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Adam Tucker
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1 CE & CLE FAQs are available under the Texas TIPS tab at

2 ATTORNEY INFORMATION Because of opinions expressed by the Texas Department of Insurance (TDI) concerning rebates, legal credit is available only to: Attorneys who own title agencies that are Stewart Title Guaranty Agents Attorneys employed by a title insurance agent licensed with Stewart Title Guaranty or Stewart entities Fee attorneys who have an Escrow Officer license through a Stewart Title Agent or Stewart entity We welcome any other lawyers to listen, but cannot provide continuing education credit to you. 2

3 Certain slides have been formatted to conform with the actual presentation by Mr. Pratt.

4 REVIEW OF OWNER S POLICY WILLIAM S. PRATT Underwriting Counsel Austin, TX , ext.3 Bill.pratt@stewart.com

5 P-35. Prohibition Against Guaranties, Affirmations, Indemnifications, and Certifications No Title Insurance Company, Title Insurance Agent, Direct Operation, Escrow Officer, nor any employee, officer, director or agent of any such entity or person, shall issue or deliver any form of verbal or written guaranty, affirmation, indemnification, or certification of any fact, insurance coverage or conclusion of law to any insured or party to a transaction other than: (i) (ii) (iii) a statement that a transaction has closed and/or has been funded, issuance of an insured closing service letter, or any insuring form or endorsement promulgated by the State Board of Insurance, or certification of copies of documents as being true and exact copies of the original document or of the document recorded in the public records.

6 T-1 or T-1R? P-38. Residential Owner Policy of Title Insurance - One-to-Four Family Residences A Company shall only issue a Residential Owner Policy of Title Insurance-One-to-Four Family Residences (Form T-1R) on property that is Residential Real Property, and the insured is a natural person(s) at the date the policy is issued. In the application of this rule it is permissible to issue a Residential Owner Policy of Title Insurance (Form T-1R) prior to the construction of improvements provided that the Residential Owner Policy of Title Insurance (Form T-1R) is issued to a natural person, in accordance with P-8.a. In all other cases, the Company shall issue the Owner Policy (Form T-1) when issuing a policy to an owner.

7 T-1 or T-1R? P-1. Definitions u. Residential real property - 1. Any real property which has improvements thereon designed principally for the occupancy of from one to four families (including individual units of condominiums and cooperatives) and either (a) situated in a platted subdivision of record, or (b) consisting of five acres or less, or 2. Any real property which has improvements thereon designed principally for the occupancy of from one to four families and consisting of more than five acres but not more than 200 acres used for agricultural production by individual insureds (according to the information known by the Company at the time of issuance of the policy of title insurance).

8 COVERED RISKS SUBJECT TO THE EXCLUSIONS FROM COVERAGE, THE EXCEPTIONS FROM COVERAGE CONTAINED IN SCHEDULE B AND THE CONDITIONS, BLANK TITLE INSURANCE COMPANY, a Blank corporation (the Company ) insures, as of Date of Policy and, to the extent stated in Covered Risks 9 and 10, after Date of Policy, against loss or damage, not exceeding the Amount of Insurance, sustained or incurred by the Insured by reason of: 1. Title being vested other than as stated in Schedule A.

9 COVERED RISKS 2. Any defect in or lien or encumbrance on the Title. This Covered Risk includes but is not limited to insurance against loss from: (a) A defect in the Title caused by: (i) forgery, fraud, undue influence, duress, incompetency, incapacity or impersonation; (ii) failure of any person or Entity to have authorized a transfer or conveyance; (iii) a document affecting Title not properly created, executed, witnessed, sealed, acknowledged, notarized or delivered; (iv) failure to perform those acts necessary to create a document by electronic means authorized by law;

10 COVERED RISKS 2. (b) The lien of real estate taxes or assessments imposed on the Title by a governmental authority due or payable, but unpaid. (c) Any encroachment, encumbrance, violation, variation, or adverse circumstance affecting the Title that would be disclosed by an accurate and complete land survey of the Land. The term encroachment includes encroachments of existing improvements located on the Land onto adjoining land, and encroachments onto the Land of existing improvements located on adjoining land. (d) Any statutory or constitutional mechanic s, contractor s, or materialman s lien for labor or materials having its inception on or before Date of Policy.

11 COVERED RISKS 3. Lack of good and indefeasible Title. 4. No right of access to and from the Land.

12 COVERED RISKS CONDITIONS AND STIPULATIONS: 1. DEFINITION OF TERMS. The following terms when used in this policy mean:... (g) access : legal right of access to the land and not the physical condition of access. The coverage provided as to access does not assure the adequacy of access for the use intended. PROCEDURAL RULE P-37. Lack of a Right of Access - If the company is not satisfied as to the insurability of access to and from the land, the title to which or a lien thereon is to be insured, it may make the following exceptions to the insuring form: a. To the Owner Policy (Form T-1): "Lack of a right of access to and from the land. Insuring provision number 4 is hereby deleted." b. To the Mortgagee Policy: "Lack of a right of access to and from the land. Insuring provision number 3 is hereby deleted." c. To the Residential Owner Policy (Form T-1R): "Lack of a right of access to and from the land. Company deletes the insurance of access under Covered Title Risks.

