 |
 |
 |
|
|
|
||
|
|||||||
|
|
|
|
|
|
||
|
|||||||
Posting for
Thursday, January 21, 1999
by: Ken Jannen
kjannen@firstam.com
SURVEY REQUIREMENTS/TITLE UNDERWRITING/MORTGAGE LENDERS
Ken Jannen (Plantation, FL) writes:
I'm looking for a database on (regulatory) requirements for surveys to be provided in order to delete the standard survey related exceptions or give various ordinary endorsements, such as Form 9 and contiguity. This is for a national residential mortgage lender, but will also relate to residential owner's policies. I know we have requirements in TX & NM, and an interpretation in FL that would generally result in a requirement of a survey, but are they required anywhere else?
Reply: The Senior Underwriting Dept. compiled a list of state requirements for the giving of survey coverage without a survey in connection with loan policies. This list, which is now about five years old, may need updating. It shows only the following states having requirements:
Florida--Survey not more than ten years old required.
New Mexico--Up-to-date survey required.
Ohio--Up-to-date survey required.
Texas--Survey not more than five years old required.
Also, Frank Melchior (Iselin, NJ)--who got Ken's request earlier (direct from Ken) writes:
NJ regs do NOT require surveys for the removal of survey exceptions. However, the filed forms permit the deletion of the survey exception without a survey only for the loan policy. P.S. Underwriting wisdom would likewise limit the coverage w/o surveys to loan policies.
Input from Savants elsewhere would be appreciated--("Is there a regulatory reason for requiring a survey to delete standard exceptions, give contiguity or Form 9, other than in Texas, Florida and New Mexico?")--just press the "reply" button.
**********
Following Thursday's posting Alan Rubin (NY) writes:
New York's TIRSA Rate Manual provides:
"In the absence of a survey acceptable to the Company, or the issuance of a TIRSA SURVEY ENDORSEMENT (Loan Policy) (1-4 family) (9/1/93), the policy must contain the following language: 'subject to any state of facts an accurate survey would show' ".
And, Mike Berey (NY) writes:
Bert - I have sent this (attachment) in before. Was it received?
Reply: Not by me--thanks for re-sending. This is a great bulletin on our underwriting initiative re survey requirements announced by Cliff Morgan and Paul Hammann at national meetings last September and October.
Sandra Thwaites (Canada) writes:
None of the Canadian provinces or territories have any regulations requiring a survey in order to delete the survey related exceptions in any type of title insurance policy.
Victor Crouch (Port Lawrence Title & Trust/Toledo) writes:
As is the case with many such rules Ohio's regulatory requirements with regard to insuring over matters of survey make little sense. If there is evidence of survey we are permitted to delete the survey exception. Evidence of survey is not defined. A recorded plat is evidence of survey as would be a boundary survey not showing improvements. Such evidence of survey provides no information to evaluate regarding the presence of encroachments, overlaps or gaps. But it's good enough for the Department. In addition, the Department of Insurance states that if we delete the survey exception from the mortgage policy we must also do so on the owners policy.
It comes down to a judgement call. If we are only issuing a mortgage policy the complications of providing survey coverage to an owner do not arise.
Since the issuance of the bulletin regarding this matter the Department has privately acknowledged that it was erroneous. However it has declined to withdraw or amend it.
Paul Trefz (PA) writes:
Daily practice in PA is not to require a survey to delete standard exceptions or to ALTA 9, contiguity or access endorsements to a lender; however, to provide similar coverage to Owner, we usually require a current ALTA/ACSM survey.
Palma Collins (VA) writes:
There is no requirement for a survey in Virginia for subdivided residential lots or for residential parcels of 25 acres or less in order to provide survey coverage on a lender's policy. The survey exception is not removed from an owner's policy without a survey. This is not based upon any regulatory requirement, but rather, established underwriting guidelines.
Surveys are still routinely required by settlement agents in connection with property transfers, as opposed to refinances, because it is the accepted practice and the settlement attorney or agent may incur liability for failing to obtain a survey so that they can alert the purchaser to any issues that may exist.
And, Mike Fromhold (Valley Forge/Philadelphia) writes:
There are no regulatory requirements (ala producing a survey, inspections or the like) as a condition to providing survey coverage to a lender for PA, Delaware or West Virginia; and Frank already covered NJ. I recall that in June of 1998, Niels Povlsen requested on behalf of Lenders Advantage, underwriting requirements relating to providing ALTA 9 coverage on residential loans. Possibly, Lender's Advantage already has some form of database on this question.
Reply: I understand Ken is checking that out.
First American Title Insurance Company
of New York
228 East 45th Street, New York, New York lOOl7-3303
To: Counsel
From: Michael Berey
Dated: October 2, 1998
Re: Survey Coverage
At an underwriting meeting held in California last week by Clifford Morgan, Underwriting Director for First American, and Paul Hammann, Associate Senior Underwriter, the attendees were advised that the survey exception can be omitted without production of a survey for a loan policy in any commercial transaction. It was also stated that access coverage or a comprehensive (ALTA 9) endorsement can be issued in a loan policy without a survey on commercial transactions. We can assume that a survey will be required for new construction, including those instances where exterior renovations are being made.
Since, for a lender to suffer a loss because of a title defect there must be a foreclosure, and the defect must reduce the value of the property so as to cause the lender not to receive its outstanding loan, this is considered to be a reasonable risk. We can therefore, in closings involving property in certain jurisdictions, save the client some money on the survey side to the advantage of other charges assessed for the services we provide.
We cannot close without a survey in New Mexico where a current survey is required by statute. In Texas and Florida surveys are also required, but the survey can be last dated seven and five years, respectively, prior to the date of the immediate transaction.
In New York, the TIRSA Rate Manual provides that absent a survey or the issuance to a lender of a "Survey Endorsement" (affording affirmative survey coverage without a survey only on premises improved by a one to four family residence) the policy must contain a survey exception for "any state of facts an accurate survey would show" or an exception for changes since the last survey date. The exception for changes since the last survey date may be eliminated by "Company inspection" for one to four family residential property and by a surveyor’s inspection for other property.
In New York, even though the TIRSA Rate Manual requires a survey in commercial transactions to eliminate the general survey exception and suggests that the exception for changes from the last survey date can be deleted only on an inspection, we can be flexible and rely on the existing survey and a borrower’s affidavit of no change for a loan policy without having the survey updated unless there are reasons to do otherwise. Such a reason could be our being aware that there has been new construction on the premises being insured or on adjoining property.
While we will, of course, comply with a lender’s requirement that there be a survey update, borrower’s counsel may for a New York transaction based on the above be able to have that requirement waived.
Outside of New York, in those jurisdictions in which we can proceed without a survey for a loan policy, an existing survey should be used even if not updated without raising an exception for matters subsequent to the last survey date, unless there are factors such as our being aware that there has been new construction on the premises being insured or on adjoining property. A borrower’s affidavit of no change to substantiate the facts relating to the improvements would be appropriate.
In addition, in all jurisdictions, a survey must be reviewed if there is a question about the accuracy of the legal description to be insured. The existing survey can often be used for this purpose without update.
Please contact me if you have any questions on the above.
cc: James Orphanides Steven Rogers Martin Demsky Helen Powell Martin Kornheiser **********
Following up on last Thursday's posting, Janine Andriole (Baltimore) writes:
In Maryland, one may delete the survey exception on mortgagee policies without requiring a survey on subdivided residential lots which are owner occupied. This is not a regulatory requirement, but is based on established underwriting practices and custom and usage in the industry.
