. If issued after said one year period, an additional $10.00 shall be charged for each twelve-month period thereafter, or a part thereof. In no event, however, shall such premium exceed 50% of the premium applicable to the original Mortgagee Policy under the Schedule of Basic Rates.

Comment: This rule is the rate rule for the Modification Endorsement (T-38). The Procedural Rule is P-9b(3). The rate is $100 plus $10 for each 12-month period (or part thereof) that has elapsed since one year after the policy was issued. For example, if the policy was issued March 1, 1989 and the endorsement is issued August 8, 1998, the endorsement premium is $190. This endorsement does not down date the policy or insure the modification.

c. Endorsement issued as provided in Rule P-9b(4) - A premium of $50.00 shall be charged for the issuance of each endorsement provided for in Rule P-9b(4).

Comment: This rule is the rate rule for Down Date Endorsements to the Mortgagee Policy and to the Binder. The form for the Down Date to the Binder is Endorsement Instruction VII (T-3). The Form for the Down Date to the Mortgagee Policy is Endorsement Instruction V (T-3). The Procedural Rule for these endorsements is P-9b(4). The rate is $50. If the Down Date is issued on a mortgagee policy made pursuant to Rule R-2 (Pay-as-you-go), then the pro rata premium for the amount of the disbursement must be paid at time of issuance of this endorsement.

d. Endorsement issued as provided in Rule P-9b(6) - A premium of $20.00 shall be charged for the issuance of each endorsement authorized by Rule P-9b(6) except that such additional premium charge shall not be made if an additional premium charge has been made for the Mortgagee Policy (to which the Endorsement is attached) under the second paragraph of Rate Rule R-4.

Comment: This rule is the rate rule for the Adjustable Mortgage Loan Endorsement to the Mortgagee Policy. The Form is the Adjustable Mortgage Loan Endorsement (Form T-33). The Procedural Rule is P-9b(6). The rate is $20. However, if a mortgagee policy is issued for 125 percent of the loan amount under R-4 and a charge is made for that extra policy amount, no charge is made for this endorsement. If the original mortgage does not secure an adjustable mortgage loan and a modification does create an adjustable rate loan, this endorsement may be issued after issuance of the Modification Endorsement (T-38).

e. Endorsement issued as provided in Rule P-9b(7) - A premium of $20.00 shall be charged for the issuance of each endorsement provided for in Rule P-9.b(7).

Comment: This rule is the rate rule for the Manufactured Housing Endorsement to the Mortgagee Policy. The Form is the Manufactured Housing Endorsement (Form T-31). The Procedural Rule is P-9b(7). The rate is $20. You must verify that the home is permanently attached to the land, that the title is canceled, and that all liens on the title are paid before issuing this endorsement. If the home is attached to the land on or after January 1, 1996, we must secure and record a certificate of attachment issued by the Texas Department of Housing and Community Affairs.

f. Endorsement issued as provided in Rule P-9b(8) - A premium of $50.00 shall be charged for the issuance of each endorsement provided for in Rule P-9b(8).

Comment: This rule is the rate rule for the Revolving Credit Endorsement to the Mortgagee Policy. The Form is the Revolving Credit Endorsement (form T-35). The Procedural Rule is P-9b(8). The rate is $50. The Deed of Trust must refer to the credit agreement or revolving credit note. The Deed of Trust must state the maximum advances, the loan agreement must have a specific time limit for advances, and the collateral must not be homestead. This endorsement may not be used on a home equity loan.

g. Endorsement issued as provided in Rule P-9b(9) - A premium of $50.00 shall be charged for the issuance of each endorsement provided for in Rule P-9b(9).

Comment: This rule is the rate rule for the Environmental Protection Lien Endorsement to the Mortgagee Policy. The Form is the Environmental Protection Lien Endorsement (Form T-36). The Procedural Rule is P-9b(9). The rate is $50. This endorsement may be issued on primarily residential real estate, which includes residential real property (as defined in Rule P-1u), condominiums, apartment complexes, and residences on 25 acres or less. The current statutory exceptions in paragraph (b) of our endorsement have been approved by FNMA. The endorsement may not be issued on an Owner Policy.

h. Endorsement issued as provided in Rule P-9b(10) - A premium of $25.00 shall be charged for the issuance of the endorsement provided for in Rule P-9b(10) if the endorsement is issued at the time of the issuance of the mortgagee policy. A premium of $50.00 shall be charged for the issuance of the endorsement provided for in Rule P-9b(10) if the endorsement is issued subsequent to the issuance of the mortgagee policy.

Comment: This rule is the rate rule for the Balloon Mortgage Endorsement. The form is the Balloon Mortgage Endorsement (Form T-39). The Procedural Rule is P-9b(10). The rate is $25 if issued at date of policy or $50 if issued after date of policy. The endorsement may be issued only on residential real property (as defined in Rule P-1u) insuring a lien with a balloon rider. This endorsement may not be used on a home equity mortgage.

See Also: 3.28 Commitments ;
                 3.36 Condemnations .

Bulletins:TX000009 House Bill 2; 
                 TX000012 New TREC Contracts;
                 TX000015 New Forms Effective January 1, 1993;
                 TX000028 Disclosures: Texas Residential Owner Policy of Title Insurance;
                 TX000032 1995 Texas Legislation;
                 TX000037 Home Equity Constitutional Amendment (HJR 31, Proposition 8);
                 TX000040 Home Equity Mortgages; Constitutional Amendment TX000043 Current Home Equity Questions.

Forms: TX Title Company Disclosure for Residential Closings 1995 ;
             TX Commitment T-7 ;
             TX Limited Pre-Foreclosure Policy T-40 ;
             TX Standard Commitment Transmittal Letter 1992 .

R-12. Commitment for Title Insurance.
Applicable only as provided in Rule P-18 - The Commitment for Title Insurance shall bear no premium in addition to the premium chargeable for the policy or policies issued pursuant thereto, except that this Rule R-12 shall not apply to any commitment for title insurance issued pursuant to Rate Rule R-23, or Rate Rule R-25. You may not issue a commitment if you will issue a Limited Pre-Foreclosure Policy (T-40).

