October 18, 2021

Changes to Title and Survey Diligence Insurers Don’t Want to Miss

As part of an effort to revamp and modernize title insurance policies and land surveys, this year, the American Land Title Association (ALTA) and the National Society of Professional Surveyors (NSPS) updated their standards, which are now in use and are summarized below.

ALTA/NSPS Land Title Surveys (Surveys) are used by owners, buyers, lenders and other parties with interests in real property to determine and depict existing features of a property, including land boundaries, accessways, structures and other buildings, encroachments, waterways and other features of significance. The 2021 Minimum Standard Detail Requirements (the Standards) for Surveys provide surveyors with the requirements by which uniform Surveys can be produced. In the new Standards, ALTA and NSPS have set forth changes, including updates to the precision of placing and depicting monuments, incorporating easements based on recorded documents noted in Policies (as defined below), and marking utilities and highways. However, the most significant changes to the Standards are: (1) the removal of the requirement to determine if certain party or division walls are plumb; (2) the inclusion of the requirement that above-ground utilities be noted; (3) the option that underground utilities be located only if specifically requested and further information is provided to the surveyor; and (4) the removal of the option to note evidence of a field delineation of wetlands. Importantly, deleted Standards may still be negotiated by those requesting Surveys and the surveyor, and notated on such Surveys.

Title insurance policies are used by owners and lenders alike to protect against property loss or damage caused by, among other things, liens, encumbrances, and other defects in the title of the property. ALTA has issued a new suite of owner’s and loan policies (collectively, the Policies), a new title commitment, a new endorsement series and a multitude of amendments to the existing endorsement series. Rather than amend the existing 2006 form policies, ALTA opted to issue entirely new form Policies in order to better incorporate a multitude of technical changes. Despite the new forms, the vast majority of the Policies remain unchanged from their 2006 precedent. Among the most notable changes are: (1) the addition of an introductory paragraph validating the policy even if it is issued electronically (removing the need for the electronic issuance endorsement); (2) the addition of coverage for defects arising due to remote online notarization or repudiation of an online signature to a recorded document, including mortgages; (3) the addition of a blanket exclusion regarding discriminatory covenants; (4) the clarification that tribal lands and Native American jurisdictions are excluded from the definition of “State”; and (5) the addition of a subsection permitting the insured to choose the date of loss for the calculation of the amount of loss. Additionally, a new series of endorsements (i.e., ALTA Endorsements 47, 47.1, 47.2, and 47.3) have been added to clarify that the law of the state in which the property is located — or to the extent it controls, federal law — will apply to determine the validity of claims against the title or the lien of the insured mortgage that are adverse to the insured and to interpret and enforce the terms of the lender’s policy.

Parties to real estate transactions, including acquisitions, dispositions, development and financing matters, rely on Surveys and Policies as part of their due diligence to ensure their respective interests are protected. These diligence items assist interested parties by showing them the potential risks and benefits of the property transaction.

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