ALTA 32-06 and ALTA 33-06 Endorsement Series -MLTA …

1 10/14/20141 First American Title Insurance Company makes no express or implied warranty respecting the information presented and assumes no responsibility for errors or omissions. First American, the eagle logo, and First American Title are registered trademarks or trademarks of First American Financial Corporation and/or its following presentation is for informational purposes only and is not and may not be construed as legal advice. First American Title Insurance Company is not a law firm and does not offer legal services of any kind. No third party entity may rely upon anything contained herein when making legal and/or other determinations regarding title practices. You should consult with an attorney prior to embarking upon any specific course of action. 2012 First American Financial Corporation and/or its affiliates.

2 All rights reserved. NYSE: FAFALTA 32-06 and ALTA 33-06 Endorsement Series Presented byCindy GuanellMLTA Spring Education SeminarNovember 13, 2014 2012 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAFTODAY S PROGRAM Construction Lien priority in Montana Policy Coverage Breaking Down the ALTA 32 Series Forms and Coverage Risk and Underwriting Considerations 2012 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAFC onstruction Lien Priority in Montana Who Has a Right to Lien 71-3-523 Montana Code Attachment of lien 71-3 535 (6) and 71-3-522 Priority of lien over mortgage-71-3-542 Montana Code10/14/20142 2012 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF POLICY COVERAGE 2012 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAFALTA 2006 Loan Policy Covered Risk No.

3 11(a)11. The lack of priority of the lien of the Insured Mortgage(a) as security for each and every advance of proceeds of the loan secured by the Insured Mortgage over any statutory lien for services, labor or material arising from construction of an improvement or work related to the Land when the improvement or work is either: 2012 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAFALTA 2006 Loan Policy Covered Risk No. 11(a)(i) contracted for or commenced on or before Date of Policy; or(ii) contracted for, commenced or continued after Date of Policy if the construction is financed, in whole or in part, by proceeds of the loan secured by the Insured Mortgage that the Insured has advanced or is obligated on Date of Policy to advance; 10/14/20143 2012 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAFALTA 32 Series Forms Discussion Modifying 11(a) Definitions Date of Coverage Endorsement ALTA 32-06 - Loss of Priority Endorsement ALTA Loss of Priority Direct Payment Endorsement ALTA 33-06 - Disbursement 2012 First American Financial Corporation and/or its affiliates.

4 All rights reserved. NYSE: FAFALTA 32 Series Forms DiscussionModifying 11(a) 1. Covered Risk 11(a) of this policy is deleted. 2. The insurance [for Construction Loan Advances] added by Section 3 of this Endorsement is subject to the exclusions in Section 4 of this Endorsement and the Exclusions from Coverage in the Policy, the provisions of the Conditions, and the exceptions contained in Schedule B. For the purposes of this Endorsement and each subsequent Disbursement Endorsement : 2012 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAFALTA 32 Series Forms DiscussionDefinitionsParagraph 2 continued. a. Date of Coverage , is [_____] [Date of Policy] unlessthe Company sets a different Date of Coverage by an ALTA 33-06 Disbursement Endorsement issued at the discretion of the Company. b. Construction Loan Advance, shall mean an advance that constitutes Indebtedness made on or before Date of Coverage for the purpose of financing in whole or in part the construction of improvements on the Land.

5 C. Mechanic s Lien, shall mean any statutory lien or claim of lien, affecting the Title, that arises from services provided, labor performed, or materials or equipment 2012 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAFALTA 32 Series Forms Company insures against loss or damage sustained by the Insured by reason of:a. The invalidity or unenforceability of the lien of the Insured Mortgage as security for each Construction Loan Advance made on or before the Date of Coverage; b. The lack of priority of the lien of the Insured Mortgage as security for each Construction Loan Advance made on or before the Date of Coverage, over any lien or encumbrance on the Title recorded in the Public Records and not shown in Schedule B; and 2012 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAFE ndorsement 32-06 (Construction Loan Loss of Priority)Revised 02-3-11 Paragraph 3c.

6 The lack of priority of the lien of the Insured Mortgage as security for each Construction Loan Advance made on or before the Date of Coverage over any Mechanic s Lien if notice of the Mechanic s Lien is not filed or recorded in the Public Records, but only to the extent that the charges for the services, labor, materials or equipment for which the Mechanic s Lien is claimed were designated for payment in the documents supporting a Construction Loan Advance disbursed by or on behalf of the Insured on or before Date of 2012 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAFE ndorsement (Construction Loan Loss of Priority - Direct Payment)Revised 04-02-13 Paragraph lack of priority of the lien of the Insured Mortgage as security for each Construction Loan Advance made on or before the Date of Coverage over any Mechanic s Lien if notice of the Mechanic s Lien is not filed or recorded in the Public Records, but only to the extent that direct payment to the Mechanic s Lien claimant for the charges for the services, labor, materials or equipment for which the Mechanic s Lien is claimed has been made by the Company or by the Insured with the Company's written approval.

7 10/14/20145 2012 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAFALTA 32-06 v. ALTA ALTA 32-06 : Issued with initial disbursement at time of closing Charges were designated for payment in the documents supporting a Construction Loan Advance Disbursed by or on behalf of the Insured on or before Date of Coverage. Direct payment is NOT made by the Company 2012 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAFALTA 32 Series Forms DiscussionALTA : Issued with initial disbursement at time of closing Direct payment to the Mechanic s Lien claimant IS made by the Company or by the Insured with the Company's written approval. 2012 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAFALTA 32 Series Forms DiscussionALTA 33-06 : Issued to the lender at time of subsequent disbursements subject to underwriting guidelines.

8 Brings forward the Date of Coverage Amends Schedules A and B of the Loan Policy10/14/20146 2012 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAFRisk and Underwriting Considerations Viability of Project Construction Draw Review Indemnification and Financial Strength Administrative Rules of Montana , Encumbrances, and Standards of Insurability 2012 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAFA dministrative Rules of Montana , Encumbrances, and Standards of InsurabilitySubsection 3(d) sets forth provisions to becomplied with in order to give construction liencoverage. (4) For purposes of (3) (d) "sufficient indemnity executed by a responsible person 2012 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAFRisk and Underwriting Considerations (6) For purposes of ARM (4)"responsible person"is any person, or persons if they are jointly and severally liable, whose currently verified balance sheet upon examination is determined by the insurer to be sufficient for the purpose of the indemnity given.

9 Verified copies of all statements shall be retained by the insurer or its 2012 First American Financial Corporation and/or its affiliates. All rights reserved. NYSE: FAF TeamworkoYour Underwriter is here to help you!oCommunication is KEY!Conclusio