Comment: The commitment is effective for 90 days. It bears no premium unless issued to (1) FDIC where no contract is pending to sell the land (for $402 under Rules R-25 and P-15) or (2) the Texas Department of Transportation for $200 (pursuant to Rule R-23). Bulletin No. 133 (May 10, 1971) by the State Board of Insurance prohibits a cancellation fee.

See Also: 12.27 Mortgagee Title Policy Binder On Interim Construction Loan (Interim Construction Binder) .

Bulletins: TX000015 New Forms Effective January 1, 1993;
                   TX000037 Home Equity Constitutional Amendment (HJR 31, Proposition 8);
                   TX000040 Home Equity Mortgages; Constitutional Amendment TX000043 Current Home Equity Questions.

Forms: TX Mortgagee's Title Policy Binder on Interim Construction Loan Schedule A T-13 ;
             TX Mortgagee's Title Policy Binder on Interim Construction Loan Schedule B T-13 ;
             TX Mortgagee's Title Policy Binder on Interim Construction Loan Schedule C T-13 ;
             TX Mortgagee's Title Policy Binder on Interim Construction Loan T-13 .

R-13. Mortgagee Title Policy Binder on Interim Construction Loan.
A. Applicable only as provided in Rule P-16 - A premium charge of an amount equal to the minimum policy Basic Premium Rate shall be made for issuance of each Mortgagee Title Policy Binder on Interim Construction Loan. Such Binder shall be issued for a term of one year. The original Binder may be extended for six (6) additional consecutive periods of six (6) months each, not to exceed thirty-six (36) months. A premium of $25.00 shall be charged for each consecutive six (6) month extension.

B. Upon subsequent issuance of:

(1) a Mortgagee Policy on a loan to fully take up, renew, extend or satisfy a lien already covered by a Mortgagee Title Policy Binder on Interim Construction Loan, or

(2) an Owner's Policy on the sale of a property which is encumbered by a lien covered by a Mortgagee Title Policy Binder on Interim Construction Loan and which lien against the conveyed property is released prior to or simultaneous with the sale, the premium for the new policy shall be at the basic rate, but a credit for the premium paid for the Binder shall be allowed to the purchaser of the Owner's Policy as follows:

Fifty percent (50%) of the premium paid for the Binder (exclusive of extensions), if the subsequent policy is issued within one (1) year from the date of the original Binder.

Where more than one Policy may be issued on a portion of the property covered by the Binder, only one credit shall be allowed, being on the first Policy issued.

This rule shall not apply to any Binder issued prior to March 1, 1989, in which case, no credit is allowed.

Notwithstanding the provision in Rate Rule R-1, it shall be permissible to combine this rule with Rate Rule R-5 in the calculation of the premium for a Policy. In no event shall the premium collected be less than the regular minimum promulgated rate for a Mortgagee Policy.

The fifty percent (50%) credit shall not apply if the Binder covers real property which is being improved for improvements other than one to four residential units.

Comment: The Binder (Form T-13) is effective for one year. The Procedural Rule is Rule P-16. The rate is $229 (plus charge for the rollback tax endorsement and tax coverage). Rule P-16 authorizes issuance of the Binder in connection with the “immediate construction of improvements.” Bulletin No. 136 (May 2, 1972) by the State Board of Insurance is critical of issuance of a Binder on a development loan. Please call our underwriting personnel if you are requested to issue a Binder in such case. The Binder may be extended by no more than six extension endorsements for six months each. These endorsements do not down date coverage. The charge for these endorsements is $25 each. The Extension Endorsement is Endorsement Instruction I (Form T-3). Rule R-13 does not prohibit the issuance of a second Binder during construction in order to describe an assignment or modification (the assignment and modification endorsements may not be issued with a Binder). A new Binder also may be issued to cover additional land. This rule provides a 50 percent credit ($139 if the Binder was issued before August 1, 1998; $135 if the Binder was issued on or after August 1, 1998) for the prior Binder upon issuance of an owner policy to the purchaser of an improved one-to-four family residence or upon the issuance of a mortgagee policy on a complete refinance on a one-to-four family residence. The credit is available only if the policy is issued within one year after the date of the Binder. The Binder does not commit to insure priority of the mortgage over mechanic's liens.

See Also:6.26 Foreclosures - Deed Of Trust .

Bulletins: NL000023 Insuring Purchasers at Foreclosure;
                  NL000034 Durrett Revisited;
                  NL000049 HUD Nonjudicial Mortgage Foreclosure; 
                  NL000053 HUD Single-Family Foreclosure Act of 1994 (12 U.S.C. 3751, et seq.).

Forms: TX Limited Pre-Foreclosure Policy T-40 .

R-14. Foreclosed Properties.
When the owner of the property has acquired same directly through foreclosure under a mortgage insured by a Mortgagee Policy, or the Secretary of Housing and Urban Development or the Administrator of Veteran's Affairs, or as their names may be changed from time to time, has acquired said property by reason of its guarantee or endorsement of a mortgage insured by a Mortgagee Policy, and is selling same, an Owner Policy may be issued on said sale, or a Mortgagee Policy may be issued on a lien being retained in the deed conveying said property. If only an Owner Policy is issued, the charge therefore shall be at the Basic Rate on the full amount of the consideration of said sale. If only a Mortgagee Policy is issued, the Basic Rate on the full amount of the lien shall be charged. In either case, the credit of $15.00 on the entire transaction shall be allowed. In the event an Owner Policy and a Mortgagee Policy are issued simultaneously on a transaction as provided in Rule R-5, the simultaneous issue rate, as well as the credit allowed by this rule, shall apply. The $15.00 credit allowed by this rule shall not apply until the issuing Company is furnished the following:

a. At the time the policy or policies are ordered, the seller will transmit to the Company, for its examination and use, such evidence as is available in the seller's files, including the Mortgagee Policy covering the lien foreclosed, showing title vested in such seller. This title evidence must be retained in the files of the Company for future reference in the event a claim arises under the indemnity agreement set forth in paragraph ‘b' hereof.

b. The seller of the property must convey by General Warranty Deed, or agree to save harmless and indemnify the Company for losses the Company may sustain as a result of any of the following:

(1) Defects, liens or encumbrances of title created prior to the date of recording of the deed conveying title to said seller, and not shown as exceptions to title in the title evidence furnished to the Company by said seller.

