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Steps 9 1. Write the Policy(s) See the sample Owner's Policy form and Lender's Policy form. See sample Schedules A and Schedule B for hints (in italics) on where to obtain information to be inserted into the Policy. Following is an overview of the types of Policies offered and contents of basic ALTA Policy forms. Types of Policies: Owner's Policy An Owner's Policy insures an owner with respect to the title to the subject property. The Policy can be used for residential or commercial properties, or various other interests in real estate. The coverage remains in effect as long as the insured, or heirs or devisees of the insured retain an interest in the subject property or remain liable under warranties given in the sale of that property. The minimum amount of coverage is generally the full purchase price of real estate, including improvements. Residential/Plain Language Policy Insures the owner of a one to four family residential dwelling, residential lot, or condominium unit. The Policy is an abbreviated short form version of the ALTA Loan Policy, incorporating all the terms and provisions of the ALTA Loan Policy and is designed to be delivered to the lender at closing. The Policy contains blanket exceptions to taxes, covenants and restrictions, easements, reservations of minerals or mineral rights, and offers certain affirmative assurances with respect to those exceptions desired by lenders. The Policy also includes an addendum, which can be used to set forth additional exceptions. The Policy is designed so that certain ALTA endorsements may be specified. Loan Policy Insures that the lender providing a Mortgage Lien secured by the land, specific to the title of the subject property; as well as the validity and the priority of the respective Mortgage Lien. Coverage usually is in the amount of the mortgage loan and the amount of coverage decreases as the Mortgage is paid. Construction Loan Policy Insures a lender providing a loan secured by a Mortgage on the land, and for the purpose of financing construction on that land, with respect to title of the subject property, as well as the validity and priority of the Mortgage Lien. This Policy is similar to the ALTA Loan Policy, except that Mechanic's Lien coverage is not furnished by the base policy, but rather by one of four endorsement forms designed to be used, depending on state law, with the ALTA Construction Loan Policy. Residential Short Form Loan Policy Insures a lender making a loan secured by a Mortgage on land with respect to the title of the subject property, and is similar to a Loan Policy. On a short form version of the ALTA Loan Policy, you check the boxes on the Short Form Policy only for the endorsements which were requested and for which you were paid. The Addendum will be attached if you need to add subordinate items, or if you must set out an encroachment that the Form 100 will not cover and for which the premium has been collected. Leasehold Policy The Leasehold Policy is identical to the Owner's Policy except: - In Schedule A the estate or interest in the land is described as "the leasehold estate." - A section has been added to Schedule A to describe the leasehold term insured. - Schedule B is the same. - The lease must be recorded and will be shown in Schedule B of the Policy as an exception to title. - If the tenant purchases the property, the Policy can be converted to a standard owner's form. - Charges for the Leasehold Policy are based upon the full value of the leasehold. 2006 ALTA Policies The Basic ALTA Policy Form Policy Jacket Insuring provisions - Extent of Coverage The Insuring Provisions detail specific matters that are covered by the Policy and states the amount of loss insured against. Matters covered are: (1) Title of the property is as specified in the Policy. (2) Defects or encumbrances on the title not excepted in the Policy. (3) Purchaser has legal access to the property. (4) Title is marketable.  The Policy insures over other risks such as:  (1) Defects disclosed by public record such as: - Liens - Restrictive covenants - Break in the chain of title - Faulty acknowledgements and  (2) Hidden defects not disclosed by public record such as: - Forgery - Misrepresentation of marital status - Loss of title because of adverse possession - Minor, mental incapacity - Other coverage added by using endorsement Exclusions from coverage (2nd page of jacket) (4 paragraphs) The exclusions from coverage set forth those matters not covered by the Policy. Conditions and Stipulations - (2nd page of jacket) (16-17 paragraphs) Conditions and Stipulations detail the contractual relationship between the insurer and the insured. Member name, address, telephone number and signature Insert the agent's name and member number where specified. Schedule A and Schedule B, Part 1 and B, Part II of an Owner's Policy should be completed as follows:  Policy Number The number of the Policy from the jacket is inserted in the space provided. When the Policy is completed, the number appearing on Schedule A should be the same as the number on the Policy Jacket. Amount of Insurance The amount of insurance is the purchase price or fair market value of the property. Date of Policy