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Basic Manual of Title Insurance, Section III

Title Manual Main Index | Section III Index

Includes Rate Rules: R-1 | R-2 Effective 01/03/2014 | R-3 | R-4

IN NO EVENT MAY ANY POLICY OR ENDORSEMENT FORMS CONTAIN COVERAGES NOT EXPRESSLY AUTHORIZED BY THESE RULES.


R-1. Schedule of Basic Premium Rates

The Schedule of Basic Premium Rates for Title Insurance shall apply to all policies, unless the same be specified in other applicable Rate Rules.

In no event shall two or more Rate Rules be combined in the calculation of the premium for the subject transaction, unless one Basic Rate on the policy in the largest amount is charged, except as provided for in Rules R-5 and R-14. The Basic Premium Rates for policies include the charge for title insurance, title examination and closing the transaction (see Definitions in Rule P-1).

No portion, split or percentage of the premium shall be paid either directly or indirectly for title insurance, title examination or closing the transaction to any person unless there shall have been timely compliance with Rule P-21 and P-22.


Title Manual Main Index | Section III Index

R-2. Rebates and Discounts

No Company shall charge for a policy in one transaction and withhold issuance of a policy thereon, nor shall any Company charge a premium for a policy in one transaction and apply the charged premium in a subsequent transaction, except when same covers identical land to that contained in the initial conveyance, and when same shall have been consented to by the parties to all conveyances involved, which consent may be provided for in the contract(s) on which the transaction is based, or may be given in a separate written instrument, or may be evidenced by the acceptance and signing of a closing statement clearly setting forth application of the premium charge as agreed by the parties to the transaction(s). The phrase "one transaction" as used in this rule may include more than one conveyance provided: (i) all grantors and grantees have acknowledged in writing the method of application for premium or premiums to be collected, and (ii) all instruments of conveyance relating to the subject property which is to be insured are unconditionally delivered simultaneously. Each company shall remit the portion of the premium due to the title Insurance Company no later than the 15th day of the second month following the month in which the premium was collected. The provisions of this rule shall also apply to any escrow officer who remits directly to a title insurance company. A company shall not issue or deliver a policy, binder or endorsement until a rate therefor has been adopted by the Commissioner. The company must collect the full charge for such form, except as follows:

  1. When a Loan Policy is issued in the manner provided in Rule P-8.b., the premium for the Loan Policy may be paid in installments if the following conditions are met:

    1. The face amount of the policy shall be $5,000,000 or more.

    2. The premium for the Loan Policy shall be determined on the date of issuance thereof. As the loan which is the subject of the policy is disbursed, a fraction of the premium for the policy equal to the fraction of the loan then funded shall be paid and upon payment thereof the amount of the coverage of the Loan Policy shall increase by the amount of such funding.

    3. The down date endorsement procedure described in rule P-9.b.(4) must be used in connection with such Loan Policy.

    If any one of the above conditions is not met with respect to such Loan Policy, the remaining premium due and owing therefore shall be immediately due and payable.

  2. When an Owner's Policy meets the requirements of paragraph (a) above, and is issued in the manner provided in Rule P-8.a., and is issued simultaneously with a Loan Policy as provided in Rule R-5.E, the amount of coverage of said Owner's Policy shall increase in an amount equal to, and contemporaneously with, the increase in the coverage of said Loan Policy.

  3. When an Owner's Policy is issued in the manner provided in Rule P-8.a., but is not issued simultaneously with a Loan Policy as provided in Rule R-5.E., the premium for the Owner's Policy may be paid in installments if the following conditions are met:

    1. The face amount of the policy shall be $5,000,000 or more.

    2. The premium for the Owner's Policy shall be determined on the date of issuance thereof. The premium for the Owner's Policy paid upon issuance thereof shall be the portion of the total premium allocable to the liability under the Owner's Policy as shown in the liability paragraph prescribed by Rule P-8.a.(1) As the contemplated improvements which are the subject of the Owner's Policy are made, a fraction of the premium for the policy equal to the amount actually expended by the Insured in improvements since the last premium payment date shall be paid periodically and in no event later than completion thereof, and upon payment of said premium fraction the amount of the coverage of the Owner's Policy shall increase by the said amount expended in improvements.

    3. The down date endorsement procedure described in Rule P-9.a.(3) must be used in connection with such Owner's Policy.

    If any one of the above conditions is not met with respect to such Owner's Policy, the remaining premium due and owing therefore shall be immediately due and payable.

  4. When a qualified intermediary under Internal Revenue Code §1031 takes title on behalf of the ultimate owner (the person making the exchange and receiving the tax benefit), Schedule A of the policy should be prepared as set out in Procedural Rule P-63.

    An issued policy should not be altered or endorsed after the deed from the intermediary to the ultimate owner, to change the insured to reflect the name of the ultimate owner. This Rate Rule R-2 strictly prohibits passing through the title insurance premium on multiple conveyances unless proper disclosure is made and the deeds to all conveyances are delivered to the title or closing agent simultaneously and without condition. However, if title coverage is issued as outlined Procedural Rule P-63, the provisions of R-2 as to the pass through premium are not applicable because the policy is issued in the transaction in which the premium was collected.

    Effective January 3, 2014 (Order 2806)

Title Manual Main Index | Section III Index

R-3. Owner's Policy

  1. Improvements Subsequently Added

    If improvements are subsequently added, a new Owner's Policy may be issued in the aggregate amount of the original Owner's Policy or Policies, plus the cost of improvements, as provided in Rule P-66.

    1. If a single original Owner's Policy was issued, the premium for the new policy shall be the Basic Rate less the premium which was paid for the surrendered, original policy.

    2. If multiple original Owner's Policies were issued, the premium for the new policy shall be at the Basic Rate less the currently promulgated Basic Rate for the aggregate of the surrendered original policies.

  2. Single Owner's Policy for Separate Purchases

    1. When multiple tracts of land are conveyed pursuant to separate contracts to a single purchaser and a single Owner's Policy is issued covering all the land conveyed for the aggregate of the separate sales prices, the premium for the single Owner's Policy shall be the aggregate of the Basic Premium Rate as applied to each sales price.

    2. Additional Chains of Title, as Defined by Rate Rule R-9.

      1. No "additional chain of title" charge shall be made as a result of the aggregation of multiple tracts according to this rule; however.

      2. Should the land covered by a single contract constitute more than one "chain of title", the applicable "additional chain of title" charge(s) shall be added to the aggregated premium.

    3. Immediately Contemplated Improvements - When the cost of immediately contemplated improvements is to be included, the premium shall be increased by the Basic Premium Rate as applied to the cost of improvements.


Title Manual Main Index | Section III Index

R-4. Mortgagee Policy

When a previously issued mortgagee policy insuring variable rate mortgage is reissued (or endorsed), effective as of the date of the original Mortgagee Policy, increasing the face amount of the Mortgagee Policy from the original principal amount of the loan to an amount not to exceed one hundred twenty-five percent (125%) of the original principal amount the additional premium is calculated as follows:

  1. The premium on the increased Policy Amount calculated at the Basic Rate (existing on the date of the original Mortgagee Policy) but less the greater of the amount of the premium previously charged for: (i) the original Mortgagee Policy, or (ii) the Owner Policy.

  2. If such original Mortgagee Policy was issued as a simultaneous issue; no credit shall be given for the simultaneous issue premium charge.

Title Manual Main Index | Section III Index



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Last updated: 07/24/2017

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