PA Title Insurance Rating Bureau Changes

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The Title Insurance Rating Bureau of Pennsylvania (“TIRBOP”) submitted to the Pennsylvania Insurance Department two (2) revised endorsements, Nine (9) new endorsements, and revised Section 5.11 of the Rate Manual in regards to the methodology for calculating the charge for mechanic’s lien coverage. The forms were approved and will be effective July 1, 2014. The largest change is that no PA Title Insurance company will be able to optionally waive the charge for mechanic’s lien coverage when insuring a construction mortgage that is being recorded after work on the property to be insured has commenced. It may be waived in situations where construction has not commenced.

The revised endorsements are as follows:

TIRBOP Endorsement 1033 – Private Rights (ALTA Endorsement 9.6-06 as modified by TIRBOP revised 04/02/13) (Loan Policy Only)
The currently filed form was revised by ALTA to include an optional section 4(d) which allows an insurer to except specific private rights from the coverage of the endorsement.

TIRBOP Endorsement 1260 – Aggregation/Tie-in/Intrastate only (ALTA Endorsement 12-06 as modified by TIRBOP revised 04/02/13)
ALTA revised this endorsement to amend Condition 7 of the Policy to reflect that the insurer’s liability is based on the aggregate amount of the insurance.
The new endorsements are as follows:

TIRBOP Endorsement 501– Mortgage Modification (ALTA Endorsement 11-06) (Loan Policy Only)
This endorsement insures against loss or damage due to the invalidity or unenforceability of the mortgage as a result of the terms of the mortgage modification agreement. It also insures that the priority of the mortgage, as modified, continues over any defects, liens, and encumbrances on title, other than those listed as exceptions in either the policy or the endorsement.
Unlike the PA 500, which was the mortgage modification endorsement being issued up until the effective date of these new endorsements; this endorsement does not change the effective date of the policy. This endorsement may only be issued when the modification is within one year of the date of the insured mortgage.

The charge for this endorsement is 25% of the non-sale rated for the unpaid principle balance of the loan.

TIRBOP Endorsement 1341 – Minerals and Other Subsurface Substances – Buildings (ALTA Endorsement 35-06) (PA Title Insurance Loan Policy Only)
This endorsement insures against loss or damage by reason of the enforced removal or alteration of any Improvement [buildings] resulting from the future exercise of any right to use the surface of the Land for the extraction or development of minerals or any other subsurface substances. The Charge for this endorsement is $500.00. Use of this endorsement is prohibited in conjunction with the issuance of a loan policy insuring 1-4 family residential property.

TIRBOP Endorsement 1351– Minerals and Other Subsurface Substances – Improvements (ALTA Endorsement 35.1-06) (PA Title Insurance Loan Policy Only)
This endorsement insures against loss or damage by reason of the enforced removal or alteration of any Improvement [including a building, structure located on the surface of the Land and any paved road, walkway, parking area, driveway or curb] resulting from the future exercise of any right to use the surface of the Land for the extraction or development of minerals or any other subsurface substances. The Charge for the endorsement is 5%, calculated in accordance with Section 5.2 of the Rate Manual, with a minimum Charge of $500.00. Use of this endorsement is prohibited in conjunction with the issuance of a loan policy insuring 1-4 family residential property.

TIRBOP Endorsement 1361– Minerals and Other Subsurface Substances – Land Under Development (ALTA Endorsement 35.3-06) (PA Title Insurance Loan Policy Only)
This endorsement insures against loss or damage by reason of the enforced removal or alteration of any Improvement or Future Improvement [including a building, structure located on the surface of the Land and any paved road, walkway, parking area, driveway or curb] resulting from the future exercise of any right to use the surface of the Land for the extraction or development of minerals or any other subsurface substances. The Charge for the endorsement is 10%, calculated in accordance with Section 5.2 of the Rate Manual, with a minimum Charge of $500.00. Use of this endorsement is prohibited in conjunction with the issuance of a loan policy insuring 1-4 family residential property.

TIRBOP Endorsement 1480– Covenants, Conditions, Restrictions (ALTA Endorsement 9.3-06 revised 04/02/13) (PA Title Insurance Loan Policy Only)
This endorsement insures against loss or damage by reason of a violation of a Covenant that (a) divests, subordinates or extinguishes the lien of the Insured Mortgage or (b) that results in the invalidity, unenforceability, or lack of priority of the lien of the Insured Mortgage. It also insures against loss or damage by reason of (i) a violation of an enforceable Covenant unless an exception in Schedule B identifies the violation, (ii) enforced removal of an Improvement as a result of a violation of a building setback line shown on a recorded subdivision plan, and (iii) notice of a violation recorded in the Public Records of an enforceable Covenant relating to environmental protection. The Charge for this endorsement is 5%, calculated in accordance with Section 5.2 of the Rate Manual, with a minimum Charge of $75.00.

