Translating ALTA into Texan - Res Ipsa

1 Translating ALTA into Texan (Ver. 11-9-15) Presented By RICHARD D. WORSHAM Vice-President/ Texan Region Underwriting Counsel WESTCOR LAND TITLE INSURANCE COMPANY 1776 Woodstead Court THE WOODLANDS, TX 77380 281-362-5860 texas Land Title Association texas Land Title Institute December 3rd & 4th, 2015,San Antonio, texas BIO Richard Worsham Richard Worsham is a 7th generation Texan and a 1985 graduate of the University of Houston Law Center. Mr. Worsham spent 10-years as a commercial litigator, 10-years as a title insurance fee attorney, and is in his 10th year as a title insurance underwriter.

2 As a former fee attorney and as an underwriter he has worked with most of the underwriters in texas , and has extensive experience underwriting commercial transactions in ALTA states. In September of this year, Mr. Worsham joined Westcor Land Title as Vice-President and texas Region Underwriting Counsel, working exclusively with independent title agents. Richard Worsham has extensive speaking experience, teaching realtors , escrow officers and attorneys. He has previously spoken here at the texas Land Title Institute, taught a webinar for the TLTA, taught at South texas College of Law s Annual Real Estate Conference, for the Houston Bar Association, and this past Summer at the State Bar of texas ' Advanced Real Estate Seminar.

3 He has taught numerous realtor seminars, and has conducted continuing education courses in the law offices of many major law firms here in texas . 1 2015 TLTA Institute Translating ALTA into Texan Table of Contents Translating ALTA INTO Texan CONTENTS INTRODUCTION .. 2 POLICIES .. 4 ALTA Standard Coverage .. 4 ALTA Extended Coverage .. 5 ENDORSEMENTS .. 6 ALTA Endorsement Coverage Not Available in texas .. 6 Endorsements that are Substantially the Same Using ALTA and texas Forms .. 7 Endorsements Where texas and ALTA Coverage Require Explanation.

4 8 Comprehensive Endorsements .. 8 ALTA Revisions to the Comprehensive Endorsements .. 9 Translating the ALTA Comprehensive Coverage Endorsements to Coverage using the texas T 19's 10 Survey Coverage (ALTA 25, Survey Deletion).. 11 Access (ALTA 17, / TX T 23) .. 12 Future Advance/Revolving Credit (ALTA 14, , , 43 / TX T 35) .. 13 Environmental Lien (ALTA / TX T 36, ) .. 13 Tie In (Aggregation) (ALTA 12, / T 16) .. 14 Planned Unit Development (PUD) (ALTA 5, / TX T 17) .. 15 Non Imputation Endorsements (ALTA 15, , TX 24) .. 17 Mezzanine Financing ALTA T 16 / texas T .. 17 Co Insurance ( Me Too ) (ALTA 23/ TX T 48).

5 18 Assignment of Rents and Leases (ALTA 37, TX T 27) .. 18 Manufactured Housing Unit ( MHU ) (ALTA , / TX T 31) .. 19 Condominium Endorsements (ALTA 4, / TX T 28) .. 20 Mechanics Lien's and Construction Issues .. 21 Translating RATE RULES .. 23 OTHER ISSUES .. 25 Assignee Language .. 25 ICL versus CPL .. 26 Procedural Rule P 35 and texas Insurance Code (c) .. 26 CONCLUSION .. 28 Appendix A .. 29 APPENDIX B GENERAL NOTES ON tx TITLE COVERAGE VERSUS ALTA .. 31 2 2015 TLTA Institute Translating ALTA into Texan Translating ALTA into Texan INTRODUCTION One of the surprises for the title insurance customer coming into texas for the first time is how tightly regulated the texas title insurance industry is.

6 It contrasts sharply with texas ' carefully cultivated national reputation for little or no business regulation. While you often meet sophisticated and experienced counsel who understand and expect texas ' to be different, for others it comes as a complete surprise. Even if the customer is aware of the differences, or at least that there are differences, there is a discomfort level in working in a regulatory environment they are not accustomed to.. To out of state customers, texas is the oddball. All of the other States are "ALTA States," where title insurance forms are sourced from the American Land Title Association, commonly known by the acronym ALTA.

7 ALTA is not a state or federal regulator, but a trade association representing the title insurance industry. It creates forms with no obligation for anyone to use them. Some states subtly alter the ALTA forms and claim them as their own, and some states may allow limited use of the other forms (California Land Title Association forms being popular in California and the Rocky Mountain states). texas is the only state where ALTA forms are not used. Title Insurance forms in texas are promulgated by the state regulator, the texas Department of Insurance ( TDI ).

8 The confusion is so great among ALTA users, that out of state customers often mischaracterize the texas forms as "TLTA forms." Further, texas is one of a few states that prohibit modifying forms, and nowhere is the rule so strict. Procedural Rule P-1 defines both "Policy" and "Endorsement" as those forms promulgated by the texas Department of Insurance. Procedural Rule P-35 of the texas Basic Manual for Title Insurance states specifically that: 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 3 2015 TLTA Institute Translating ALTA into Texan 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.

9 (i) a statement that a transaction has closed and/or has been funded, (ii) issuance of an insured closing service letter, or any insuring form or endorsement promulgated by the State Board of Insurance, or (iii) certification of copies of documents as being true and exact copies of the original document or of the document recorded in the public records. texas Insurance Code Section (c) take the issue further, still, stating that, Unless authorized by rule adopted by the commissioner, an insurer may not enter into a contract or other agreement concerning an individual title insurance policy if the contract or other agreement is not expressed in the policy.

10 A contract or agreement prohibited by this subsection is void. That is, according to texas law, if the title insurance coverage is not on a texas Department of Insurance promulgated form, it is not valid title insurance in texas , or even a binding contract. The most difficult problem for the out of state customer can be a lack of understanding by the title company. As a texas closer, escrow assistant, attorney, examiner, or underwriter, you have become accustomed to a certain level of understanding from customers about what you do, and a common way of speaking about title insurance.