Since October 2003, the American Land Title Association (ALTA) adopted fifteen (15) new endorsements primarily designed to be used with commercial transactions:  ALTA 14 (Future Advance – Priority); ALTA 14.1 (Future Advance – Knowledge); ALTA 14.2 (Future Advance – Letter of Credit); ALTA 15 (Nonimputation – Full Equity Transfer); ALTA 15.1 (Nonimputation – Additional Insured); ALTA 15.2 (Nonimputation – Partial Equity Transfer); ALTA 16 (Mezzanine Financing); ALTA 17 (Access and Entry); ALTA 17.1 (Indirect Access and Entry); ALTA 18 (Single Tax Parcel); ALTA 18.1 (Multiple Tax Parcel); ALTA 19 (Contiguity – Multiple Parcels); ALTA 19.1 (Contiguity – Single Parcel); ALTA 20 (First Loss – Multiple Parcel Transaction); and ALTA 21 (Creditor’s Rights).  Although the coverage offered by the new endorsements was previously available through proprietary endorsements issued by the various title insurers, ALTA standardized and improved the coverage available for the insured.  Uniformity within the title insurance industry is preferable for the sake of lenders, property owners and their respective counsels. 

In this three-part article, each new endorsement shall be discussed with a focus towards underwriting issues, practicality in usage, and coverage offered to the insured.  The most commonly used commercial endorsements are explored initially with the more specialized commercial endorsements addressed in later articles.

Access Endorsements

In the traditional ALTA 1992 Loan and Owner’s Policies, the insured has coverage against loss for lack of access to the land.  In commercial transactions, the insured frequently requires protection for the lack of “actual” access to the land from a public street.  In developing the ALTA 17 and 17.1 endorsements, ALTA recognized the need in the marketplace for a more expansive coverage for access issues.  Accordingly, both the ALTA 17 and ALTA 17.1 endorsements provide protection for the lack of “actual vehicular and pedestrian access” to and from a specifically named publicly maintained and open street.  In addition, each access endorsement gives coverage to the insured of the right to use the existing curb cuts or entries along such street abutting the land. Although the ALTA 17 and ALTA 17.1endorsements have similar coverage for the insured, one major difference exists between the two endorsements:  the ALTA 17.1 endorsement is designed to be used when the insured has “indirect” access to a public street through an access easement. 

The ALTA 17 and ALTA 17.1 endorsements may be used with a Loan Policy or an Owner’s Policy.  ALTA also designed the ALTA 17 and ALTA 17.1 endorsements to be utilized on either residential or commercial transactions.  When issuing said endorsements, “blanks” located on the endorsements must be completed by the underwriter for the endorsements to be effective.  On the ALTA 17 endorsement, the name of the street to which the land has access must be noted on the endorsement.  On the ALTA 17.1 endorsement, the parcel numbers or other identifying features of the easement and the land must be added to the endorsement along with the name of the street to which the land has access through the access easement. 

In order to give the ALTA 17 or ALTA 17.1 endorsement to the insured, the title insurance company may require a survey showing actual access to the public street as well as satisfactory evidence that the street is publicly maintained and physically open.  Moreover, evidence of the right to use the existing curb cuts or entries off the street may also be required for issuance of either endorsement.    In states where attorney certification of title is prevalent, the title insurance company may depend on said certification to fulfill the evidence requirements; however, in non-attorney states or when the attorney is unwilling to certify to such items, the underwriter may obtain such evidence from local municipal authorities or from a surveyor’s certification. 

Tax Parcel Endorsements

Typically, in commercial transactions, the insured(s) and their counsel(s) desire coverage against loss or damage sustained by reason of the tax parcel including more or less land than what is insured in Schedule A of the policy.  The ALTA 18 endorsement was created to address this coverage need.  The ALTA 18 may be used with a Loan Policy or an Owner’s Policy for commercial or residential transactions.  When issuing the ALTA 18 endorsement, no “blanks” need to be completed to give the endorsement.  In order to provide the ALTA 18 endorsement, the title insurance company may require verification from the tax assessor’s office that the insured property is a separate, identifiable tax parcel and not part of a larger tax parcel.

