Real Estate Law Blog

ACMA Publishes Resource Guide for Mortgage Lenders

Did you know that every other year the American College of Mortgage Attorneys updates its Mortgage Law Summary? This hefty volume offers a compendium of useful information regarding mortgage law topics in each state and Puerto Rico. Each jurisdiction's summary is prepared by licensed attorneys from that jurisdiction, is subject to peer review, and covers such topics as the form of security instrument used, recording requirements, the foreclosure process, usury limits, title insurance options, and many other topics of interest to mortgage attorneys and their lawyers.

The most recent edition of the Mortgage Law Summary, edited by yours truly, was published in October and includes updates reflecting recent legislative activity in the various jurisdictions. If you're still using a prior edition, you don't have access to the most up-to-date reporting. For more information or to order your copy of the newest edition, visit ACMA's website at www.acmaatty.org.

Laura McClellan
Thompson & Knight LLP
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Texas Title Rules & Forms Changes Effective 2/1/2010

Effective as of February 1, 2010, the Texas Department of Insurance adopted various changes to the Title Insurance rates, rules, and forms. Many of the changes were corrections to typographical errors or references to outdated forms or revisions to become more consistent with ALTA language, but some of the changes will affect day-to-day transactions. A few are summarized below.

• New T-24.1 Non-Imputation for Mezzanine Financing Endorsement: Similar to the existing non-imputation endorsement, the T-24.1 also will act as an assignment of rights to receive payments under the applicable owner's policy. Issuance of this endorsement requires signature of both the insured under the owner's policy and the mezzanine lender. The T-24.1 will not be available until an amended Rate Rule R-31 becomes effective. The proposed premium is 5% of the Basic Rate for the associated owner's policy, with a minimum premium of $25.
• New T-25.1 Contiguity Endorsement: The most significant distinction between this endorsement and the existing T-25 Contiguity Endorsement is that the new endorsement may be issued only if the subject property is comprised of at least four parcels or irregularly shaped parcels, and it does not require that the tracts' contiguous boundaries be specifically identified. As with the T-25 endorsement, the T-25.1 may be issued only with respect to non-residential property. No rate rule has yet been proposed, but watchers anticipate that it will be the same as the premium for the T-25.
• Loan Policy Endorsement: The T-2 Loan Policy form has been modified to remove a redundant T-30 endorsement for taxes and to delete the option of deleting insuring paragraphs of certain endorsements.
• Insured Closing Letter: The form has been modified to conform with the corresponding ALTA form. The main differences are that it now protects warehouse lenders and liability under the letter terminates if written notice of claim is not received within two years after the applicable closing date.

"Last Dollar" Endorsement Rescinded in Texas

In case you were not already aware of this, the T-15 (Last Dollar) endorsement to loan policies is no longer available in Texas, as of January 1, 2010, because it refers to a provision that is no longer contained in the T-2 form loan policy, so it's therefore no longer necessary.

No More Creditors' Rights Endorsements?

Word is that this week the governing board of the American Land Title Association ("ALTA") voted unanimously to withdraw and decertify the ALTA 21 endorsement (creditors' rights coverage), effective on March 8. It remains to be seen whether some states will continue to offer some form of creditors' rights coverage.

The ALTA 21 endorsement insures against losses suffered by the insured party if the insured interest if voided because of a finding that a fraudulent transfer or preference occurred before the policy date.

In a search this morning of the ALTA website, I was unable to find any mention of this issue.

Guest Blog: New Title Insurance Rules and Endorsements Regarding Minerals.

The following comes from guest blogger Thad Armstrong, one of my colleagues in the T&K real estate group. For more information, please contact Thad at 713-951-5834

or thad.armstrong@tklaw.com.

Effective November 1, 2009, Texas title companies will have the right to elect whether to exclude or except minerals from coverage. This new rule is the result of months of controversy over the recent trend of title companies to exclude minerals from coverage arguably in violation of the previous rule requiring any exceptions to coverage to be specific in nature rather than broad or general. If the title company elects to exclude minerals under the new rules, a broad "carve out" will be made from the description of the insured property. If the title company elects to except minerals from coverage, a similar broad exception will be made on Schedule B of the policy. If the title company makes either election, it will be required to offer the new T-19.2 and/or T-19.3 endorsements. These endorsements are similar to the existing T-19.1 endorsement in that each offers the insured protection against certain damages resulting, for example, from mineral exploration on the property. There are, however, significant differences. First, the new endorsements offer better coverage for damage to buildings and other improvements on the property. Second, the new endorsements are less expensive – a flat $50.00 for each parcel of land covered by the policy, whereas the cost for the T-19.1 endorsement is 10% of the policy premium.