Basic Manual of Title Insurance, Section III

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Includes Rate Rules R-5 Effective 11/1/2024 | R-6 | R-7 | R-8 | R-9 | R-10 | R-11 Effective 11/1/2024 | R-12 | R-13 | R-14 | R-15 Effective 11/1/2024 | R-16 Effective 11/1/2024

R-5. Simultaneous Issuance of Owner's and Loan Policies

An Owner's Policy must be issued at the Basic Rate, and the premium for each Loan Policy must be $100.00, if:
1. all policies are issued simultaneously;
2. all policies bear the same date;
3. each Loan Policy covers the same land—or part of the land—covered by the Owner's Policy and covers no other land;
4. the Owner's Policy shows the lien(s) insured by each Loan Policy as an exception; and
5. the amount of the Loan Policy(ies) does not exceed the amount of the Owner's Policy.
When the amount of the Loan Policy(ies) exceeds the amount of the Owner's Policy:
1. the Basic Rate must be charged for the Owner's Policy; and
2. the premium charged for the Loan Policy(ies) must be:
  1. the Basic Rate for the combined Loan Policy amounts; minus
  2. the Basic Rate for the Owner's Policy; plus
  3. $100.00 for each Loan Policy, if:
    1. all policies are issued simultaneously;
    2. all policies bear the same date;
    3. each Loan Policy covers the same land—or part of the land—covered by the Owner's Policy and covers no other land; and
    4. the Owner's Policy shows the lien(s) insured by each Loan Policy as an exception.
When there is an existing Owner's Policy(ies) and improvements are now immediately contemplated:
1. the premium for the new Owner's Policy must be reduced by a credit as provided in Rate Rule R-3, if the new policy:
  1. covers the identical property covered by the existing Owner's Policy(ies);
  2. is dated within four years of the existing Owner's Policy(ies); and
  3. includes the exception and liability paragraph provided in Procedural Rule P-8.a.
2. The credit applies only when the ownership of the property has not changed.
3. The premium for the Owner's Policy must not be less than the minimum Basic Rate.
4. The premium for each Loan Policy must be $100.00, if
  1. all policies bear the same date;
  2. all policies are issued simultaneously;
  3. each Loan Policy covers the same land—or part of the land—covered by the Owner's Policy and covers no other land; and
  4. the Owner's Policy shows the lien(s) insured by each Loan Policy as an exception.
When there is an existing Owner's Policy(ies) insuring residential property that did not include the exception and liability paragraph provided in Procedural Rule P-8.a and improvements are now completed:
1. The premium for a new Owner's Policy(ies) must be reduced by a credit as provided in Rate Rule R-3, if the new Owner's Policy:
  1. is in an amount greater than the existing Owner' Policy(ies);
  2. covers the identical property covered by the existing Owner's Policy(ies); and
  3. is dated within four years of the existing Owner's Policy(ies);
2. The credit only applies when the ownership of the property has not changed; and
3. The premium collected for the Owner's Policy must not be less than the minimum Basic Rate.
4. The premium for each Loan Policy must be $100.00, if
  1. all policies bear the same date;
  2. all policies are issued simultaneously;
  3. each Loan Policy covers the same land—or part of the land—covered by the Owner's Policy and covers no other land; and
  4. the Owner's Policy shows the lien(s) insured by each Loan Policy as an exception.
When an Owner's Policy is issued as provided in Rate Rule R-2.b, and the Loan Policy is issued as provided in Rate Rule R-2.a,
1. the premium for the Owner's Policy must be $100.00, and the premium for the Loan Policy must be the Basic Rate, if:
  1. both policies are issued simultaneously;
  2. both policies bear the same date;
  3. the amount of the Owner's Policy(ies) does not exceed the amount of the Loan Policy;
  4. the Owner's Policy covers the same land—or part of the land—covered by the Loan Policy and covers no other land; and
  5. both policies include the exception and the liability paragraph or the pending disbursement paragraph, as applicable, provided in Procedural Rule P-8.
2. When the amount of the Owner's Policy(ies) exceeds the amount of the Loan Policy, the premium charged for the Owner's Policy must be:
  1. the Basic Rate; plus
  2. $100.00; minus
  3. the Basic Rate for the Loan Policy to be paid as provided in Rate Rule R‑2.a.
3. The credit provided in Rate Rule R-3 must be given against the premium for the new Loan Policy, if:
  1. the existing Owner's Policy(ies) covers the identical property to be covered by the new Owner's Policy; and
  2. ownership of the property has not changed.
When an Owner's Policy is issued with a policy amount of $1,000,000.00 or more on land that is not residential real property and bears the date the insured instrument was recorded:
1. the premium for each Loan Policy is $100.00, if:
  1. the Loan Policy(ies) is issued within 90 days after the date of the Owner's Policy;
  2. the Loan Policy(ies) covers the same land—or part of the land—covered by the Owner's Policy and covers no other land;
  3. ownership of the Land has not changed since the Owner’s Policy was issued;
  4. the Loan Policy(ies) is issued by the same Title Insurance Company(ies) that issued the Owner’s Policy; and
  5. the amount of the Loan Policy(ies) does not exceed the amount of the Owner's Policy, and
2. if the conditions in paragraphs F.1.a, F.1.b, F.1.c, and F.1.d are met, but the amount of the Loan Policy(ies) exceeds the amount of the Owner's Policy, the premium for the Loan Policy(ies) is:
  1. the Basic Rate for the combined Loan Policy amounts;
  2. minus the Basic Rate for the Owner's Policy amount;
  3. plus $100.00 for each Loan

