Looking Ahead: The New ALTA Policies

Transcription

1 Looking Ahead: The New ALTA Policies Joe Powell NTP Area Counsel- Alabama, Mississippi & Arkansas Southeast Land Title Association Mid-Year Meeting April 1

2 Before we review the 2018 Policy drafts, did you hear the one about On April 2, 2018, the ALTA Forms Committee released Technical Corrections to the 2016 ALTA Commitment Form The changes are merely the substitution of the ALTA Registry number and the deletion of the estate or interest language in Item 4 of Schedule A in an attempt to simplify and clarify 2

3 Previous Commitment 3

4 Technical Correction Universal is dropped and ALTA Registry is substituted, since that s the name they are going with. Also, makes it clear this ID is from the Issuing Office. Removes to the [ ] estate or interest in the Land and inserts grammatically warranted commas (!), adding The Before Title since Title is a defined Term in Condition 1(h). 4

5 BE on the Lookout! New Forms filing Updates to your Software If in doubt, ask your Underwriter Effective date of new forms Use the CORRECT form once it is fully implemented ALTA s changes are theirs alone; each underwriter still has to adopt / file 5

6 The deadline for comments is May 1, 2018 The Forms Committee is charged with maintaining a quality standard title insurance product that is responsive to the needs of proposed insureds. The current versions of the standard ALTA Owner s and Loan Policies of Title Insurance were published in Legislation, regulation, judicial proceedings and business practices have changed the title insurance landscape over time. These Discussion Drafts also present an opportunity to enhance benefits to consumers. Comments on the Discussion Drafts are welcome and should be submitted to forms@alta.org

7 Highlights - Covered Risks The Discussion Drafts acknowledge that the Insurer will not deny liability because the policy is issued electronically or lacks wet signatures. This is the ALTA 39 coverage. Makes that endorsement moot! Covered Risks 2(a)(iii) and 2(a)(iv) address electronic notarization of any sort and include insurance against invalidity of a document affecting Title as a result of repudiation of the electronic signature because the electronic signature was not valid adds a Covered Risk relating to any PACA-PSA Trust expands the coverage of insurance against lack of priority of the Insured Mortgage to refer to particular obligations and expenses adds coverage for certain court orders providing an alternative remedy in a claim of a voidable or fraudulent transfer or voidable preference

8 Summary of Changes in the Draft Covered Risks The following Covered Risks on Title are unchanged in the draft: Covered Risk 1 on Title vesting Covered Risk 3 on Marketable Title Covered Risk 4 on right of access Covered Risk 2(b) on real estate taxes and assessments is also unchanged, but: Covered Risk 2(a), that lists defects in the Title, is changed in 2(a)(iv) (vi); and Covered Risk 2(c), on survey coverage, is rewritten to avoid confusion

9 Summary of Changes in the Draft Covered Risks ALTA 2017 Covered proposes Risk changing 2(a)(iv) 2006 insures Covered against Risk loss 2(a)(iv) from a that defect insures the against Title caused loss from by: a defect in the Title caused by: (iv) failure to perform those acts necessary to create a document by electronic means authorized by law; (iv) repudiation of a document that affects the Title because an electronic signature is not valid under applicable electronic transactions law; As a result of a request from Freddie Mac to insure against repudiation.

10 Summary of Changes in the Draft Covered Risks The To be 2006 consistent, Covered the Risks 20172(a)(v) Covered and Risks 2(a) (vi) 2(a)(v) are: and 2(a) (vi) change to: (v) a document that executed affects under the Title a falsified, and that expired, is executed or otherwise under a invalid falsified, power of expired, attorney; otherwise invalid power of attorney; (iv) a document that not properly affects the filed, Title recorded, and that or is indexed not properly in the filed, Public recorded, Records including indexed in failure the Public to perform Records those including acts by failure electronic to perform means those authorized acts by by law; electronic or means authorized by law; or

11 Summary of Changes in the Draft Covered Risks The Draft Covered changed Risk Covered 2(c) includes, Risk but 2(c) is to not avoid limited the to confusion insurance caused against by the apparent loss from: definition for encroachment : (c) Any the effect encroachment, on the Title encumbrance, of encumbrance, violation, violation, variation, variation, or adverse adverse circumstance, affecting or encroachment, the Title that including would an be encroachment disclosed by an of accurate an and complete improvement land across survey the of the boundary Land. lines The term of the encroachment Land, but only if includes the encroachments encumbrance, violation, of existing variation, improvements adverse located circumstance, on the Land or encroachment onto adjoining would be land, disclosed and encroachments by an accurate and onto complete the Land land of existing title survey improvements of the located Land. on adjoining land. One of the elements of the policy definition of Land is that The term "Land does not include any property beyond the lines of the area described in Schedule A. So the sentence in red was to override that element.

