Bulletin: NJ000017

Dear Associates:

On August 15, 1995 the Department of Insurance approved for use a new form of endorsement to provide affirmative coverage on non-residential transactions. The form carries a form number NJRB-5-42. This form will be available from our Forms Department shortly. You may view the form through the reference section at the end of this bulletin.

A revised page of the rate manual adding Section 10.22 is available through the New Jersey State office. You will note that there is a charge of ten percent (10%) of the applicable underwriting charge, with a minimum of one hundred ($100.00) dollars for the issuance of this endorsement.

Please also note that this endorsement may not be given unless survey coverage is also given.

This endorsement is substantially similar to the ALTA 9 endorsement which you are familiar with relative to loan transactions. However, this endorsement is intended for use with an owner's policy on commercial transactions only. The endorsement may not be used in transactions involving a one-to-four family residence, a residential condominium, or a cooperative unit.

As you review the endorsement you will realize that it provides substantial affirmative coverage with regards to covenants, conditions and restrictions found of record; easements; encroachments; and forced removal of improvements due to violations of restrictions or setback lines.

Each of the affirmative coverages given in the endorsement must be separately underwritten in accordance with the Company's standard underwriting guidelines. For example, paragraph 3(b)affirmatively insures the insured against loss due to surface disturbance caused by extraction of minerals. Should your title examination find that there has been a severance of the mineral rights from the rest of the fee title with the right to extract those minerals, you would not be in a position to provide this endorsement. Similarly, paragraph 1(b)(3) provides for affirmative insurance against encroachments onto adjoining lands. If a review of the survey of the property indicates such encroachments exist, you may not issue the endorsement.

Because it has become somewhat routine to issue the ALTA 9 endorsement on residential loan policies, there is real danger that this endorsement may be similarly viewed. It should not be. By the issuance of this endorsement, the Company is incurring substantial liability.

If you have any questions or concerns with regards to issuance of this endorsement, please call the state office for underwriting approval.