THIS RULE MAY NOT BE APPLIED in connection with the issuance of a series of Loan Policies issued by reason of notes being apportioned to individual units in connection with a master policy covering the aggregate indebtedness, including improvements. Except as otherwise provided in this rule, individual Loan Policies must be issued at the Basic Rate.

Effective November 1, 2024 (Order 2024-8851)

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R-6. Subsequent Issuance of Mortgagee Policy

Subsequent to Owner Policy - When a Mortgagee Policy(ies) is requested, subsequent to the issuance of an Owner Policy which excepted to the Vendor's Lien, the premium shall be one-half the Basic Rate. The lien to be insured must be as originally created, and excepted to in the Owner Policy, and not an extension or rearrangement thereof. Such Mortgagee Policy(ies) shall be issued in the amount of the current unpaid balance of said indebtedness. The Company shall be furnished such evidence as it may require verifying such unpaid balance, that the indebtedness is not in default and that there has been no acceleration of maturity.
THIS RULE MAY NOT BE APPLIED in connection with the issuance of a series of Mortgagee Policies issued by reason of notes being apportioned to individual units in connection with a master policy covering the aggregate indebtedness, including improvements. Individual Mortgagee Policies must be issued at the Basic Rates.
Subsequent to Mortgagee Policy - When a Mortgagee Policy(ies) is requested, for any reason whatsoever, on a lien already covered by an existing Mortgagee Policy(ies), but not on a renewal or extension thereof, the new policy being in the amount of the current unpaid balance of the indebtedness, the premium for the new policy shall be at the Basic Rate, but a credit for three-tenths (3/10) of said premium may be allowed.
Subsequent to Mortgagee Policy - When an insolvent insurer is placed in permanent receivership by a court of competent jurisdiction and a Mortgagee Policy(ies) is requested on a lien already covered by an existing Mortgagee Policy(ies) of said insolvent insurer, but not on a loan to take up, renew, extend or satisfy an existing lien, the new policy being in the amount of the current unpaid balance of the indebtedness, the premium for the new policy shall be at the basic rate, but a credit for one-half of said premium shall be allowed, unless such credit would reduce the premium to less than the minimum Basic Rate, in which case the rate shall be the minimum Basic Rate. The insured shall surrender the existing Mortgagee Policy(ies) to the Company when placing the order for a new Mortgagee Policy(ies). The date of Policy for the new policy(ies) shall be the same Date of Policy as the existing Mortgagee Policy(ies).