12 Summary of Changes in the Draft Covered Risks The government action Covered Risks, Nos. 5, 6, 7 & 8 and Exclusion 1 use a new five element definition of Record Title Notice introduced in Condition 1(o) : (o) Record Title Notice : A document affecting the Title, recorded in the Public Records at Date of Policy, that describes any part of the Land and identifies a violation or enforcement of a law, ordinance, permit, or governmental regulation, exercise of a power, or enforcement of a PACA-PSA Trust.

13 Summary of Changes in the Draft Covered Risks Covered Risk 5 :: changes to: 5. The A violation or enforcement of a of law, any ordinance, law, ordinance, permit, permit, or governmental or regulation (including those relating to building and zoning), restricting, but only to regulating, the extent prohibiting, of the violation or relating or enforcement to described by the enforcing governmental (a) authority the occupancy, in a Record use, Title or Notice enjoyment that identifies of the Land; a restriction, regulation, or (b) prohibition the character, relating dimensions, to: or location of any improvement erected on the (a) Land; the occupancy, use, or enjoyment of the Land; (c) (b) the subdivision character, dimensions, of land; or or location of an improvement on the Land; (d) (c) environmental the subdivision protection of the Land; or if (d) a notice, environmental describing remediation any part of or the protection Land, is on recorded the Land. in the Public Records setting forth the violation or intention to enforce, but only to the extent of the violation or enforcement referred to in that notice.

14 Summary of Changes in the Draft Covered Risks The 2006 Covered Risk 6 changes from: 6. An enforcement action based on the exercise of a governmental police power not covered by Covered Risk 5 if a notice of the enforcement action, describing any part of the Land, is recorded in the Public Records, but only to the extent of the enforcement referred to in that notice. To the 2017 version: 6. Enforcement of a governmental forfeiture, police, or regulatory power, but only to the extent of the enforcement described by the enforcing governmental authority in a Record Title Notice.

15 Summary of Changes in the Draft Covered Risks Covered Risks 7 & 8 change from: 7 The exercise of the rights of eminent domain if a notice of the exercise, describing any part of the Land, is recorded in the Public Records. 8 Any taking by a governmental body that has occurred and is binding on the rights of a purchaser for value without Knowledge To a combined Covered Risk 7: 7. The exercise of the power of eminent domain, but only to the extent: (a) (b) of the exercise described in a Record Title Notice; or the taking occurred and is binding on a purchaser for value without Knowledge.

16 Summary of Changes in the Draft Covered Risks New Covered Risk 8: 8 Enforcement of a PACA-PSA Trust, but only to the extent of the enforcement described in a Record Title Notice. Condition 1(m) adds a definition for: 1. DEFINITION OF TERMS... (m) PACA-PSA Trust : A trust under the federal Perishable Agricultural Commodities Act or the federal Packers and Stockyards Act or a similar state or federal law.

17 Summary of Changes in the Draft Covered Risks The changes to Covered Risk 9 (invalidity or unenforceability of the lien of the Insured Mortgage) mirror the changes to Covered Risk 2(a) Covered Risk 10 changes from to The The lack lack of of priority priority of of the the lien lien of of the the Insured Insured Mortgage Mortgage, upon over any the Title other over lien any or other encumbrance lien or encumbrance. on the Title, as security for the following components of the Indebtedness, to the extent secured by the Insured Mortgage: (a) (b) (c) (d) the amount of the principal disbursed as of Date of Policy; the interest on the obligation secured by the Insured Mortgage; the reasonable expense of foreclosure; and the amount advanced to pay real estate taxes and reasonable insurance premiums.

18 Summary of Changes in the Draft Covered Risks Covered Risk 11 (mechanics liens) expanded its scope to include liens for services, labor, material, or equipment, but there is no other material change despite its coverage for priority over mechanics liens being inconsistent with the law in each and every state. Covered Risk 12 (mortgage assignment) and Covered Risk 14 (gap coverage) are unchanged. Covered Risk 13 (creditors rights) is tweaked slightly, but the changes to its corresponding Exclusion 6 are more pronounced, so the changes will be addressed on the slide for Exclusion 6.

