Title Insurance Endorsements

Endorsements are used to change the coverage of the title insurance policy.  ALTA policies and other forms of title insurance policies provide adequate coverage for a majority of the "simple" real property transactions.  If the transfer of title is not "simple", the the policy coverage needs to be added by endorsement to tailor coverage to meet the home owner's, the seller's, and/or the lender's needs.  Endorsements can change any port or portion of the policy, although endorsements are usually used to extend or make policy coverage more comprehensive for a particular title issue.

The follow are some of the more commonly used endorsements, but remember that each endorsement is subject to approval in the state where it will be issued or used.

1 Endorsement: Assessments 
In some states, ALTA loan policies do not insure against loss or damage caused by assessments for street improvements under construction or completed at date of policy which have or may gain priority over the lien of the insured mortgage.  

3 and 3.1 Endorsements:  Zoning 
These endorsements, where not prohibited by state regulations, insure what zone is applicable to the property insured and what uses the zone permits.  In addition, the 3.1 insures against loss or damage arising from a final decree of a court of competent jurisdiction which either 1) prohibits a specific use set forth in the policy or 2) requires the removal or alteration of a structure located on the property on the date the policy is issued because of violations of area, floor space or setback requirements in the law.  

4 and 4.1 Endorsements: Condominiums 
This endorsement insures that 1) the condo being insured qualifies as a condo by its creating documents under the applicable state statutes, there are no violations of restrictive covenants which will cause a forfeiture of the title, 3) the liens for homeowners' association assessments will not have priority over the insured mortgage (4.1 limits title insurance coverage to the date of recording), 4) there will be no loss or damage to the insured by reason of the insured's interest no being separately assessed, 5) that there are no encroachments that will cause loss or damage to the insured owner or lender, and 6) that there is no right of first refusal to purchase that will crate a loss to the insured.

5 and 5.1 Endorsements: Planned Unit Developments 
This endorsement provides the same basic coverage as 4 and 4.1 as stated above for planned unit developments rather than condos.

6, 6.1 and 6.2 Endorsements: Variable Rate Mortgage 
These endorsements insure a lender against loss or damage arising from the invalidity or unenforceability of the lien of the insured mortgage caused by changes in interest rates in variable or adjustable rate mortgages.  The 6.2 endorsement is applicable to negative amortization mortgages and also insures that the negative amortization of interest to the principal balance will not affect the priority of the lien. 

7 Endorsement: Manufactured Housing 
When this endorsement is attached to an ALTA loan or owner's policy, it changes the definition of the word "land" in the policy and insures that the manufactured housing unit is real property and part of the land.  

8.1 Endorsement: Environmental Protection Lien 
This endorsement does not provide coverage for environmental protection.  Rather, this endorsement gives affirmative coverage that no document in the public records discloses an environmental lien or notice of enforcement of a lien.  It also insures that there are no super-lien statutes in the state where the land is located that could affect the priority of the lien for the insured mortgage.  

9 Endorsement: Restrictions, Encroachments and Minerals 
This is a lender's endorsement that is considered an all-inclusive endorsement.  It assures that the covenants, conditions and restrictions that are shown in Schedule B of the title insurance policy are not violated, but if they are, the violation will not affect the priority of the mortgage or cause the loss of all, or part, of the title to the property.  In addition, there are assurances that there are no violations of building codes relating to setback lines, nor other encroachments.  Lastly, the endorsement assures against damage arising out of the right to surface entry resulting from mineral exceptions shown in Schedule B.