Dear Associates:
We previously advised you of the adoption by the American Land Title Association (ALTA) of the following form:
ALTA Short Form Residential Loan Policy - Current Violations (04-02-15).
This Bulletin describes the similarities and differences between the older version of the ALTA Short Form Residential Loan Policy (12-03-12) and the newer version: Current Violations (04-02-15), and provides guidance for their use.
Similarities Between the ALTA Short Form Residential Loan Policies
The ALTA Short Form Residential Loan Policy (12-03-12) and the ALTA Short Form Residential Loan Policy - Current Violations (04-02-15) are similar in many respects. Both policies incorporate by reference the coverage provided to a lender in the ALTA Loan Policy 2006. Both policies permit the incorporation of several ALTA endorsements by check box. Both policies also contain pre-printed Schedule B exceptions and affirmative insurance for such exceptions.
Differences Between the ALTA Short Form Residential Loan Policies
These two ALTA Short Form Residential Loan Policies differ with respect to their potential coverage of the priority of the lien of the insured mortgage in relation to the priority of a condominium association's or homeowners association's lien for future unpaid charges and assessments.
ALTA Short Form Residential Loan Policy (12-03-12) contains options to incorporate either of two versions of the ALTA Condominium Endorsements (ALTA Endorsement 4-06 or ALTA 4.1-06) and ALTA Planned Unit Development Endorsements (ALTA Endorsement 5-06 or 5.1-06). These endorsements provide different coverage relating to the lien priority of the insured mortgage in relation to an association's lien for future unpaid charges and assessments. ALTA Short Form Residential Loan Policy - Current Violations (04-02-15) contains an option to incorporate only one version of each of these endorsements: ALTA Condominium Endorsement 4.1-06 or ALTA Planned Unit Development Endorsement 5.1-06.
Differences Between ALTA Endorsements 4-06 and 4.1-06 and 5-06 and 5.1-06
ALTA Endorsement 4-06 (Condominium) and ALTA Endorsement 5-06 (Planned Unit Development) insure against loss or damage if the condominium association’s or the homeowners association's lien for future unpaid charges and assessments is superior to the lien of the insured mortgage. ALTA Endorsement 4-06 (Condominium) and ALTA Endorsement 5-06 (Planned Unit Development) may be used only on policies where the insured mortgage has priority over the condominium association's or homeowners association's lien for future unpaid charges and assessments.
In contrast, ALTA Endorsement 4.1-06 (Condominium) and ALTA Endorsement 5.1-06 (Planned Unit Development) only insure against loss or damage if any charges or assessments of the association are due and unpaid at Date of Policy. ALTA Endorsement 4.1-06 (Condominium) and ALTA Endorsement 5.1-06 (Planned Unit Development) must be used in certain states, and may be used on all policies in all states provided that all condominium association’s and homeowners association’s charges and assessments, as applicable, are paid to date. Please refer to the Guidelines for these endorsements for additional guidance and requirements.
Differences Between Available Endorsements on the ALTA Short Form Residential Policies
ALTA Short Form Residential Loan Policy - Current Violations (04-02-15) includes the option to incorporate only the following endorsements relating to the priority of the condominium or homeowners association's liens:
* ALTA Endorsement 4.1-06 (Condominium), if a condominium unit is referred to in the description of the Land;
* ALTA Endorsement 5.1-06 (Planned Unit Development)
By incorporation of the above endorsements, ALTA Short Form Residential Loan Policy Current Violations (04-02-15) only insures against loss or damage if an association's charges and assessments are due and unpaid at Date of Policy. ALTA Short Form Residential Loan Policy - Current Violations (04-02-15) is the preferred policy form. It may be issued in any state if it is available in the state, provided all association charges and assessments are paid to date.
In some jurisdictions, state law determines the priority of the mortgage versus the condominium or homeowners association's lien for future unpaid charges and assessments, and ALTA Short Form Residential Loan Policy - Current Violations (04-02-15) is the only form that may be issued in those states, if it is available. Click here to view a list of states where the ALTA Short Form Residential Loan Policy - Current Violations (04-02-15) must be issued, if it is available in the state. (See Requirement 18). Please note the requirements for issuance. NOTE: If ALTA Short Form Residential Loan Policy - Current Violations (04-02-15) is the indicated policy but it is not yet available in your state (i.e., Maryland), you may issue ALTA Short Form Residential Loan Policy (12-03-12) but you must select only ALTA 4.1-06 or ALTA 5.1-06, if applicable, to provide coverage relating to a condominium or homeowners association's lien.
ALTA Short Form Residential Loan Policy (12-03-12) includes the option to incorporate the above endorsements or the following endorsements relating to the priority of the condominium or homeowners association's liens:
* ALTA Endorsement 4-06 (Condominium), if a condominium unit is referred to in the description of the Land;
* ALTA Endorsement 5-06 (Planned Unit Development)
By incorporation of the above endorsements, ALTA Short Form Residential Loan Policy (12-03-12) insures against loss or damage if an association's lien for future charges and assessments has priority over the insured mortgage. Click here to view a list of states where the ALTA Short Form Residential Loan Policy (12-03-12) may be issued with ALTA Endorsements 4-06 or 5-06, for first mortgage liens only, if the policy is available in the state. (See Requirement 17). Please note the requirements for issuance. NOTE: If you are unable to confirm that the condominium or homeowners association's lien for future charges and assessments is subordinate to the insured mortgage, you may issue the ALTA Short Form Residential Loan Policy (12-03-12), but you must select only ALTA 4.1-06 or ALTA 5.1-06, if applicable, to provide coverage relating to a condominium or homeowners association's lien.
In all other circumstances, contact a Stewart Title Guaranty Underwriter before issuing ALTA Short Form Residential Loan Policy (12-03-12) with ALTA Endorsements 4-06 or 5-06.
As a reminder, you should always use the most current version of any ALTA form, if it is available in your state.
If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.
For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.