Rule P-16 reads in part as follows:
"The Mortgagee Title Policy Binder on Interim Construction Loan (Interim Binder) shall be used only with respect to Interim Construction Loans in which it is contemplated in good faith that the company issuing Interim Binder shall be asked to issue its Mortgagee Policy on a permanent loan covering the identical property when improvements are completed."
We have been advised that some companies are issuing Interim Binders where the loan is merely for developing a sub-division, or in other words, a developer of a proposed sub-division secures a loan from a bank or other lender for the purpose of the site development, such as curb, gutter, streets and utilities.
We have been asked if a title insurance company would be permitted to issue a binder under such circumstances, or must a Mortgagee Title Policy with the Completion of Improvements Exception be issued.
We are of the opinion that a Mortgagee Title Policy with the Completion of Improvements Exception provided by Rule P-8 should be issued in these instances.
/s/ Ira M. Goodrich
Ira M. Goodrich
Director of Title Insurance