19 Highlights - Exclusions Exclusion 1(b) includes forfeitures. Exclusion 6(b) of the Loan Policy and Exclusion 4(b) of the Owner s Policy (Creditors Rights) exclude a voidable transfer under the Uniform Voidable Transactions Act, which refers to a voidable transfer instead of fraudulent transfer. The Exclusions also exclude a claim that the transaction wasn t made as a contemporaneous exchange for new value. Exclusion 7 of the Loan Policy and Exclusion 5 of the Owner s Policy exclude claims arising out of a statutory trust under PACA and P&SA. Exclusion 8 of the Loan Policy and Exclusion 6 of the Owner s Policy exclude governmental taxes or assessments (such as PACE assessments) due and payable after Date of Policy. Exclusion 9 of the Loan Policy and Exclusion 7 of the Owner s Policy exclude liability for the quantity of area, square footage, or acreage. Finally!

20 Summary of Changes in the Draft Exclusions Exclusion 1 was revised from to 1. (a) Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, that restricts, regulating, regulates, prohibiting, prohibits, or relating relates to: (i) the occupancy, use, or enjoyment of the Land; (ii) the character, dimensions, or location of any improvement erected on the Land; on the Land; (iii) the subdivision of land; or (iv) environmental protection; remediation or protection; (b) or Any the governmental effect of any police violation power. of these laws, ordinances, or governmental (c) regulations. The effect of This a violation Exclusion or enforcement 1(a) does not of modify a matter or excluded limit the coverage under Exclusion provided 1(a) or under 1(b), unless Covered a Record Risk 5. Title Notice describes the violation or enforcement. (b) Any governmental police power. This Exclusion 1(b) does not modify or limit the coverage provided under Covered Risk 6.

21 Summary of Changes in the Draft Exclusions The first line of 2006 Exclusion 3 was revised from 3. Defects, liens, encumbrances, adverse claims, or other matters To the 2017 Exclusion 3 version 3. Any defect, lien, encumbrance, adverse claim, or other matter: 2006 The 2017 Exclusion Exclusion 3(e) 3(e) was revised to (e) resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Insured Mortgage. sufficient to qualify for protection of recording law.

22 Summary of Changes in the Draft Exclusions 2006 Exclusion 2 was revised from 2. Rights of eminent domain. This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 8. To 2017 Exclusion 2 2. Any power of eminent domain. Exclusion 2 does not modify or limit the coverage provided under Covered Risk 7.

23 Summary of Changes in the Draft Exclusions Exclusion 5 was revised from to 5. Invalidity or unenforceability, in whole or in part, of of the lien of of the Insured Mortgage that arises out of the transaction evidenced by the Insured Mortgage and is based upon usury or law any or any consumer Consumer credit Protection protection Law or or truth-in-lending consumer credit law. protection law. Condition 1(c) adds a definition for: 1. DEFINITION OF TERMS... (c) Consumer Protection Law : Any law regulating trade, lending, credit, sale, and debt collection practices involving consumers; any consumer financial law; or any other law relating to truth-in-lending, predatory lending, or a borrower s ability to repay a loan.

24 Summary of Changes in the Draft Exclusions Exclusion 6 was revised from to 6. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors rights laws, that the transaction creating the lien of the Insured Mortgage, is (a) (b) (c) a fraudulent conveyance or fraudulent transfer, or a preferential voidable transfer under for any the Uniform reason not Voidable stated Transactions in Covered Risk Act, 13(b) or of this a preferential policy. transfer (i) (ii) to the extent the Insured Mortgage is not a transfer made as a contemporaneous exchange for new value or for other any reason not stated in Covered Risk 13(b).

25 Summary of Changes in the Draft Exclusions New Exclusion 7 7. Any PACA-PSA Trust. Exclusion 7 does not modify or limit the coverage provided under Covered Risk 8. Exclusion 8 is former Exclusion 7 and is revised from to Any lien on the Title for real estate taxes or assessments imposed or by collected governmental by authority governmental and created authority or due attaching and payable between after Date Date of Policy of Policy. and Exclusion the date of 8 limits recording of Covered the Insured Risk 14, Mortgage but does in the not Public modify Records. limit the This coverage Exclusion provided does under not modify Covered or limit Risk the 14. coverage provided under Covered Risk 11(b). New Exclusion 9 9. The quantity of the area, square footage, or acreage of the Land.

