Affirmative Coverage Over Violations of CCRs or Maintenance Assessments is Not Standard (AYU May 2024)

Presented by T. Stewart Rauch

We have recently seen a number of commitments where agents have included either or both of the following in Schedule B-II of the commitment:

1. The policy insures that the covenants have not been violated by any existing structures and a future violation will not cause a forfeiture or reversion of title.

2. The lien for any maintenance charges or assessments is subordinate to the lien of the insured Deed of Trust.

Agents frequently include the above language with the exception for covenants, conditions and restrictions (CCRs). We have recently seen the above language as stand-alone exceptions. Neither is acceptable. 

Please note that using this language provides affirmative coverage and is NOT to be included as a matter of course as standard language in a commitment or because a lender requests or requires it. 

This affirmative coverage should only be provided if:

(a) it is specifically requested;

(b) you have reviewed all of the CCRs of record and can affirm that that there is no forfeiture or reversion of title and/or that assessments and charges are in fact subordinate to the deed of trust being insured;

(c) you have provided the specific CCR that allows the affirmative coverage to be issued to ORT for review; and

(d) you have received written approval from ORT to issue the affirmative coverage.

Current practice is to issue an ALTA 34 to provide any necessary affirmative coverage rather than including affirmative coverage in the commitment/policy itself. No affirmative coverage should be given unless the above guidelines are followed. 

If you have questions, please contact vaunderwriting@oldrepublictitle.com.