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TEXAS DEPARTMENT OF INSURANCE
FORMS AND RULES CHANGES
EFFECTIVE MAY 1, 2008
NEW TEXAS OWNER POLICY (Form T-1)
TDI has adopted an amendment to the Owner Policy of Title Insurance Form T-1 based on the new 2006 American Land Title Association Owner's Policy.
- Adding certain coverages to the Covered Risks section of the policy. The added coverages were previously limitations on the Exclusions From Coverage (in effect turning exclusions from the exclusions into stated coverages);
- Adding explicit coverage as to survey issues, taxes, assessments and other matters, including gap coverage; and
- Expanding the definition of insured.
For a comparison of the existing to the new form, click HERE.
NEW TEXAS LOAN POLICY (Form T-2)
TDI has adopted an amendment to the Mortgagee Policy of Title Insurance Form T-2 based on the new 2006 American Land Title Association Loan Policy.
- Adding certain coverages to the Covered Risks section of the policy, which were previously limitations on the Exclusions From Coverage (in effect turning exclusions from the exclusions into stated coverages);
- Adding explicit coverage as to survey issues, taxes, assessments and other matters, including gap coverage;
- Incorporating certain endorsements;
- Broadening the definition of insured;
- Deleting the Noncumulative Liability Clause and former pro tanto reduction clause; and
- Adding a new provision providing for increase in Amount of Insurance by 10%.
T-19/19.1 AND OTHER CHANGES ADOPTED - CONFORM TO NEW POLICY -FORMS
TDI has adopted revisions to the arbitration notice given proposed insureds;
TDI has adopted an amendment to the Restrictions, Encroachments, Minerals Endorsement T-19 to conform to the new American Land Title Association Endorsement 9.3-06, which may be issued with the amended Loan Policy T-2; and TDI has adopted an amendment to the Restrictions, Encroachments, Minerals Endorsement - Owner Policy T-19.1 to conform to the new American Land Title Association Endorsement 9.5-06, which may be issued with the amended Owner Policy T-1.
Form T-19 (Loan Policy)
- As amended, the endorsement now provides coverage against damages to "improvements, including lawns, shrubbery and trees, located on the Land on or after Date of Policy" caused by mineral exploration and/or extraction.
- This amendment now results in the termination of the practice of providing a lender P-39 express coverage as to damages to subsequently constructed improvements caused by mineral exploration and/or extraction.
Form T-19.1 (Owner's Policy)
- As amended, the endorsement now provides coverage against damages to "improvements (excluding lawns, shrubbery and trees) located on the Land on or after Date of Policy" caused by mineral exploration and/or extraction.
- This amendment now results in the termination of the practice of providing an owner P-39 express coverage as to damages to subsequently constructed improvements caused by mineral exploration and/or extraction.
Successors and Assigns Language Incorporated into the Rules
TDI has adopted an amendment to Procedural Rule P-7 to incorporate the language from Bulletin 157 into the procedural rules and to resolve the question as to whether it is permissible to include the "successor in ownership" language as part of the Proposed Insured in a Commitment.
Subordinate Liens
TDI has adopted a new Procedural Rule (P-64) regarding the treatment of subordinate liens and leases in order to better alert title companies to comply with the instruction in Procedural Rule P-11.b.(8) (this is the "insuring around" rule, and contains the language whereby the title company insures that certain matters are subordinate to the insured mortgage).
Revolving Credit/Future Advance Endorsement Form (T-35)
TDI has amended the Revolving Credit Endorsement Form T-35 to change the name to the Revolving Credit/Future Advance Endorsement Form T-35 and to conform to the American Land Title Association form by expanding coverage to the lender.
- It insures compliance with future advance laws,
- It includes protective advances in the scope of coverage, and it limits the application of Policy provisions relating to subsequent advances.
- This endorsement should not be issued based on a generic future advances clause in the insured mortgage. Instead, the mortgage must secure indebtedness described in a loan agreement that clearly contemplates future advances.
Co-Insurance Endorsement (T-48)
TDI has adopted a new Co-Insurance Endorsement Form T-48 to accommodate commercial lenders and owners who often request this endorsement in multi-state, multi-site, and other large transactions. There is a companion amendment to Procedural Rule P-6 to authorize a Co-insurer to issue a Co-insurance Endorsement to another Title Insurer's Owner or Mortgagee Policy when the co-insurance transaction exceeds fifteen million dollars.
Reverse Exchanges
TDI has adopted a new Procedural Rule (P-63) that incorporates the procedural portion of Rate Rule R-2.(d) concerning a policy issued to a qualified intermediary under IRS Code 1031 and also contains deletions and improved formatting.
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