26 Summary of Changes in the Draft Schedules Optional Transaction Identification Data at the top of Schedule A: [Transaction Identification Data for reference only: Issuing Agent: Issuing Office: ALTA Universal ID Number: Loan ID Number: Issuing Office File Number: Property Address:]

27 Summary of Changes in the Draft Schedules Schedule A Name and Address of Title Insurance Company: [ Policy File No.: Number: ] Policy Number: Loan Amount Number.: of Insurance: $ [Premium: $ ] Address Date of Policy: Reference: [at a.m./p.m.] Amount of Insurance: $ [Premium: $ ] Date of Policy: [at a.m./p.m.] 1. Name The Insured of Insured: is: 2. The estate or interest in the Land encumbered by the Insured Mortgage is: 3. The Title Title is vested encumbered in: by the Insured Mortgage is vested in: 4. The Insured Mortgage and its assignments, if any, are described as follows: 5. The Land is described as follows: [6. This policy incorporates by reference the endorsements designated below]

28 Summary of Changes in the Draft Schedules Schedule B Policy Number: EXCEPTIONS FROM COVERAGE This policy does not republish any covenant, condition, restriction, limitation contained in any document referred to in this policy to the extent that the specific covenant, condition, restriction, or limitation violates a state or federal law based on race, color, religion, sex, sexual orientation, gender identity, handicap, familial status, or national origin. This policy does not insure against loss or damage and the Company will not pay costs, attorneys fees, or expenses resulting from the terms and provisions of any lease or easement identified in Schedule A and the following matters:

29 Summary of Changes in the Draft Schedules Schedule B Part II 2006 In addition to the matters set forth in Part I of this Schedule, the Title is subject to the following matters, and the Company insures against loss or damage sustained in the event that they are not subordinate to the lien of the Insured Mortgage:] 2017 Covered Risk 10 insures against loss or damage sustained by the Insured by reason of the lack of priority of the lien of the Insured Mortgage over the following matters, subject to the terms and provisions of any subordination agreement identified below:

30 Highlights - Conditions The definition of Public Records is modified, consistent with the prevalent understanding, to exclude environmental protection, planning, permitting, zoning, licensing, building, health, or public safety matters unless a Record Title Notice is filed in the Public Records. A new definition of Consumer Protection Laws is included in the Loan Policy. The definition of Insured is expanded in both the Owner s Policy and the Loan Policy with respect to a grantee of the Insured that is an Affiliate, and foreclosure or deed in lieu of foreclosure by an Affiliate.

31 Highlights - Conditions Condition 8 states that the policy is not an abstract of the Title, report of the condition of the Title, legal opinion, opinion of the Title, or other representation of the status of Title, and that the Company shall not be liable for any claim alleging negligence or negligent misrepresentation. Consistent with the NEW 2016 ALTA Commitment form NOTICE Condition 8(b) establishes an explicit date for determination of the amount of loss or damage [1] date of notice of claim or [2] date of foreclosure as chosen by the Insured if Loan Policy, or [1] date of notice of claim or [2] date liability is finally established if Owner s Policy Condition 17 of the Loan Policy and Condition 18 of the Owner s Policy disclaim class action in arbitration.

32 Summary of Changes in the Conditions Definitions 1. DEFINITION OF TERMS (a) (e) Affiliate : An Entity: (i) (ii) that is wholly-owned by the Insured; that wholly-owns the Insured; or (iii) if the Entity and the Insured are both wholly-owned by the same person or Entity. Entity : A corporation, partnership, trust, limited liability company, or other entity authorized by law to hold title to real property in the jurisdiction where the Land is located.