TIRBOP Endorsement 1490– Private Rights (ALTA Endorsement 9.9-06 revised 04/02/13) (PA Title Insurance Owner’s Policy Only) This endorsement insures against loss or damage if enforcement of a Private Right in a Covenant affecting the Title at Date of Policy causes a loss of the Insured’s Title. Private Right is defined as (i) an option to purchase; (ii) a right of first refusal; or (iii) a right of prior approval of a future purchaser or occupant. This endorsement permits a specific Private Right to be excluded from coverage. The Charge for this endorsement is 10%, calculated in accordance with Section 5.2 of the Rate Manual, with a minimum Charge of $1,000.00. Use of this endorsement is prohibited in conjunction with the issuance of an owner’s policy insuring 1-4 family residential property.

TIRBOP Endorsement 1500– Construction Loan – Loss of Priority (ALTA Endorsement 32-06) (PA Title Insurance Loan Policy Only) This endorsement deletes Covered Risk 11(a) of the ALTA Loan Policy of Title Insurance, as modified by TIRBOP (06/17/06) and provides the coverage set forth in section 3 which insures against (a) loss or damage by reason of 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 for each Construction Loan Advance over any recorded lien or encumbrance not shown in Schedule B; and (c) the lack of priority of the lien of the Insured Mortgage over any unrecorded mechanic’s liens but only for such mechanic lien claims which were designated for payment in the Construction Loan Advance and disbursed on or before Date of Coverage. The Charge for this endorsement is set forth in Section 5.11B of the Rate Manual.

TIRBOP Endorsement 1510- Construction Loan – Loss of Priority – Direct Payment (ALTA Endorsement 32.1-06 revised 04/02/13) (PA Title Insurance Loan Policy Only)
This endorsement deletes Covered Risk 11(a) of the ALTA Loan Policy of Title Insurance, as modified by TIRBOP (06/17/06) and provides the coverage set forth in section 3 which insures against (a) loss or damage by reason of 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 for each Construction Loan Advance over any recorded lien or encumbrance not shown in Schedule B; and (c) the lack of priority of the lien of the Insured Mortgage over any unrecorded mechanic’s liens but only for such mechanic lien claims which were designated for payment in the Construction Loan Advance. This endorsement requires direct payment to contractors and materialmen to be made by the Company or by the Insured with the Company’s written approval. The Charge for this endorsement is set forth in Section 5.11B of the Rate Manual.

TIRBOP Endorsement 1520- Disbursement (ALTA Endorsement 33-06) (PA Title Insurance Loan Policy Only)
This endorsement can only be issued in conjunction with TIRBOP Endorsement PA 1500 or 1510 and advances the Date of Coverage for Construction Loan Advances. The endorsement includes an option to state the current disbursement amount and to state the aggregate amount, including the current disbursement amount. The Charge for this endorsement is set forth in Section 5.11B of the Rate Manual.
IN THE CASE OF ALL THE ABOVE ENDORSEMENTS, PRIOR UNDERWRITING APPROVAL IS REQUIRED BEFORE THESE MAY BE ISSUED.

The following endorsements and policy forms have been withdrawn simultaneously with the filing of the revised forms:

TIRBOP Endorsement 1033 (04/01/13) – Private Rights (ALTA Endorsement 9.6-06 as revised 04/02/12) (Loan Policy Only)
TIRBOP Endorsement 1260 (04/01/07) – Intrastate Aggregation (ALTA Endorsement 12-06, as modified by TIRBOP as revised 04/02/13)
The modifications and additions to Section 5.11 of the Rate Manual are as follows:
5.11 MECHANIC’S LIEN INSURANCE
If, by reason of the visible commencement of erection or construction of an improvement, a statutory lien for labor or material may gain priority over the instrument being insured, an additional Charge for insurance covering unfiled mechanics’ and materialmen’s liens shall be made as follows:
A. Non Construction Mortgage
When a Loan Policy is to be issued insuring a mortgage, other than a purchase money mortgage or a construction mortgage as provided in Section 5.11B, the additional Charge shall be 20%, calculated in accordance with Section 5.2.
B. Construction Mortgage
When a Loan Policy is to be issued insuring a construction mortgage, the additional Charge shall be 20% calculated in accordance with Section 5.2, unless it is issued with either TIRBOP Endorsement PA 1500 or PA 1510 and with TIRBOP Endorsement PA 1520. In that event, the additional Charge shall be 10% calculated in accordance with Section 5.2 for either TIRBOP Endorsement PA 1500 or 1510 and $100.00 for TIRBOP Endorsement PA 1520. The Charge for the TIRBOP Endorsement PA 1520 shall be made each time it is issued.
C. Owners Policy
When insurance covering unfiled mechanics’ and materialmen’s liens is provided in an Owner’s Policy, the additional Charge shall be, 25% calculated in accordance with Section 5.2.
D. Waiver of Additional Charge
The Insurer reserves the right to waive the additional Charge, as set forth in Sections 5.11A or C above, when, in its opinion, based upon the protective devices and procedures used in the transaction, the risk involved does not warrant payment thereof. The additional Charge, when insuring a construction mortgage as set forth in Section 5.11 B above, shall not be waived.