(2) Unfiled mechanic's and/or materialmen's liens.

(3) Rights of parties in possession.

c. The seller will not be required to indemnify the Company for errors and omissions previously made in policies previously issued by that Company.

Comment: This rule is rarely used because it requires an indemnity or General Warranty Deed from VA or HUD or a purchaser at foreclosure sale in order to give the credit of $15. It is possible to provide this credit on many resales by the bidders at foreclosure provided (1) the foreclosed mortgage was insured by a policy which is furnished to the title company and (2) the bidder gives the title company a general warranty deed or indemnity for all matters arising before the deed to the seller and for mechanic's liens and parties in possession. Given the requirements of the indemnity, the credit will be given only if the seller provides a general warranty deed and copy of a prior policy. This rule can apply to any foreclosure. Pursuant to Rule R-26, no credit is available for issuance of, or based on a prior issuance of, a Limited Pre-Foreclosure Policy T-40.

See Also: 14.12 Owner Policies ;
                  17.38 Residential Owner Title Policies .

Bulletins: TX000015 New Forms Effective January 1, 1993;
                   TX000044 Commissioner's Order for 1996 Rate Hearing.

Forms: TX Date Down Endorsement for Owner Policy T-3 ;
             TX Limited Pre-Foreclosure Policy T-40 .

R-15. Owner Policy Endorsement.
Applicable only as provided in Rule P-9.a.(3) - A premium of $50.00 shall be charged for the issuance of each endorsement provided for in Procedural Rule P-9.a.(3).

Comment: This rule is the rate rule for the Down Date Endorsement to the Owner Policy. The Form for the Down Date is Endorsement Instruction VIII (Form T-3). The Procedural Rule is P-9a(3). The rate is $50. If the Down Date is issued on an Owner Policy made pursuant to Rule R-2 (“Pay-as-you-go”), then the pro rata premium for the amount of disbursement or expenditure must be paid at time of issuance of this endorsement.

See Also: 12.26 Mortgagee Policies ;
                  14.12 Owner Policies ;
                  17.38 Residential Owner Title Policies ;
                  18.40 Surveys .

Bulletins: TX000030 New Rules and Forms; Effective August 1, 1995.

R-16. Amendment of Exception to Area and Boundaries.
Applicable only as provided in Rules P-2 and P-8.a(2) - the Exception as to area and boundaries, etc., may be amended in an Owner or Mortgagee Policy upon the payment of an additional premium (in the case only of an Owner Policy) therefor equivalent to 15% of the Basic Rate, with a minimum premium of $20.00.

Comment: Rule P-2 defines the requirements for a “current survey” sufficient to amend the area and boundaries exception to state only “shortages in area.” There is no charge to amend the area and boundaries exception on the Binder or on the Mortgagee Policy. The rate on the owner policy is 15 percent of the basic rate for the policy amount (not 15 percent of the actual premium if the Owner Policy is issued pursuant a credit under R-3, R-5, or otherwise).

See Also: 3.36 Condemnations ;
                 20.12 United States Of America Policy Forms .

Forms: TX Certificate of Title for Easements (U.S.A.) T-9 ;
             TX Certificate of Title T-6 ; 
             TX Owner Title Insurance Policy (U.S.A.) T-11 ;
             TX Owner Title Insurance Policy Endorsement (U.S.A.) T-12 .

R-17. Policy Forms for use by United States Government.
Certificate of Title (U.S.A.), Certificate of Title for Easement (U.S.A.) and Policy of Title Insurance (U.S.A.) may be issued to the United States of America showing the condition of title to a tract of land prior to the acquisition of title to said land by the U.S.A. in an amount to be designated by the U.S.A. The premium for said policies shall be at the Basic Rate.

Upon acquisition of title by the U.S.A., a final Certificate of Title, or an Endorsement to the Owner Policy, may be issued to the U.S.A., and the premium therefor shall be at the Basic Rate, and subject to the provisions of Rule R-3, less the premium which was paid for the Certificate of Title or Policy of Title Insurance, prior to the acquisition by the U.S.A..

Policy of Title Insurance (U.S.A.), Form T-11, may be issued in favor of the United States Postal Service upon its acquisition of title to properties with the addition of the following paragraph 9 to the conditions and stipulations:

“9. In the event that the interests of the United States Postal Service with respect to the land referred to in this policy are not represented by the Attorney General of the United States at the time any election, notice, request, permission, cooperation, assistance, or statement is required or permitted by these conditions and stipulations, then such election, notice, request, permission, cooperation, assistance or statement, as so required or permitted, and otherwise conforming hereto, shall be given or furnished by or to the United States Postal Service.”

Such policy forms shall also have stricken therefrom in all places the name “United States of America” and have substituted in lieu thereof the name “United States Postal Service.”

Comment: The forms issued to the U.S. are:

(1) Certificate of Title (USA) (Form T-6). The Procedural Rule is R-17. The form may be issued to the U.S.A. before acquisition of title in an amount designated by the U.S.A. Upon acquisition of title, a final certificate is issued to the U.S.A. The rate under R-17 is the basic rate for the initial certificate. The final certificate is the basic rate less the prior rate paid.

(2) Certificate of Title for Easement (U.S.A.) (Form T-9). The Procedural Rule is R-17. The form may be issued before acquisition of the easement in an amount designated by the U.S.A. Upon acquisition of the easement, a Final Certificate of Title for Easement (U.S.A.) is issued to the U.S.A. The rate under R-17 is the basic rate for the initial certificate. The Final Certificate is the basic rate less the prior rate paid.

(3) Owner Title Insurance Policy U.S.A. T-11. The Procedural Rule is R-17. The form may be issued to the U.S.A. before acquisition of the title or interest in an amount designated by the U.S.A. Upon acquisition of the title or interest, an endorsement (U.S.A.) (Form T-12) is issued to the U.S.A. The rate under R-17 is the basic rate for the Policy (T-11). The endorsement is the basic rate less the prior rate paid.