33 Summary of Changes in the Conditions Definitions 1. DEFINITION OF TERMS... (e) (g) Insured : The Insured named in Schedule A. (i) The (1) term the "Insured" named also includes Item 1 of Schedule A or the future holder of (A) the the owner Indebtedness, of the Indebtedness to the extent and theeach named successor Insured in or ownership the future of the holder Indebtedness, either: whether the owner or successor owns the Indebtedness (a) holds the for Indebtedness its own account for its or own as a account trustee or as other a trustee fiduciary, or except other a successor fiduciary or who is an obligor under the provisions of Section (b) holds 12(c) the of Title these after Conditions; acquiring the Indebtedness, but in each case, only so long as the named Insured or future holder of the Indebtedness holds the Indebtedness, the Title, or an estate or interest as provided in Condition 2;

34 Summary of Changes in the Conditions Definitions 1. DEFINITION OF TERMS... (e) (g) Insured continued (B) (2) the person or Entity who has control of the transferable record, if the Indebtedness is evidenced by a transferable record, as these defined terms by applicable are defined electronic by applicable transactions electronic law; (3) transactions the successor law; to an Insured resulting from dissolution, (C) successors merger, consolidation, to an Insured distribution, by dissolution, or reorganization; merger, (4) consolidation, the successor distribution, to an Insured or resulting reorganization; from its conversion to (D) successors another kind to of an Entity; Insured by its conversion to another kind of Entity;

35 Summary of Changes in the Conditions Definitions 1. DEFINITION OF TERMS... (e) (g) Insured continued (5) (E) a the grantee of of an an Insured under a a deed delivered or other without instrument payment transferring of actual the Title, valuable if the grantee consideration is an Affiliate; conveying the Title (6) (1) an Affiliate if the stock, that acquires shares, the memberships, Title through or foreclosure other equity or deedin-lieu or deed-in-lieu interests of foreclosure of of the foreclosure grantee of the Insured are of the wholly-owned Mortgage; Insured Mortgage; by the named or (7) any government Insured, agency or instrumentality that is an insurer or (2) guarantor if the grantee under an wholly insurance owns contract the named or guaranty Insured, insuring or or (3) guaranteeing if the grantee the Indebtedness is wholly-owned secured by an by affiliated the Insured Entity of the Mortgage, named or Insured, any part provided of it, whether affiliated named Entity as an and Insured the or not; not; named Insured are both wholly-owned by the same person or Entity;

36 Summary of Changes in the Conditions Definitions 1. DEFINITION OF TERMS... (e) (g) Insured continued (ii) With regard to (A), Conditions (B), (C), 1(g)(i)(1) (D), and and (E) 1(g)(i)(2), reserving, reserving however, all all rights and defenses as to any successor that the Company would have had against any predecessor Insured, unless the successor acquired the Indebtedness as a purchaser for value without Knowledge of the asserted defect, lien, encumbrance, or adverse other matter claim, or insured other matter against insured by this against policy. by this policy. (iii) With regard to Conditions 1(g)(i)(3), 1(g)(i)(4), 1(g)(i)(5), and 1(g)(i)(6), reserving all rights and defenses as to any successor that the Company would have had against any predecessor Insured.

37 Summary of Changes in the Conditions Definitions 1. DEFINITION OF TERMS... (h) (j) 2006 "Knowledge" or "Known": Actual knowledge, not constructive knowledge or notice that may be imputed to an Insured by reason of the Public Records or any other records that impart constructive notice of matters affecting the Title Knowledge or Known : Actual knowledge or actual notice, but not constructive notice imparted by the Public Records.

38 Summary of Changes in the Conditions Definitions 1. DEFINITION OF TERMS... (i) (k) "Land": The land described in Schedule A, and affixed improvements that by law constitute real property. The term "Land does not include any property beyond the lines of the area described in Schedule A, nor any right, title, interest, estate, nor any right, title, interest, estate or easement in abutting streets, roads, avenues, alleys, lanes, ways, or waterways, but this does not modify or limit the extent that a right of access to and from the Land is insured by this policy. Land : The land described in Item 5 of Schedule A and improvements located on that land at the Date of Policy that by law constitute real property. The term Land does not include any property beyond that described in Schedule A, nor any right, title, interest, estate, or easement in any abutting street, road, avenue, alley, lane, way, body of water, or waterway, but does not modify or limit the extent that a right of access to and from the Land is insured by this policy.

39 Summary of Changes in the Conditions Definitions 1. DEFINITION OF TERMS... (k) (n) "Public Records": Records established under state statutes at Date of Policy for the purpose of imparting constructive notice of matters relating to real property to purchasers for value and without Knowledge. With respect to Covered Risk 5(d), "Public Records" shall also include environmental protection liens filed in the records of the clerk of the United States District Court for the district where the Land is located. Public Records : The records established under state statutes in effect at the Date of Policy that impart constructive notice of matters relating to the Title to a purchaser for value without Knowledge. The term Public Records does not include any record pertaining to environmental protection, planning, permitting, zoning, licensing, building, health, or public safety matters unless the record is contained in a Record Title Notice.