13 COVERED RISKS 5. The violation or enforcement of any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting or relating to: (a) the occupancy, use or enjoyment of the Land; (b) the character, dimensions or location of any improvement erected on the Land; (c) subdivision of land; or (d) environmental protection If a notice, describing any part of the Land, is recorded 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 COVERED RISKS 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. 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.

15 COVERED RISKS 9. Title being vested other than as stated in Schedule A or being defective: (a) as a result of the avoidance in whole or in part, or from a court order providing an alternative remedy, of a transfer of all or any part of the title to or any interest in the Land occurring prior to the transaction vesting Title as shown in Schedule A because that prior transfer constituted a fraudulent or preferential transfer under federal bankruptcy, state insolvency or similar creditors rights laws; or

16 COVERED RISKS 9. (b) because the instrument of transfer vesting Title as shown in Schedule A constitutes a preferential transfer under federal bankruptcy, state insolvency or similar creditors rights laws by reason of the failure of its recording in the Public Records: (i) to be timely, or (ii) to impart notice of its existence to a purchaser for value or a judgment or lien creditor.

17 COVERED RISKS 10. Any defect in or lien or encumbrance on the Title or other matter included in Covered Risks 1 through 9 that has been created or attached or has been filed or recorded in the Public Records subsequent to Date of Policy and prior to the recording of the deed or other instrument of transfer in the Public Records that vests Title as shown in Schedule A. The Company also will pay the costs, attorneys fees and expenses incurred in defense of any matter insured against by this policy, but only to the extent provided in the Conditions. STEWART TITLE GUARANTY COMPANY By President Secretary

18 EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage, costs, attorneys fees or expenses which arise by reason of: 1. (a) Any law, ordinance or governmental regulation (including but not limited to building and zoning laws, ordinances, or regulations), restricting, regulating, prohibiting or relating to (i) the occupancy, use, or enjoyment of the land; (ii) the character, dimensions or location of any improvement now or hereafter erected on the land;

19 EXCLUSIONS FROM COVERAGE (a) (iii) a separation in ownership or a change in the dimensions or area of the land or any parcel of which the land is or was a part; or (iv) environmental protection, or the effect of any violation of these laws, ordinances or governmental regulations, except to the extent that a notice of the enforcement thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. (b) Any governmental police power not excluded by (a) above, except to the extent that a notice of the exercise thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy.

20 EXCLUSIONS FROM COVERAGE 2. Rights of eminent domain unless notice of the exercise thereof has been recorded in the public records at Date of Policy, but not excluding from coverage any taking that has occurred prior to Date of Policy which would be binding on the rights of a purchaser for value without knowledge.

21 EXCLUSIONS FROM COVERAGE 3. Defects, liens, encumbrances, adverse claims or other matters: (a) created, suffered, assumed or agreed to by the insured claimant; (b) not known to the Company, not recorded in the public records at Date of Policy, but known to the insured claimant and not disclosed in writing to the Company by the insured claimant prior to the date the insured claimant became an insured under this policy; (c) resulting in no loss or damage to the insured claimant; (d) attaching or created subsequent to Date of Policy; (e) resulting in loss or damage that would not have been sustained if the insured claimant had paid value for the estate or interest insured by this policy.

22 EXCLUSIONS FROM COVERAGE 4. The refusal of any person to purchase, lease or lend money on the estate or interest covered hereby in the land described in Schedule A because of unmarketability of title.

23 EXCLUSIONS FROM COVERAGE 5. Any claim which arises out of the transaction vesting in the person named in paragraph 3 of Schedule A the estate or interest insured by this policy, by of the operation of federal bankruptcy, state insolvency, or other state or federal creditors rights laws that is based on either (i) (ii) the transaction creating the estate or interest Insured by this Policy being deemed a fraudulent conveyance or fraudulent transfer or a voidable distribution or voidable dividend, the subordination or re-characterization of the estate or interest insured by this Policy as a result of the application of the doctrine of equitable subordination or \ (iii) the transaction creating the estate or interest insured by this Policy being deemed a preferential transfer except where the preferential transfer results from the failure of the Company or its issuing agent to timely file for record the instrument of transfer to the insured after delivery or the failure of such recordation to impart notice to a purchaser for value or a judgment or lien creditor.

24 CONDITIONS AND STIPULATIONS 1. DEFINITION OF TERMS. The following terms when used in this policy mean: (a) insured : the insured named in Schedule A, and, subject to any rights or defenses the Company would have had against the named insured, those who succeed to the interest of the named insured by operation of law as distinguished from purchase including, but not limited to, heirs, distributees, devisees, survivors, personal representatives, next of kin, or corporate, partnership or fiduciary successors, and specifically, without limitation, the following: Note: Please see current policy for most current definition.