If a Policy is issued to the U.S. Postal Service, then additional paragraph 9 is added to the policy (Form T-11) and the Postal Service is substituted for the U.S.A. The ALTA U.S. Policy (1995) is not available in Texas.

See Also: 12.12 Mechanic's Liens ;
                  12.26 Mortgagee Policies .

Bulletins: TX000004 Sales Prior to Completion of Improvements;
                   TX000022 Mechanic's Lien Procedures.

R-18. Creation of New Loan Contemplated by Construction Lender.
When a Mortgagee Policy has been issued insuring the lien of a construction loan to be fully taken up, renewed, extended or satisfied by a new loan, the premium on the Mortgagee Policy insuring the lien of the new loan shall be at the currently promulgated minimum policy Basic Premium Rate; provided; however, if the Mortgagee Policy insuring the lien of the new loan is in an amount in excess of the amount of the Mortgagee Policy insuring the lien of the construction loan, the premium shall be equal to the greater of (i) the currently promulgated minimum policy Basic Premium Rate, or (ii) the excess of the currently promulgated Basic Premium Rate on the amount of the Mortgagee Policy insuring the lien of the new loan less the currently promulgated Basic Premium Rate on the amount of the Mortgagee Policy insuring the lien of the construction loan.

Comment: This rule provides a credit on a loan to fully (not partially) take up, renew, extend, or satisfy a construction loan. If the new policy is not greater than the prior policy, the premium is the minimum basic premium rate ($229). The prior policy must contain the P-8 (mechanic's liens and pending disbursement clause) exceptions. The new policy may continue to be made in whole or in part for construction and may continue to have the P-8 exceptions, if applicable. There is no time limit for this credit. The title insurance agent must determine that all bills for labor and material have been paid before issuing a policy under this rule if the new policy does not contain the P-8 exceptions.

See Also: 12.26 Mortgagee Policies ;
                  12.27 Mortgagee Title Policy Binder On Interim Construction Loan (Interim Construction Binder) ;
                  19.04 Taxes And Assessments .

Bulletins: TX000015 New Forms Effective January 1, 1993;
                   TX000033 Rollback Taxes;
                   TX000035 Tax Abatement (Chapter 312, Texas Tax Code);
                   TX000037 Home Equity Constitutional Amendment (HJR 31, Proposition 8);
                   TX000040 Home Equity Mortgages; Constitutional Amendment TX000043 Current Home Equity Questions;
                   NL000017 Use of Starter Files.

Forms:TX Equity Loan Mortgage Endorsement T-42 ; 
            TX Tax Deletion Endorsement T-30 .

R-19. Amendment of or Endorsement Amending Exception in Mortgagee Policy or Mortgagee Title Policy Binder on Interim Construction Loan (Interim Binder).
Applicable as provided in Rule P-20. A Mortgagee Policy or Mortgagee Title Policy Binder on Interim Construction Loan (Interim Binder) may be amended in accordance with Rule P-20 upon the payment of an additional premium of $20.00. This rate rule shall be applicable to any Interim Binder currently effective but shall be applicable only to Mortgagee Policies issued from and after July 24, 1980. A separate charge of $20.00 shall be made for any such amendment to or endorsement of a Mortgagee Policy issued subsequent to the issuance of an Interim Binder and no credit shall be given for any such amendment or endorsement to any prior Interim Binder.

Comment: This rule is the rate rule for deletion of the rollback tax language of the tax exception on the Mortgagee Policy or Binder. The rollback language may not be deleted from the Owner Policy. If a separate endorsement is used, the form is Tax Deletion Endorsement (Form T-30). The Procedural Rule is P-20. The rate is $20. The endorsement may be issued if the land is not potentially subject to rollback taxes (special use valuation) or if underwriting personnel of the company authorize the deletion. If the improvements are subject to tax abatement pursuant to an agreement by the taxing authority, you must except to the tax abatement agreement.

Bulletin No. 153 (April 14, 1988) by the State Board of Insurance prohibits title companies from escrowing funds to “delete” the standard tax exception when the taxes are not yet paid and the tax rolls are not certified. However, title companies are not prohibited from escrowing funds where taxes are now due and payable and may have been paid by the lender, seller, or a tax service. In that case, the title company may hold the funds until satisfied that the taxes have in fact been paid or until such time as the title company is authorized by the agreement to pay the taxes.

If the land is subject to agricultural assessment on a home equity mortgage, you must delete paragraph 2(b) of the Equity Loan Mortgage Endorsement (T-42) unless our requirements are met.

See Also: 12.12 Mechanic's Liens ;
                  14.12 Owner Policies .

Bulletins: TX000004 Sales Prior to Completion of Improvements;
                   TX000022 Mechanic's Lien Procedures.

Forms: TX Owner Policy T-1 ;
             TX Owner Policy Schedule A T-1 ;
             TX Owner Policy Schedule B T-1 ;
             TX Final Affidavit and Agreement 1 ;
             TX Final Affidavit and Agreement 2 ;
             TX Indemnity Agreement 1 ;
             TX Affidavit and Indemnity as to Debts, Liens and Possession 1993 .

R-20. Owner Policy after Construction Period.
When an Owner Policy has been issued in the manner provided in Rule P-8.A. with a face amount of $5,000,000 or more and the premium for said Owner Policy has been paid in full, upon completion of the improvements on the property covered thereby, the owner's acceptance thereof, and satisfactory evidence to the Company that all bills for labor and materials have been paid in full, an Owner Policy may be issued by the Company which issued the previously issued Owner Policy, at any time up to one year after such completion of improvements, covering the same land, or a portion thereof, covered by said Owner Policy and covering no other land, and the premium for the new Owner Policy shall be the currently promulgated minimum policy Basic Premium Rate. Should the amount of the new Owner Policy exceed the amount of the previously issued Owner Policy, the premium for the new Owner Policy shall be at (i) the Basic Rate plus (ii) the currently promulgated minimum policy Basic Premium Rate less (iii) the currently promulgated premium for the previously issued Owner Policy or, in the event the previously issued Owner Policy was issued for a simultaneous issue rate under Rule R-5B, the currently promulgated premium for the Mortgagee Policy referred to in said Rule R-5B.