40 Summary of Changes in the Conditions 3. NOTICE OF CLAIM TO BE GIVEN BY INSURED CLAIMANT The Insured The Insured must shall notify notify the Company the Company promptly promptly in writing in writing if the (i) Insured in case has of any Knowledge litigation of: as set forth in Section 5(a) of these Conditions, (ii) in case Knowledge shall (a) any come claim to an of Insured title or interest of any that claim is of adverse title or interest to the Title that or is the adverse lien of to the the Title Insured or the lien Mortgage, of the Insured as insured, Mortgage, that as might insured, otherwise and that cause might loss cause or loss or damage for for which the the Company may may be be liable liable by by virtue virtue of of this this policy, policy; or (iii) if the (b) Title any or litigation the lien that of the affects Insured the Title, Mortgage, as insured; as insured, or is rejected as Unmarketable (c) any rejection Title. of the If the Title Company or the lien is prejudiced of the Insured by the Mortgage failure of as the Insured Claimant Unmarketable to provide Title. prompt notice, the Company's liability to the Insured Claimant under the policy shall be reduced to the extent of the prejudice. If the Company is prejudiced by the failure of the Insured Claimant to provide prompt notice, the Company s liability to the Insured Claimant under this policy is reduced to the extent of the prejudice.

41 Summary of Changes in the Conditions 8. CONTRACT OF INDEMNITY; DETERMINATION AND EXTENT OF LIABILITY This policy is a contract of indemnity against actual monetary loss or damage sustained or incurred by the an Insured Claimant who has suffered the loss loss or damage or by damage reason by of reason matters of insured matters against insured by against this policy. by this policy. This policy is not an abstract of the Title, report of the condition of the Title, legal opinion, opinion of the Title, or other representation of the status of the Title. All claims asserted under this policy are based in contract and are restricted to the terms and provisions of this policy. The Company is not liable for any claim alleging negligence or negligent misrepresentation arising from or in connection with this policy or the determination of the insurability of the Title.

42 Summary of Changes in the Conditions 8. CONTRACT OF INDEMNITY; DETERMINATION AND EXTENT OF LIABILITY Continued (a) The extent of liability of the Company for loss or damage under this policy shall not exceed the least of (i) (ii) the Amount of Insurance, the Indebtedness, (iii) the difference between the value of the Title as insured and the value of the Title subject to the risk insured matter insured against against by this by policy, this or policy, or (iv) if a government agency or instrumentality is the Insured Claimant, the amount it paid in the acquisition of the Title or the Insured Mortgage in satisfaction of its insurance contract or guaranty.

43 Summary of Changes in the Conditions 8. CONTRACT OF INDEMNITY; DETERMINATION AND EXTENT OF LIABILITY Continued (b) The Insured Claimant has the right to have the amount of the loss or damage payable under this policy determined as of: (i) (ii) the date the notice of claim required by Condition 3 is received by the Company; or the date of the sale in a foreclosure of the Insured Mortgage.

44 Summary of Changes in the Conditions 8. CONTRACT OF INDEMNITY; DETERMINATION AND EXTENT OF LIABILITY Continued (b) (c) If the Company pursues its rights under Section Condition 5 of 5(b) these and Conditions is unsuccessful and is in unsuccessful establishing the in establishing Title or the lien the of Title the or Insured the lien Mortgage, of the Insured as insured: Mortgage, as (i) insured, the Amount of Insurance will be increased by 10%, and (i) (ii) the Amount Insured Claimant of Insurance may shall choose, be increased an alternative by 10%, to and the dates set (ii) the forth Insured in Condition Claimant 8(b), shall to have the amount right to of have the the loss loss or damage or damage determined payable under either this as policy of the determined date the claim as of was the date made the by action, the Insured Claimant proceeding, or as or other of act date described it is settled in Condition and paid. 5(b) is concluded.

45 Summary of Changes in the Conditions 8. CONTRACT OF INDEMNITY; DETERMINATION AND EXTENT OF LIABILITY Continued (c) 2006 In the event the Insured has acquired the Title in the manner described in Section 2 of these Conditions or has conveyed the Title, then the extent of liability of the Company shall continue as set forth in Section 8(a) of these Conditions. (d) 2017 If the Insured acquires the Title in the manner described in Condition 2 or conveys the Title, the extent of liability of the Company continues as set forth in Condition 8(a).

