1. The Form 9 is to be issued on loan policies only.
2. A current, accurate survey should be obtained and reviewed for any encroachments of minimum setback lines, easements, property lines, etc. Any violations must be listed as exceptions in Schedule B of the title policy. (If a current survey is not required, Agents National Title will accept a recent survey on refinance transactions provided the owner/borrower executes a survey affidavit attesting to the fact that there have been no changes or improvements to the property. Commercial transactions will require a current survey.
3. The plat and public records must be examined for easements, setback lines, assessments, etc., and checked against the survey for any encroachments.
4. Restrictions must be carefully read to verify that:
are no forfeiture provisions unless the
forfeiture clauses are expressly subordinate to the lien of the insured
mortgage; otherwise, the applicable paragraphs
must be deleted from the endorsement;
b. Whether the restrictions create maintenance liens, easements, options, or rights of first refusal to purchase. If found, these provisions must be expressly subordinate to the lien of the insured mortgage and listed as exceptions in Schedule B; otherwise, the applicable paragraph of the endorsement must be deleted.
5. If the restrictions contain a right of first refusal or option to purchase, you must verify that the option will not be exercised in connection with the current or prior transactions by estoppels letter from the association.
6. Before the coverage of the ALTA 9 may be given with regard to damage to existing improvements as provided in paragraphs 3(a), 4 and 5, the encroachments must be determined to be minor and may not include an encroachment of any permanent improvements onto adjoining land without approval from Agents National Title underwriting counsel.
7. It must be determined that there are no unreleased rights of surface entry related to any outstanding mineral rights. Any rights of entry must be released before providing this coverage or listed as exceptions in Schedule B of the policy and the applicable paragraph of the endorsement deleted. In some instances, Agents National Title is willing to approve issuance of the ALTA 9 or an equivalent endorsement without waiver of rights of surface entry for a severed mineral estate. Consult your Agents National Title underwriting counsel for guidelines and approval.
If violations of restrictions are present and the encroachments have been determined to be minor, the ALTA 9 may be issued. If the violations are not minor, they must be listed in Schedule B of the title policy with a notation which deletes the applicable items of the Form 9:
“The survey by Joe Sight dated, January 1, 1993, shows a 1 foot encroachment of the pool over the adjoining property line to the West. Element of coverage number(s) [list applicable paragraphs] of the attached ALTA form 9 shall not apply with respect to this encroachment.”
The agent should carefully review the lender’s closing instructions for any prohibited exceptions to coverage. Should a major violation be discovered, advise your lender immediately. Do not proceed with the closing until modifications to the closing instructions or instructions on how to proceed are received from your lender in writing. A seller’s/Borrower’s Affidavit should be executed by the appropriate parties.
A sample ALTA Endorsement Form 9.