25 CONDITIONS AND STIPULATIONS (i) the successors in interest to a corporation, limited liability company or limited liability partnership resulting from merger or consolidation or conversion or the distribution of the assets of the corporation or limited liability company or limited liability partnership upon partial or complete liquidation; (ii) the successors in interest to a general or limited partnership or limited liability company or limited liability partnership which dissolves but does not terminate; (iii) the successors in interest to a general or limited partnership resulting from the distribution of the assets of the general or limited partnership upon partial or complete liquidation;

26 CONDITIONS AND STIPULATIONS (iv) the successors in interest to a joint venture resulting from the distribution of the assets of the joint venture upon partial or complete liquidation; (v) the successor or substitute trustee(s) of a trustee named in a written trust instrument; or (vi) the successors in interest to a trustee or trust resulting from the distribution of all or part of the assets of the trust to the beneficiaries thereof

27 CONDITIONS AND STIPULATIONS 1. DEFINITION OF TERMS. The following terms when used in this policy mean:... (d) land : the land described or referred to in Schedule A, and improvements affixed thereto that by law constitute real property. The term land does not include any property beyond the lines of the area described or referred to in Schedule A, nor any right, title, interest, estate or easement in abutting streets, roads, avenues, alleys, lanes, ways or waterways, but nothing herein shall modify or limit the extent to which a right of access to and from the land is insured by this policy.

28 CONDITIONS AND STIPULATIONS 2. CONTINUATION OF INSURANCE AFTER CONVEYANCE OF TITLE. The coverage of this policy shall continue in force as of Date of Policy in favor of an insured only so long as the insured retains an estate or interest in the land, or holds an indebtedness secured by a purchase money mortgage given by a purchaser from the insured, or only so long as the insured shall have liability by reason of covenants of warranty made by the insured in any transfer or conveyance of the estate or interest. This policy shall not continue in force in favor of any purchaser from the insured of either (i) an estate or interest in the land, or (ii) an indebtedness secured by a purchase money mortgage given to the insured.

29 EXCEPTIONS FROM COVERAGE This policy does not insure against loss or damage (and the Company will not pay costs, attorney s fees or expenses) that arise by reason of the terms and conditions of the leases or easements insured, if any, shown in Schedule A and the following matters: 1. The following restrictive covenants of record itemized below (the Company must either insert specific recording data or delete this exception): 2. Any discrepancies, conflicts, or shortages in area or boundary lines, or any encroachments or protrusions, or any overlapping of improvements. 3. Homestead or community property or survivorship rights, if any, of any spouse of any insured

30 EXCEPTIONS FROM COVERAGE 4. Any titles or rights asserted by anyone, including but not limited to, persons, the public, corporations, governments or other entities, a. to tidelands, or lands comprising the shores or beds of navigable or perennial rivers and streams, lakes, bays, gulfs or oceans, or b. to lands beyond the line of the harbor or bulkhead lines as established or changed by any government, or c. to filled-in lands, or artificial islands, or d. to statutory water rights, including riparian rights, or e. to the area extending from the line of mean low tide to the line of vegetation or the right of access to that area or easement along and across that area.

31 EXCEPTIONS FROM COVERAGE 5. Standby fees, taxes and assessments by any taxing authority for the year and subsequent years; and subsequent taxes and assessments by any taxing authority for prior years due to change in land usage or ownership, but not those taxes or assessments for prior years because of an exemption granted to a previous owner of the property under Section 11.13, Texas Tax Code, or because of improvements not assessed for a previous tax year. 6. The following matters and all terms of the documents creating or offering evidence of the matters (The Company must insert matters or delete this exception.):

32 To Receive CE Credit Each individual seeking credit hours must send their own certificate request to: Please include the following information: Provide only this Presentation Name in the Subject Line of your Review of Owner s Policy In the body of your Name of Participant (as it appears on your Escrow Officer License); Presentation PASSWORD given at the end of the webinar; License Number Only (located on left side of Escrow Officer Certificate of License for example: License Number: ) For Attorney CLE Credit also include: Texas State Bar Number Affiliation with Stewart Employed by Stewart Title Guaranty Company; an affiliate; or a Stewart agent For more details, see the CE and CLE FAQs at:

33 Please contact us ONLY if you haven t received your certificate within 10 business days at: CEcertificate@stewart.com You can access the full presentation materials 10 business days after this presentation as well as all current courses at: under the Texas TIPS tab 33

34 Next Month s Texas TIPS Online presentation is June 15, 2017 E-closings Future or Now presented by: Dawn Lewallen For Questions/Comments john.rothermel@stewart.com or heidi.junge@stewart.com 34

American Land Title Association Adopted OWNER S POLICY OF TITLE INSURANCE Issued by [TITLE INSURANCE COMPANY]

American Land Title Association Adopted OWNER S POLICY OF TITLE INSURANCE Issued by [TITLE INSURANCE COMPANY] OWNER S POLICY OF TITLE INSURANCE Issued by [TITLE INSURANCE COMPANY] Any notice of claim and any other notice or statement in writing required to be given to the Company under this Policy must be given