If the property to be insured abuts or contains wetlands, it is not uncommon to discover an Order of Conditions in the chain of title. Typically, an Order of Conditions is issued by the local Conservation Commission. Occasionally, however, you will discover a superseding order issued by the DEP. Although these Orders impact greatly on a purchaser’s use and enjoyment of the premises, they are not an insured matter under the title insurance policy.

Orders of Conditions relate to laws and governmental regulations that restrict, regulate, or prohibit occupancy, use and enjoyment of the land. As such, they are excluded from coverage under Exclusion No. 1 of the title insurance policy. Nevertheless, they should be brought to the attention of the insured lender and owner. The preferable way to handle this issue involves including a note on Schedule B of the title insurance policy that indicates that the Order of Conditions is excluded from coverage and is listed for informational purposes only. This note should read as follows:

NOTE: While such matters are excluded from coverage under this policy by the Exclusions from Coverage provisions, your attention is directed to the fact that the records of the ___________ County Registry of Deeds disclose the following:

(a) Order of Conditions issued by the [TOWN] Conservation Commission (File No. ________), dated _____________, and recorded in the __________ County Registry of Deeds at Book _______, Page _________, as affected by Certificate of Compliance recorded with said Deeds at Book _______, Page _______.

In the event a Certificate of Compliance has not yet been issued, an underwriting decision must be made by the lender and the lender's attorney. It is not uncommon to run into a situation where a local Conservation Commission refuses to issue a Certificate of Compliance for each of the lots being sold out in a subdivision. Rather, the Conservation Commission tends to wait until the entire project has been completed and sold. At that time, they will issue a Certificate of Compliance assuming that all of the conditions have been met.

Under these circumstances, it is up to the lender to make the decision as to whether they wish to proceed without a Certificate of Compliance. The factors which are generally considered include whether the lot in question contains any actual wetlands, whether any work required to be completed has in fact been completed, whether any funds are being held back from the developer in order to accomplish the eventual completion of the conditions, and the financial status and viability of the developer and the subdivision project.

When you see a Certificate of Compliance, do not always assume that it has discharged all of the conditions which are listed in the Order of Conditions. It is not uncommon for the Conservation Commission to issue a partial Certificate of Compliance. Only a close reading of the actual certificate will indicate whether all the conditions have been met.