ASSIGNMENT OF TITLE INSURANCE POLICY

The ALTA Owner Policy definition of insured extends to certain people beyond the named person or entity on Schedule A. It also includes "those who succeed to the interest of the named insured by operation of law as distinguished from purchase including, but not limited to, heirs, distributees, devisees, survivors, personal representatives, next of kin, or corporate or fiduciary successors." This means that anyone who takes title from the insured by a conveyance is not an insured and cannot make a claim under the policy.

For the most part, those who take title by conveyance are third parties, usually buyers in a buy/sell transaction. However, sometimes the insured will convey the property to his or her own trust, a family partnership, or some other entity that the insured controls. In this case, the new entity in title is not an insured.

On the other hand, the new entity will not really benefit from a new policy because the Policy Exclusions 3a and 3e, for matters created, suffered, or assumed by the insured and for consequences of the failure to pay value for the property, will diminish coverage.

To provide some coverage to the new entity, it is prudent to obtain an Assignment of Title Insurance Policy. In the past, assignments of title policies were entirely handled by ATG staff. Now, ATG has new procedures that allow members a choice of two ways to provide this coverage to insureds. Members can earn a fee for issuing these endorsements and provide excellent legal advice to clients about how to ensure appropriate title coverage for their estate planning transfers.

ATG has a new endorsement that allows an estate planning vehicle to be an insured under an ATG Owner Policy, despite the fact that the estate planning vehicle takes title by conveyance.

The endorsement is the Assignment of Title Insurance Policy Endorsement (ATG Form 2089), which carries a special risk premium to ATG of $200. For insureds in the process of conveying their property to an estate planning vehicle, this endorsement may be issued at the time of the conveyance to ensure that the coverage under an original ATG Owner Policy will continue for the benefit of the estate planning vehicle.

This endorsement does not extend the Date of Policy, does not add insurance for defects, liens, or encumbrances after the Date of Policy, and does not insure the validity of the conveyance or of the estate planning vehicle.

To issue this endorsement, take the following steps:

1.      Obtain a copy of the recorded deed to the estate planning vehicle and a copy of the ATG Owner’s Policy.

2.      Review the deed to be sure it conveys the same property as is covered by the Owner’s Policy, and to determine whether all the Insureds on the Owner’s Policy conveyed their interests to the estate planning vehicle. (If not, please contact the Underwriting Department for instruction).

3.      Complete the endorsement to show the names of the grantors who are assigning the Owner’s Policy, as shown on the Owner’s Policy, and the names of the assignees, as shown on the deed.

4.      Have the assignors sign the endorsement.

The assignees should attach the endorsement to the original title policy once it is complete. Remit copies of the endorsement and Owner’s Policy, together with ATG’s premium, to the Policy Records Department in Champaign.

Questions? Contact an Underwriter. 

© ATG UB0409vol9no5

 

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