ALTA also developed the ALTA 18.1 endorsement for property with multiple tax parcels insured in Schedule A of the policy.  Not only does the ALTA 18.1 endorsement give coverage to the insured against loss or damage because of the multiple tax parcels not being assessed for real estate tax purposes under the listed tax identification numbers, it also gives extended coverage to the insured if the easements (if any) listed in Schedule A are cut off or disturbed by the non-payment of real estate taxes or assessments against the servient estate. 

Similar to the ALTA 18 endorsement, the ALTA 18.1 may be used with a Loan Policy or an Owner’s Policy for commercial or residential transactions.  When issuing the ALTA 18.1 endorsement, the insured parcels along with their respective tax parcel identification numbers must be reflected on said endorsement.  In order to give the ALTA 18.1 endorsement, the title insurance company may require verification from the tax assessor’s office that the insured property is identified as multiple parcels along with their tax parcel identification numbers.  Furthermore, a determination must be made that real estate taxes and/or assessments against the servient estate were paid.

Contiguity Endorsements

When the property insured in the policy is comprised of two (2) or more parcels, the insured or their counsel may require a Contiguity endorsement be issued to show that all parcels may be described as a single parcel and no gaps, strips or gores separate the contiguous boundary lines.  ALTA addressed the insured’s concerns by formulating the ALTA 19 endorsement.  The ALTA 19 endorsement gives coverage to the insured that two (2) or more parcels are contiguous to each other along defined boundary lines.  In addition, the ALTA 19 endorsement provides insurance against loss or damage the insured may sustain due to any gaps, strips or gores separating any of the contiguous boundary lines as described in the ALTA 19 endorsement.  The ALTA 19 endorsement may be used with either a Loan Policy or an Owner’s Policy for commercial or residential transactions.  When issuing the ALTA 19 endorsement, the contiguous boundary lines must be specifically described within the body of the endorsement (i.e.  direction – North, South, East, West; parcel name; and/or metes and bounds description).  In order to obtain the ALTA 19 endorsement, a title insurance company may require receipt of a survey in order to confirm the contiguity between the parcels and to adequately describe the contiguous boundary lines.

The ALTA 19.1 endorsement also addresses the issue of contiguity; however, instead of being issued when multiple parcels are being insured, the ALTA 19.1 endorsement may be used when the insured wishes to show contiguity between the insured parcel and an adjacent parcel that is not insured under the policy.  The uninsured parcel is usually owned by the same owner of the parcel to be insured.  Coverage under the ALTA 19.1 endorsement is similar to coverage under the ALTA 19 endorsement:  coverage to the insured that the insured parcel is contiguous to another uninsured parcel(s) along defined boundary lines and insurance against loss or damage the insured may sustain due to any gaps, strips or gores separating any of the contiguous boundary lines as described in the ALTA 19.1 endorsement.  The ALTA 19.1 endorsement may be used with either a Loan Policy or an Owner’s Policy for commercial or residential transactions.  As with the ALTA 19 endorsement, the contiguous boundary lines between the insured parcel and the uninsured parcel(s) must be specifically described within the body of the endorsement (i.e.  direction – North, South, East, West; parcel name; and/or metes and bounds description).  In order to obtain the ALTA 19.1 endorsement, a title insurance company may require receipt of a survey in order to confirm the contiguity between the insured parcel and the uninsured parcel(s) and to adequately describe the common boundary line between the parcels. 

With the advent of these endorsements, ALTA has truly demonstrated its commitment to recognize the need for such coverage in the marketplace and its dedication to improve the existing title insurance standards and practices.   Implementation of these standardized endorsements with their expanded coverage displays ALTA’s innovative and consumer-friendly tendencies.  More importantly, ALTA has revitalized the coverage available for commercial transactions with the added bonus of uniformity throughout the industry.