Comment: This rule provides a credit on a new Owner Policy if a prior Owner Policy was issued (1) for $5 million or more, (2) with the P-8 exceptions, and (3) included the value of contemplated construction. New owner policies may be issued pursuant to this rule within one year after completion (which may be substantially more than 1 year after policy date). The new owner policy must be issued by the same title company. The new policy may not cover additional land, but may cover less land. The new policy may be issued to an original investor or a new purchaser not associated with the original insured entity during construction or permanent financing. Rule R-20 contemplates, but is not limited to, financing vehicles other than long term permanent loans. Those financing methods include sale leaseback and syndication of partnership and limited partnership interests in the owning entity. The Rule does not limit the type of insured that may be issued the new Owner Policy after completion of construction. The express terms of the Rule allow the issuance of the Owner Policy to an unrelated party and to a newly structured entity. The simultaneous issue Rule (R-5) for a $100 Mortgagee Policy may not be used if this rule is used because of the prohibition in Rate Rule R-1 against combination of rate rules. You may rely on a starter (such as a prior policy) in your examination if our requirements are met.

See Also: 11.04 Leasehold Insurance ;
                  14.12 Owner Policies ;
                  17.38 Residential Owner Title Policies .

Forms: TX Owner Policy T-1 ; 
             TX Owner Policy Schedule A T-1 ;
             TX Owner Policy Schedule B T-1 ;
             TX Residential Owner Policy T-1R ;
             TX Residential Owner Policy Schedule A T-1R ;
             TX Residential Owner Policy Schedule B T-1R .

R-21. Multiple Owner Policies on Same Land.
Upon request when two or more owner policies (excluding owner policies covering leasehold estates) covering the same land and covering no other land are issued simultaneously to different insureds who are the grantor(s) (or seller(s)) and grantee(s) (or purchaser(s)) in the transaction pursuant to which policies are to be issued (e.g., a buyer and a seller or a fee estate and easement on the fee), a separate policy shall be issued to all grantors (or sellers) and all grantee(s) (or purchasers) in accordance with Rate Rule R-3. The rate for the first policy issued shall be the Basic Rate and the rate for the next policy(ies) shall be 30% of the basic premium for such amount for each policy(ies) issued. Should the aggregate amount of the next policy(ies) exceed the amount of the first policy, the premium for the next policy(ies) shall be at the basic rate plus 30% of the basic premium for the first policy, less the Basic Rate for the first policy. In no event shall the charge for any policy issued pursuant to this rule be less than the minimum promulgated rate.

Comment: This rule is the rate rule for issuance of two or more owner policies simultaneously. The charge for the second (and any additional policies) is 30 percent of the basic rate (but no less than $229) The Owner Policies must be issued simultaneously and must cover the same land. This Rule is designed to issue an Owner Policy to the seller that might be liable by reason of covenants of title. If warranty liability is the seller's concern, the seller should secure a policy if the seller executes a general warranty deed. Matters covered by a special warranty deed would generally be excluded from the coverage of the policy. This rule also applies if a sublessor and sublessee desire simultaneous policies. The Rule also applies to an Owner Policy covering the fee and a simultaneous Owner Policy covering an easement. By the express terms of the Rule, it may apply to flip transactions if simultaneous owner policies are issued. Since a basic rate is charged for the larger (or largest) owner policy, mortgagee policies may be issued for $100 pursuant to Rule R-5 A.

Example

• Seller sells land to Buyer for $50,000. Buyer secures a loan for $70,000, including $50,000, for construction of improvements. Buyer wants an owner policy for $100,000 and a mortgagee policy for $70,000 and seller wants an owner policy for $50,000.
• Cost of the Buyer's Owner Policy for $100,000 is $843.
• Cost of the Seller's Owner Policy for $50,000 is $229 (30 percent of $503 for a $50,000 policy or $151 is less than the minimum rate; therefore, the minimum rate is charged).
• Cost of the mortgagee policy is $100.
  

 

See Also: 1.56 Amount Of Policy ;
                 11.04 Leasehold Insurance ;
                 14.12 Owner Policies ;
                 17.38 Residential Owner Title Policies .

Forms: TX Leasehold Owner Policy Endorsement T-4 ; 
             TX Residential Leasehold Endorsement T-4R ;
             TX Owner Policy T-1 ;
             TX Owner Policy Schedule A T-1 ;
             TX Owner Policy Schedule B T-1 ; 
             TX Residential Owner Policy T-1R ;
             TX Residential Owner Policy Schedule A T-1R ;
             TX Residential Owner Policy Schedule B T-1R .

R-22. Owner and Leasehold Policies.
Upon request when an owner policy (‘Owner Policy') insuring fee simple and an owner policy insuring a leasehold estate (‘Leasehold Owner Policy') wherein the leasehold owner policy or policies issued cover part or all of the land insured in the owner policy and cover no other land and the owner policy bears the same date as and specifically excepts to the leases creating the estates insured in each leasehold policy issued pursuant to this regulation, in amounts as required by Rate Rule R-3, the rate for the owner policy shall be the basic rate. The rate for each leasehold policy so simultaneously issued will be thirty (30%) percent of the rate for the owner policy up to the amount of the owner policy. The rate on the aggregate amount of any leasehold policy (or combined amount of all leasehold policies if more than one is issued) exceeding the owner policy shall be the difference between the basic premium rates of the owner policy and the basic premium rate for the leasehold policies (or combined amount of all leasehold policies if more than one is issued). In no event shall the charge for any policy issued pursuant to this rule be less than the minimum promulgated rate.