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R-7. Mortgagee Policies Covering First and Subordinate Liens Issued Simultaneously

When a Mortgagee Policy is issued on a First Lien, and other policy(ies) is issued on Subordinate Lien(s), created in the same transaction, covering the same land or a portion thereof, the premium for the First Lien policy shall be computed on the total of the combined liens; the premium for each Subordinate Lien policy shall be $5.00.

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R-8. Loan Policy on a Loan to Take Up, Renew, Extend or Satisfy an Existing Lien(s)

When a Loan Policy is issued on a loan that fully takes up, renews, extends, or satisfies one or more existing liens that are already insured by one or more existing Loan Policies, the new Loan Policy must be in the amount of the note of the new loan. The premium for the new Loan Policy is reduced by a credit. The credit is calculated as follows:

Calculate the Basic Premium on the written payoff balance of the existing loan or the original amount of that loan, whichever is less; and
Multiply by the percentage below for the time from the existing Loan Policy date to the new Loan Policy date:
1. 50% when four years or less;
2. 25% when more than four years but less than eight years; or
After eight years from the date of the Loan Policy insuring the existing loan, the Basic Rate must apply.

The premium for the new Loan Policy is the Basic Premium less the credit; but not less than the minimum Basic Premium.

The credit does not apply if any property not covered in the existing Loan Policy(ies) is included in the new Loan Policy.

When the existing Loan Policy(ies) included more than one chain of title, and the new Loan Policy also includes one or more of the original chains of title, the minimum Basic Premium must be charged for each additional chain of title. (See Rate Rule R-9 for the definition of "additional chain.")

When two or more new Loan Policies are issued on multiple loans to fully take up, renew, extend, or satisfy an existing lien insured by a single Loan Policy, the premium for each new Loan Policy, is the Basic Premium. The credit calculated above must be applied to the premium for the largest Loan Policy. A credit must be given even if not all of the new loans are insured or if only one of the new loans is insured.

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R-9. Additional Chains of Title

In the event more than one chain of title is involved in the issuance (including determination of insurability of access) of any policy, the Company shall charge the minimum policy Basic Premium Rate for each additional chain. For purpose of applying this rule, contiguous parcels of land in one county shall be treated as one chain, provided record title to the land and record title to the access is vested in one owner at the time application is made. Each noncontiguous parcel having a separate chain shall be treated as a separate chain, except where two or more lots in the same platted subdivision, and having the same plat recording date, belong to the same owner, then such shall be treated as one chain. If the parcels of land lie in more than one county, there are separate chains of title in each county. No additional chain charge may be made for determination of insurability of access to land located within a subdivision, provided: (i) the subdivision is located in only one county, and (ii) the plat of the subdivision has been lawfully approved by an authorized governmental entity, is duly recorded, and the roads shown thereon have been dedicated for public use or for the use of the owners of lots located in the subdivision.

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R-10. Owner's Policies - City Subdivision, Acreage Subdivisions, Industrial Tracts

Rate Rule R-10 is rescinded, effective September 1, 2013, due to obsolescence.

Effective January 3, 2014 (Order 2806)

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R-11. Loan Policy Endorsements

Applicable only as provided in Procedural Rule P-9.