46 Summary of Changes in the Conditions 8. CONTRACT OF INDEMNITY; DETERMINATION AND EXTENT OF LIABILITY Continued (d) (e) 2006 In addition to the extent of liability under (a), (b), and (c), the Company will also pay those costs, attorneys' fees, and expenses incurred in accordance with Sections 5 and 7 of these Conditions In addition to the extent of liability for loss or damage under Conditions 8(a) and 8(c), the Company will also pay the costs, attorneys fees, and expenses incurred in accordance with Conditions 5 and 7.

47 Summary of Changes in the Conditions 9. LIMITATION OF LIABILITY (d) (e) An Insured Claimant must hold the Indebtedness or have acquired the Title at the time that a claim under this policy is paid. The Company is not liable for the content of the Transaction Identification Data, if any.

48 Summary of Changes in the Conditions 13. Arbitration Either (a) Any the claim Company or dispute or the arising Insured out may of or demand relating that to this the policy claim or may controversy be resolved shall by be arbitration. submitted Matters to arbitration that may be pursuant arbitrated to the include Title any Insurance service Arbitration in connection Rules with of issuing the American this policy, Land Title Association any breach ( Rules ). of a policy Except provision, as or provided any other in the claim Rules, or dispute there shall arising be out no joinder of or relating or to consolidation the transaction with claims giving or rise controversies to this policy. of other If Amount persons. of Arbitrable Insurance matters is $2,000,000 may include, or less, but are not any limited claim to, or dispute any controversy may be submitted or claim between to binding the arbitration Company at and the the election Insured of either arising the out of or Company relating to or this the policy, Insured. any If service the Amount in connection of Insurance with its is greater issuance than or the $2,000,000, breach of any a policy claim provision, or dispute or to any may other be submitted controversy to binding or claim arbitration arising out only of the when transaction agreed to giving by both rise the to this policy. Company All arbitrable and the matters Insured. when Arbitration the Amount must of be Insurance conducted is $2,000,000 pursuant to or the less Title shall Insurance be arbitrated Arbitration the Rules option of of either American the Company Land Title or the Association Insured. ( ALTA All arbitrable Rules ). matters The ALTA when Rules the Amount are of available Insurance online is in at excess of $2,000,000 shall The be arbitrated ALTA Rules only incorporate, when agreed as to by both the Company appropriate and to the a particular Insured. dispute, Arbitration the pursuant Consumer to this Arbitration policy and Rules under and the Commercial Rules shall be binding Arbitration upon the Rules parties. of the Judgment American upon Arbitration the award Association rendered ( AAA by the Rules ). Arbitrator(s) The AAA may be entered Rules in any are court available of competent online at jurisdiction.

49 Summary of Changes in the Conditions 13. Arbitration (b) ALL CLAIMS AND DISPUTES MUST BE BROUGHT IN AN INDIVIDUAL CAPACITY. NO PARTY MAY SERVE AS PLAINTIFF, CLASS MEMBER, OR PARTICIPANT IN ANY CLASS, REPRESENTATIVE, OR PRIVATE ATTORNEY GENERAL PROCEEDING IN ANY ARBITRATION GOVERNED BY CONDITION 17. If a court decides that applicable law precludes enforcement of any of the limitations contained in Condition 17as to a particular cause of action, then that cause of action (and only that cause of action) must remain in court and be severed from any arbitration. The arbititrator shall not have any authority to conduct any class action arbitration, private attorney general arbitration or arbitration involving joint or consolidated claims under any circumstance.

50 Summary of Changes in the Conditions 13. Arbitration (b) [The Company will pay all AAA filing, administration, and arbitrator fees of the consumer when the arbitration seeks relief of $100,000 or less. Otherwise f] [F]ees will be allocated in accordance with applicable AAA Rules. The results of arbitration will be binding upon the parties. The arbitrator may consider, but is not be bound by, rulings in prior arbitrations involving different parties. The arbitrator is bound by rulings in prior arbitrations involving the same parties to the extent required by law. The arbitrator will issue a written decision sufficient to explain the findings and conclusions on which the award is based. Judgment upon the award rendered by the arbitrator may be entered in any court of competent jurisdiction.

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