Comment: This rule is the rate rule for simultaneous issuance of an Owner Policy insuring a leasehold and an Owner Policy insuring the fee. The premium for the owner policy on the fee is the basic rate; the premium on the leasehold policy is 30 percent of the basic rate (no less than $229) if a simultaneous Owner Policy insures the fee covering the same or more land. Simultaneous mortgagee policies may be issued at $100 each under R-5A covering the same estates. This rule may apply if multiple leasehold policies are issued. The owner policies are not required to cover the same land so long as the leasehold policy covers no more land than the fee owner policy. Each policy must be issued for the amount provided under R-3.

Example

• Owner Policy on fee for $100,000
• Owner Policy on ground lease for $50,000
• Owner Policy on sublease for $100,000
• Mortgagee Policy on sublease for $100,000
• Premium charge is:
  • $843 for Owner Policy on fee
  • $100 for Mortgagee Policy
  • $520 total premium for leasehold and sublease owner policies ($1,110 for $150,000 plus 30 percent of $100,000 premium [.3 x $843 = $253] minus $843 [premium for fee policy].
    

See Also: 3.28 Commitments ;
                 3.36 Condemnations .

Bulletins: TX000030 New Rules and Forms; Effective August 1, 1995.

R-23. Commitment Fee.
Applicable only as provided in Rule P-14b. A premium charge of $200.00 shall be made for issuance of each Owner Title Policy Commitment or Owner Title Policy Commitment for eminent domain proceedings to the Texas Department of Transportation. A credit of $200.00 shall be given upon issuance of an Owner Title Policy to the Texas Department of Transportation by the company which issued the previously issued commitment. No credit shall be allowed if title is not conveyed within thirty-six (36) months from the date of the original Commitment.

Comment: Generally, there is no charge for the issuance of a commitment. Because of the extra costs for issuing commitments to the Texas Department of Transportation, this Rule requires a $200 charge for the commitment but provides a 100 percent credit if a policy is issued to the Department of Transportation within 36 months after date of the original commitment.

See Also: 12.26 Mortgagee Policies ;
                  12.27 Mortgagee Title Policy Binder on Interim Construction Loan (Interim Construction Binder) ;
                  19.04 Taxes And Assessments .

Forms: TX Mortgagee's Title Policy Binder on Interim Construction Loan Schedule B T-13 ;
             TX Mortgagee Policy Schedule B T-2 .

R-24. Applicable Only as Provided in Procedural Rule P-29.
A premium of $5.00 shall be charged for addition of the language ‘Company insures that standby fees, taxes and assessments by any taxing authority for the year ______ are not yet due and payable.

Comment: The title company may insure that taxes are not yet due and payable on a Mortgagee Policy or binder. The Company may not provide such insurance on the Owner Policy. If tax bills are not yet mailed, Staff Letter (October 4, 1993) by the Texas Department of Insurance states that the taxes are not yet due and payable and that this coverage may be given. According to that letter, the Company may still provide affirmative insurance after October 1 if tax bills are not yet mailed. The title company may insure that taxes of certain taxing authorities are not due yet due and payable where applicable (e.g., substitute a named taxing authority for “any taxing authority”). If the current year's taxes have been paid, prior oral Department of Insurance staff opinion stated that the company may provide insurance that the subsequent year's taxes are not yet due and payable.

See Also:3.28 Commitments .

Bulletins: TX000015 New Forms Effective January 1, 1993;
                  TX000021 New Texas Legislation.

Forms: TX Commitment T-7 ;
             TX Standard Commitment Transmittal Letter 1992 .

R-25. Premium for Commitment for Title Insurance to The Federal Deposit Insurance Corporation, Office of Thrift Supervision, or Resolution Trust Corporation.
This Rule R-25 is applicable only to a Commitment for Title Insurance issued pursuant to Procedural Rule P-15. A premium equal to the premium for a $25,000.00 policy as specified in the then current promulgated Basic Rate for title insurance shall be charged to the Federal Deposit Insurance Corporation, Office of Thrift Supervision, or Resolution Trust Corporation for each Commitment. It shall be permissible to collect the premium charge following issuance of the Commitment.

In that the agent's retained portion of the premium for the Commitment is attributed for: (i) title search, (ii) title examination, and (iii) issuance of the Commitment, the agent's portion of the premium shall be retained by and paid to only the agent licensed in the county where the property described in the Commitment is located.

Comment: This rule requires a rate of $332 for issuance of a commitment to FDIC pursuant to Rule P-15 if the commitment is not based upon a contract or auction to sell the land. The RTC terminated December 31, 1995 and its corporate assets were acquired by the FSLIC Resolution Fund. FDIC succeeded the RTC as receiver or conservator of financial institutions. This Rule does not require the collection of a premium ($332) for the commitment in connection with (1) a contract of purchase or (2) a particular auction if the commitment is issued to the “proposed purchaser” at the auction.

See Also: 6.26 Foreclosures - Deed Of Trust .

Forms: TX Limited Pre-Foreclosure Policy T-40 ;
             TX Limited Pre-Foreclosure Policy Down Date Endorsement T-41 .

R-26. Premium for Limited Pre-Foreclosure Policy (Form T-40) and Limited Pre-Foreclosure Policy Downdate Endorsement (Form T-41).
A) A Limited Pre-foreclosure Policy must be issued in accordance with the requirements of Procedural Rule P-43. In this Rule, the term "Foreclosing Mortgage" means the deed of trust, or other lien, specifically described under the section entitled Foreclosing Mortgage in the Limited Pre-Foreclosure Policy Combined Schedule (Form T-40).

B) The premium for the Limited Pre-Foreclosure Policy must be calculated in accordance with Steps One through Four below:

Step One: Determine the smaller of: (i) the outstanding loan balance on the loan secured by the Foreclosing Mortgage; and, (ii) the value of the land secured by the Foreclosing Mortgage. If the proposed insured does not provide the Company with some written evidence of the value of the land, use the outstanding balance of the loan secured by the Foreclosing Mortgage as the Step One numerical figure.

Step Two: Then use the numerical figure derived in Step One to calculate a full (undiscounted) premium amount using the Schedule of Basic Premium Rates for Title Insurance under Rate Rule R-1.

Step Three: The multiply the premium amount calculated under Step Two x .40.