The effective date of the policy should be the month, day, year and time of day (7:45 AM) and must be the day after recording of the instrument on which the exposure is based. Paragraph 1 - Name of the Insured Insert the name of the grantee in the Deed, or the Lessee in the Lease, or the Vendee in a Contract for Deed. (Do not show any reference to tenancy.) Show the name exactly as it appears on the Conveyance Deed. Paragraph 2 - Vesting Insert here how the title to the property is held. In most cases this will be "fee simple". Paragraph 3 - Owners of Record Enter the name or names of the owner(s) of record. Paragraph 4 - County Enter the county name in which the property being insured is located. Legal description of the property The complete legal description of the property must be shown. Include the county and the State of Colorado in the description. If the description is according to a recorded plat, include the lot number, block number, name of the subdivision, plat book and page and where it was recorded (if known). Countersigned The city and state where the policy is signed may be inserted here. Member's signature The agent's signature goes in the space provided. Member's number The agent's ATGF member number goes in the space provided. Schedule B, Part 1 Details the exceptions to coverage - Some are pre-printed and some will be typed by the agent. Pre-printed exceptions include: (1) Rights or claims of parties in possession. (2) Easements not shown by public record. (3) Boundary and encroachment conflicts. (4) Mechanic's Liens. (5) Unpatented mining claims and water rights. (6) Unpaid taxes. (7) Other exceptions should be added as prudent. Items 1-4 may be insured over if an endorsement Form 100 is acquired. The Form 100 provides for the following: (1) Claims of parties - If an affidavit was secured. (2) Matters disclosed by survey - If a survey was secured. (3) Mechanic's Liens - If affidavits were secured from the seller and purchaser that no work has been done on the property within the past six months. (4) Taxes and special assessments - If affidavits were secured by municipalities having jurisdiction over the property saying that taxes have been paid. Schedule B, Part II Anything which should be subordinate to the first Deed of Trust being insured should be listed here as an exception to coverage. Schedule A and Schedule B, Part I and B, Part II of a Lenders Policy should be completed as follows:  Date of Policy The effective date of the Policy should be the month, day, year and time of the day through which title has been examined, and must be immediately after the time of recording the instrument on which the exposure is based. Paragraph 1 - Name of Insured The lender will typically indicate how it wishes its name to appear in the Policy. Paragraph 2 - Vesting State the type of estate owned by the mortgagor that is the subject of the Mortgage or Deed of Trust (e.g. Fee Simple, Leasehold). Paragraph 3 - Owner of Record State the name(s) of the owner of record of the estate or interest encumbered by the insured Deed of Trust. As with the Owner's Policy, do not show tenancy. Paragraph 4 - Insured Interest Enter the complete recorded information of the Deed of Trust and any assignments covered by the Policy. Describe in detail the recording information of the instrument such as date, book and page, reception number and the amount of the debt secured. Paragraph 5 - Legal Description The complete legal description of the property, which is the security for the loan, must be entered here. Include the county and State of Colorado in the description. Countersigned The city and state where the Policy is signed may be inserted here. Agent Signature The same individual who signs the Policy Jacket must sign this schedule. Member Number The ATGF member number of the attorney should be inserted in the space provided. Schedule B, Part I File No. and Policy No. The file number is either the ATGF number or the number that the agent has assigned the transaction. The Policy number should be the same as the serialized Policy number on the lower right hand corner of the Policy Jacket. Paragraphs 1 through 4 details the exceptions from coverage as follows: (1) Rights or claims of parties in possession. (2) Easements not of public record. (3) Discrepancies and conflicts with boundary lines and encroachments. (4) Liens not shown by the public records. Paragraphs 1 though 4 are pre-printed exceptions in an ALTA Loan Policy form but may be insured over if an endorsement Form 100 is obtained. If a Form 100 is obtained, that information should be noted under paragraph 4 of the Exceptions. Additional Exceptions In addition to the pre-printed exceptions, the agent must add the specific items encumbering or acting as liens against the property that are superior in priority to the lender's Deed of Trust. Note that all items added to Schedule B should be consecutively numbered. Schedule B, Part II Subordinate Liens Enter here any Deeds of Trust or Assignments of Rent that were recorded after the first Deed of Trust and any other encumbrance which is subordinate to the Deed of Trust being insured. 2. Send the Policies to the appropriate parties. 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