Upon determination that the seller or mortgagor is in sole possession of the property, this exception can be deleted routinely from owner’s policies on owner-occupied residential property, if the proposed insured so requests, by having them execute an affidavit stating that they are the sole party(ies) in possession. This affidavit should be retained in the agent’s files. It can be deleted from rural or farm property upon presentation of a recent survey. This survey must not show the potential for boundary line disputes or other evidence of potential adverse possessors. The parties in possession exception may be deleted on commercial property or residential investment property transactions with an affidavit from the seller that there are no tenants holding unrecorded leases. Otherwise, the following exception should be taken in Schedule B:
“Rights of tenants, under unrecorded leases or tenancies.”
Commercial properties present a particular problem because tenants must be presumed to occupy all or part of the property. It is customary to require a certified rent roll before insuring such property. With the certified rent roll, the general exception can be deleted and a special exception noted for rights of tenants according to the rent roll.
“All roads and rights of way, if any; any unrecorded, underground easements, if any.”
NOTE: The rights of parties in possession not shown by the public records exception certainly addresses non-record leases, but it applies equally to non-record contract purchases, optionees in possession, trails, driveways and other possible easement claims, encroachments from adjoining property and fences which do not follow the property boundaries. Care must be taken any time this exception is deleted to inquire as to any and all of these possible non-record interests to be sure affect the land being insured.