Assignment of Mortgage Endorsement (Form T-3, Endorsement Instruction III):
1. If issued within twelve months after the date of the policy, the premium is the minimum Basic Premium Rate.
2. If issued more than twelve months after the date of the policy, the premium is the minimum Basic Premium Rate plus $100.00 for each additional full or partial twelve-month period.
3. However, the maximum premium collected must not be more than 50% of the premium for the loan policy amount based on the current Schedule of Basic Premium Rates.
Partial Release, Release of Additional Collateral, Modification Agreement, Reinstatement Agreement, or Release from Personal Liability Endorsement (Form T-38):
1. If issued within twelve months after the date of the policy, the premium is the minimum Basic Premium Rate.
2. If issued more than twelve months after the date of the policy, the premium is the minimum Basic Premium Rate plus $25.00 for each additional full or partial twelve-month period.
3. However, the maximum premium collected must not be more than 50% of the premium for the loan policy amount based on the current Schedule of Basic Premium Rates
Down Date Endorsement (Form T-3, Endorsement Instruction V or VII):
1. If the land in the policy is Residential Real Property, the premium is $50.00.
2. If the land in the policy is not Residential Real Property, the premium is $100.00.
Variable Rate Mortgage Endorsement (Form T-33) and Variable Rate Mortgage - Negative Amortization Endorsement (Form T-33.1):
1. The premium for the Variable Rate Mortgage Endorsement (Form T-33) is $20.00.
2. The premium for the Variable Rate Mortgage-Negative Amortization Endorsement (Form T-33.1) is:
  1. $20.00; or
  2. $0.00 if an additional premium is charged for the Loan Policy because of an increased policy amount.
Manufactured Housing Endorsement (Form T-31) and Supplemental Coverage Manufactured Housing Unit Endorsement (Form T-31.1):
1. The premium for the Manufactured Housing Endorsement (Form T-31) is $20.00
2. The premium for the Supplemental Coverage Manufactured Housing Unit Endorsement (Form T-31.1) is $50.00.
The premium for the Revolving Credit Endorsement (Form T-35) is $50.00.
The premium for the Environmental Protection Lien Endorsement (T- 36) is $25.00.
Balloon Mortgage Endorsement (Form T-39):
1. When issued at the time the policy is issued, the premium is 25.00.
2. When issued after the date of the policy, the premium is $50.00.
The premium for the First Loss Endorsement (Form T-14) is $25.00.
The premium for the Loan Policy Aggregation Endorsement (Form T-16) is $25.00.
Planned Unit Development Endorsement (Form T-17):
1. The premium is $25.00.
2. However, when multiple Planned Unit Development Endorsements (Form T-17) are issued simultaneously on multiple Loan Policies covering the same land, the premium for the first endorsement is $25.00 and the premium for additional endorsements is $0.00.
The premium for the Condominium Endorsement (Form T-28) is $0.00.

Effective November 1, 2024 (Order 2024-8851)

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R-12. Commitment for Title Insurance

Applicable only as provided in Rule P-18 - The Commitment for Title Insurance shall bear no premium in addition to the premium chargeable for the policy or policies issued pursuant thereto, except that this Rule R-12 shall not apply to any commitment for title insurance issued pursuant to Rate Rule R-23, or Rate Rule R-25.

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R-13. Mortgagee Title Policy Binder on Interim Construction Loan

Applicable only as provided in Rule P-16 - A premium charge of an amount equal to the minimum policy Basic Premium Rate shall be made for issuance of each Mortgagee Title Policy Binder on Interim Construction Loan. Such Binder shall be issued for a term of one year. The original Binder may be extended for six (6) additional consecutive periods of six (6) months each, not to exceed thirty-six (36) months. A premium of $25.00 shall be charged for each consecutive six (6) month extension.
Upon subsequent issuance of:
1. a Mortgagee Policy on a loan to fully take up, renew, extend or satisfy a lien already covered by a Mortgagee Title Policy on Interim Construction Loan, or
2. an Owner's Policy on the sale of a property which is encumbered by a lien covered by a Mortgagee Title Policy Binder on Interim Construction Loan and which lien against the conveyed property is released prior to or simultaneous with the sale, the premium for the new policy shall be at the basic rate, but a credit for the premium paid for the Binder shall be allowed to the purchaser of the Owner's Policy as follows:
  Fifty percent (50%) of the premium paid for the Binder (exclusive of extensions), if the subsequent policy is issued within one (1) year from the date of the original Binder.

