Most people don’t realize there are varying ALTA title policies with disparate coverage provisions which may handle a claims scenario differently.  Episode 12 of Dirt Tales dealt with a fact situation in which the owner transferred property into a living trust and how the 1992 and 2006 policies handled the matter differently.  In this fact situation the 2006 policy would continue to cover the newly vested entity, the trust, while the 1992 policy would not. 

            But suppose instead of a transfer into a trust, what if there had been a merger or acquisition by Corporation A of Corporation B, our insured.  Now that the insured property is now owned by Corporation A does the title policy in Corporation B’s name continue to insure the land now owned by Corporation A?  Again, there is a difference in whether the title policy is a 1992 policy form or the 2006 form.  With respect to this the 1992 ALTA policy, states:

1.          Title to the estate or interest described in Schedule A being vested other than as stated therein;

              In other words, unless the named insured in the policy is the same as the insured owner of the property at the time of the claim there will be no coverage under the policy.  However, the 2006 title policy contains provisions for continued coverage under certain circumstances where title to the property has been transferred. 

 Section 1. Definition of Terms:       

 The following terms when used in this policy mean:         

Conditions and Stipulations

3 (e)  “Insured":  The Insured named in Schedule A. 

 (i)  The term "Insured" also includes

(C)  successors to an Insured by dissolution, merger, consolidation, distribution, or reorganization; 

(D) successors to an Insured by its conversion to another kind of Entity; 

(E) a grantee of an Insured under a deed delivered without payment of actual valuable consideration conveying the Title

(1) if the stock, shares, memberships, or other equity interests of the grantee are wholly-owned by the named Insured, 

(2) if the grantee wholly owns the named Insured, or 

(3) if the grantee is wholly-owned by an affiliated Entity of the named Insured, provided the affiliated Entity and the named Insured are both wholly-owned by the same person or Entity;  

              In addition to covering the named insured, the 2006 policy will continue to provide coverage where title has been transferred into a trust or acquired by reason of a corporate merger or acquisition or by inheritance.  The 2006 policy gives the insured and their successors much broader coverage than afforded by the 1992 policy, but the Expanded Coverage Policy, also known as the ALTA Homeowner’s Policy, gives even broader coverage and will continue coverage even where title is transferred as a part of a divorce settlement.   

Section 2.        CONTINUATION OF COVERAGE, states:

a.         This Policy insures You forever, even after You no longer have Your Title.  You cannot assign this Policy to anyone else.

b.         This Policy also insures:

(2)       Your spouse who receives Your Title because of dissolution of Your marriage.

            Under the Homeowner’s Policy, Covered Risks No. 28, protection is also provided in the event a neighbor builds a structure on the insured’s property after the effective date of the policy.  This is unique in giving post policy coverage in a title insurance policy.   

                         Item 9 under Conditions sets out inflation protection, which automatically will occur on an annual basis adjusting the amount of coverage up to a maximum amount of 150% of the original insured amount.  

            The Expanded Coverage Homeowner’s Title Policy is available for both the lender and owner in North Carolina for an additional 20% of the filed premium rate.