Step Four: The premium for the Limited Pre-Foreclosure Mortgagee Policy is the greater of:

(i) The minimum basic premium; or,

(ii) The premium calculated after completing Step Three above.

C) The title insurance agent's portion of the premium shall be retained by and paid to only the title insurance agent licensed in the county where the land described in the Limited Pre-Foreclosure Policy is located because the title insurance agent's retained portion of the premium for the Limited Pre-Foreclosure Policy and the Limited Pre Foreclosure Policy Downdate Endorsement is attributed for: (i) title search; (ii) title examination; and, (iii) issuance of the Limited Pre-foreclosure Policy and Limited Pre-Foreclosure Policy Downdate Endorsement.

D) The premium for each Limited Pre-Foreclosure Policy Downdate endorsement shall be $50.00.

Comment: The premium charge for the Limited Pre-Foreclosure Policy (T-40) is 40% of the Binder Rate. In no event shall the charge be less than one minimum Binder Premium Rate ($229). The charge for the Limited Pre-Foreclosure Down Date Endorsement (T-41) is $50. No more than 4 Down Dates may be issued within two years after issued prior to issuance of the Policy. Procedural Rule P-43 requires that a mortgagee Policy (T-2) have been issued prior to issuance of this Policy; you may assume a Mortgagee Policy (T-2) was issued if the lender or assignee is an institutional lender. The policy must be issued for the value of the land or amount of debt; you may rely upon the amount of insurance requested for issuance of this policy. You may not give credit based on the prior Mortgagee Policy (T-2); you may not give a credit on issuance of a subsequent policy.

a.  When a Texas Residential Limited Coverage Junior Mortgagee Policy (Form T-44) is issued pursuant to P-46, the premium shall be as follows:

                 (i) For Policy amount up to $10,000.00 or less, the premium shall be $150.00;
                 (ii) For policy amount more than $10,000.00, but not more than $50,000.00, the premium shall be
                       $175.00; and
                 (iii) For policy amount more than $50,000.00, but not more than $100,000.00, the premium shall be
                        $200.00.

b.  When a Texas Residential Limited Coverage Junior Mortgagee Policy (Form T-44) has been issued and the Texas Residential Limited Coverage Junior Mortgagee Policy Additional Coverage Endorsement is issued in accordance with Rule P-46.B, the premium for such endorsement shall be $25.00.

c.  When a Texas Residential Limited Coverage Junior Mortgagee Policy (Form T-44) has been issued and a Texas Residential Limited Coverage Junior Mortgagee Policy Down Date Endorsement (Form T-45) is issued in accordance with Rule P-46.C, the premium for such endorsement shall be $50.00.

d.  When a Texas Residential Limited Coverage Junior Mortgagee Policy (Form T-44) has been issued and a Texas Residential Limited Coverage Junior Mortgagee Policy Home Equity Line of Credit/Variable Rate Endorsement (Form T-46) is issued in accordance with Rule P-46.D, the premium for such endorsement shall be $25.00.

See Also: 8.08 Homestead .

Bulletins: TX000040 Home Equity Mortgages; Constitutional Amendment (HJR 31; Proposition 8) (Effective January 1, 1998); 
                   TX000043 Current Home Equity Questions;
                   TX000049 Orders on Home Equity Endorsement (T-42, T-42.1) Effective November 12, 1998.

Forms: TX Equity Loan Mortgage Endorsement T-42 ; 
             TX Supplemental Coverage Equity Loan Mortgage Affidavit Checklist for T-42.1 Endorsement 1 ;
             TX Supplemental Coverage Equity Loan Mortgage Endorsement T-42.1 .

R-28. Premium for Equity Loan Mortgage Endorsement (T-42) and Supplemental Coverage Equity Loan Mortgage Endorsement (T-42.1)

“A. When a Mortgagee Policy of Title Insurance (T-2) is issued and the Equity Loan Mortgage Endorsement (T-42) is issued in accordance with Rule P-44, the premium for the Equity Loan Mortgage Endorsement (T-42) shall be 10% of the Basic Premium Rate.

“B. When a Mortgagee Policy of Title Insurance (T-2) is issued and the Equity Loan Mortgage Endorsement (T-42) is issued in accordance with Rule P-44 and the Supplemental Coverage Equity Loan Mortgage Endorsement (T-42.1) is issued in accordance with Rule P-47, the premium for the Supplemental Coverage Equity Loan Mortgage Endorsement (T-42.1) shall be 15% of the Basic Premium Rate.”

Comment: This rule provides that the rate for the Equity Loan Mortgage Endorsement (T-42) will be 10% of the Basic Rate for the Mortgagee Policy. This rule provides that the rate for the Supplemental Coverage Equity Loan Mortgage Endorsement will be 15% of the Basic Rate for the Mortgagee Policy. If both the Endorsement T-42 and T-42.1 are issued, the additional charge for both endorsements is 25% (10% for T-42 and 15% for T-42.1) of the Basic Rate for the Mortgagee Policy. You must continue to apply Rate Rule R-8 (refinance rate) if the Home Equity Mortgage is a “cash out refinance” that pays off a prior mortgage covered by a Mortgagee Policy issued within the last 7 years. You then calculate the rate for the T-42 (and T-42.1, if issued) by multiplying the Basic Rate (without consideration of the credit available under R-8) for the new Mortgagee Policy by .10 for the T-42 Endorsement and .15 for the T-42.1 Endorsement (if issued); you add those results to the rate for the Mortgagee Policy based on the credit, if any, available under R-8. Then add the costs for other endorsements and coverages, such as the tax coverage and Environmental Protection Lien Endorsement. Example: The New Home Equity Loan will be a cash out refinance for $100,000. $80,000 will be used to pay the unpaid balance on a prior purchase money mortgage covered by a Mortgagee Policy issued 1 year, and three months ago. The remaining balance of loan proceeds will be disbursed to the borrower. The Basic Premium for a $100,000 policy is $843. The credit available under R-8 (40% of the unpaid balance) is $282. The charge for the new policy is $561 ($843 minus $282), plus $84 (10% of the basic premium for the T-42 endorsement), plus $126.45 (15% of the basic premium for the T-42.1 endorsement, if issued), plus any other endorsement charges.