Where more than one Policy may be issued on a portion of the property covered by the Binder, only one credit shall be allowed, being on the first Policy issued.

This Rule shall not apply to any Binder issued prior to March 1, 1989, in which case no credit is allowed.

Notwithstanding the provision in Rate Rule R-1, it shall be permissible to combine this rule with Rate Rule R-5 in the calculation of the premium for a Policy. In no event shall the premium collected be less than the regular minimum promulgated rate for a Mortgagee Policy.

The fifty percent (50%) credit shall not apply if the Binder covers real property which is being improved for improvements other than one to four residential units.

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R-14. Foreclosed Properties

When the owner of the property has acquired same directly through foreclosure under a mortgage insured by a Mortgagee Policy, or the Secretary of Housing and Urban Development or the Administrator of Veteran's Affairs, or as their names may be changed from time to time, has acquired said property be reason of its guarantee or endorsement of a mortgage insured by a Mortgagee Policy, and is selling same, an Owner Policy may be issued on said sale, or a Mortgagee Policy may be issued on a lien being retained in the deed conveying said property. If only an Owner Policy is issued, the charge therefore shall be at the Basic Rate on the full amount of the consideration of said sale. If only a Mortgagee policy is issued, the Basic Rate on the full amount of the lien shall be charged. In either case, the credit of $15.00 on the entire transaction shall be allowed. In the event an Owner Policy and a Mortgagee Policy are issued simultaneously on a transaction as provided in Rule R-5, the simultaneous issue rate, as well as the credit allowed by this rule, shall apply. The $15.00 credit allowed by this rule shall not apply until the issuing Company is furnished the following:

At the time the policy or policies are ordered, the seller will transmit to the Company, for its examination and use, such evidence as is available in the seller's files, including the Mortgagee Policy covering the lien foreclosed, showing title vested in such seller. This title evidence must be retained in the files of the Company for future reference in the event a claim arises under the indemnity agreement set forth in paragraph "b" hereof.
The seller of the property must convey by General Warranty Deed, or agree to save harmless and indemnify the Company for losses the Company may sustain as a result of any of the following:
1. Defects, liens or encumbrances of title created prior to the date of recording of the deed conveying title to said seller, and not shown as exceptions to title in the title evidence furnished to the Company by said seller.
2. Unfiled mechanic's and/or materialmen's liens.
3. Rights of parties in possession.
the seller will not be required to indemnify the Company for errors and omissions previously made in policies previously issued by that Company.

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R-15. Owner's Policy Endorsements

Increased Value - When requested by the Insured, and upon compliance with Rule P-9a(2), endorsement form T-34 shall be attached to the Owner's Policy upon payment of a premium for such endorsement which shall be the Basic Rate computed on the new amount less the premium paid for the Owner's Policy and any form T-34 endorsements previously attached thereto, but in no event less than the then applicable minimum policy Basic Premium Rate.
Increase in Coverage During Construction (Form T-3, Endorsement Instruction VIII)
1. If the land in the policy is Residential Real Property, the premium is $50.00.
2. If the land in the policy is not Residential Real Property, the premium is $100.00.
Manufactured Housing Unit - A premium of $50.00 shall be charged for each T-31.1 Endorsement issued, as provided in Rule P-9a(4).

Effective November 1, 2024 (Order 2024-8851)

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R-16. Amendment of Exception as to Area, Boundaries, etc.

The premium for amending the exception as to area and boundaries, in a Loan Policy (Form T-2 or Form T-2R) is $0.
The premium for amending the exception as to area and boundaries, in an Owner’s Policy (Form T-1 or Form T-1R) is:
1. 15 percent of the Basic Premium Rate on the Policy Amount when the Land is not Residential Real Property, or
2. 5 percent of the Basic Premium Rate on the Policy Amount when the Land is Residential Real Property, but not less than $20.00.

Effective November 1, 2024 (Order 2024-8851)

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