A.  When the Restrictions, Encroachments, Minerals Endorsement (T-19) is issued on residential real property in accordance with Rule P-50, the premium shall be 5% of the Basic Rate for a single issue policy provided that the minimum premium shall be not less than $50.00. 

B.  When the Restrictions, Encroachments, Minerals Endorsement (T-19) is issued on land which is not residential real property, in accordance with Rule P-50, the premium shall be 10% of the Basic Rate for a single issue policy provided that the minimum premium shall be not less than $50.00. 

C.  When the Restrictions, Encroachments, Minerals Endorsement - Owner Policy (T-19.1) is issued on residential real property in accordance with Rule P-50, the premium shall be: 

            1.  10% of the Basic Rate for a single issue policy; or

            2.  5% of the Basic Rate for a single issue policy if an amendment of the exception to area and boundaries is also purchased in accordance with Rate Rule R-16. 

            In either event, the minimum premium shall not be less than $50.00 

D.  When the Restrictions, Encroachments, Minerals Endorsement - Owner Policy (T-19.1) is issued on land which is not residential property, in accordance with Rule P-50, the premium shall be: 

1.  15% of the Basic Rate for a single issue policy; or

2. 10% of the Basic Rate for a single issue policy if an amendment of the exception to area and boundaries is also purchased in accordance with Rate Rule R-16. 

            In either event, the minimum premium shall be not less than $50.00 

Texas Title Insurance Premium Rates - Effective February 1, 2007.

Policies        Up To And Including	Basic        Premium	Policies        Up To And Including	Basic        Premium	Policies       Up To And Including	Basic        Premium	Policies         Up To And Including	Basic        Premium
$10,000	$229	$32,500	$383	$55,000	$536	$77,500	$690
10,500	233	33,000	386	55,500	539	78,000	694
11,000	235	33,500	390	56,000	544	78,500	698
11,500	239	34,000	393	56,500	547	79,000	702
12,000	243	34,500	397	57,000	550	79,500	703
12,500	246	35,000	400	57,500	554	80,000	707
13,000	250	35,500	404	58,000	558	80,500	711
13,500	254	36,000	407	58,500	560	81,000	715
14,000	257	36,500	410	59,000	564	81,500	717
14,500	260	37,000	413	59,500	567	82,000	721
15,000	262	37,500	417	60,000	571	82,500	725
15,500	266	38,000	421	60,500	575	83,000	729
16,000	270	38,500	425	61,000	578	83,500	731
16,500	274	39,000	427	61,500	581	84,000	734
17,000	277	39,500	431	62,000	585	84,500	739
17,500	281	40,000	434	62,500	589	85,000	742
18,000	285	40,500	438	63,000	591	85,500	745
18,500	287	41,000	440	63,500	594	86,000	748
19,000	290	41,500	445	64,000	598	86,500	752
19,500	293	42,000	448	64,500	602	87,000	756
20,000	298	42,500	452	65,000	605	87,500	759
20,500	301	43,000	454	65,500	608	88,000	762
21,000	305	43,500	458	66,000	612	88,500	766
21,500	308	44,000	461	66,500	617	89,000	770
22,000	312	44,500	465	67,000	620	89,500	772
22,500	315	45,000	469	67,500	621	90,000	775
23,000	318	45,500	472	68,000	625	90,500	779
23,500	321	46,000	475	68,500	629	91,000	783
24,000	325	46,500	479	69,000	632	91,500	787
24,500	328	47,000	481	69,500	635	92,000	789
25,000	332	47,500	485	70,000	640	92,500	793
25,500	335	48,000	489	70,500	644	93,000	797
26,000	339	48,500	493	71,000	647	93,500	801
26,500	342	49,000	496	71,500	649	94,000	802
27,000	345	49,500	499	72,000	652	94,500	806
27,500	348	50,000	503	72,500	656	95,000	811
28,000	352	50,500	506	73,000	660	95,500	814
28,500	355	51,000	508	73,500	663	96,000	816
29,000	359	51,500	512	74,000	667	96,500	820
29,500	362	52,000	516	74,500	671	97,000	824
30,000	366	52,500	520	75,000	674	97,500	828
30,500	369	53,000	523	75,500	676	98,000	830
31,000	373	53,500	527	76,000	680	98,500	834
31,500	376	54,000	530	76,500	683	99,000	838
32,000	379	54,500	533	77,000	687	99,500	841
						100,000	843

Comment: The premium rates are promulgated by the Commissioner of Insurance pursuant to Article 9.07 of the Texas Insurance Code and may not be deviated form. If the amount is $0.50 or less of a dollar, you should round down to the nearest dollar; if the amount is $0.51 or more of a dollar, you should round up to the nearest dollar.

When the Access Endorsement (T-23) is issued with a Mortgagee Policy of Title Insurance (T-2) or Owner Policy (T-1) in accordance with Rule P-54, the premium for the Access Endorsement (T-23) shall be $100 for each policy.

When the Non-Imputation Endorsement (T-24) is issued with an Owner Policy (T-1) in accordance with Rule P-55, the premium for the Non-Imputation Endorsement (T-24) shall be 5% of the Basic Rate for each policy provided that the minimum premium shall be not less than $25.00.

When the Contiguity Endorsement (T-25) is issued with a Mortgagee Policy of Title Insurance (T-2) or Owner Policy (T-1) in accordance with Rule P-56, the premium for the Contiguity Endorsement (T-25) shall be $100 for each policy.

When the Additional Insured Endorsement (T-26) is issued with an Owner Policy in accordance with Rule P-57, the premium for the Additional Insured Endorsement (T-26) shall be 10% of the Basic Rate for each policy provided that the minimum premium shall be not less than $25.00.

When the Assignment of Rents/Leases Endorsement (T-27) is issued with a Mortgagee Policy of Title Insruance (T-2) in accordance with Rule P-60, the premium for each Assignment of Rents/Leases Endorsement (T-27) shall be $0.00.