CREATING SUBDIVISION AND CONDOMINIUM MASTER POLICIES


There are extensive and sometimes complicated statutory requirements that must be met when creating plats of subdivision and condominium. An improperly created plat can adversely affect title to all properties in the subdivision or condominium complex, and can cause expensive claims. Furthermore, new plats contain numerous matters that must be raised on policies for each lot within the subdivision. To be sure that all statutory requirements have been met and all matters affecting title have been reviewed and noted on a title policy for a lot or unit, ATG requires that you make a master policy, pursuant to ATG Administrative Regulation 5B, whenever you wish to insure all or most of the lots or units in a new subdivision or condominium. ATG co-examines all master policies to be sure that the plats are valid and that all adverse matters are noted on the master policy.


A master policy is not actually a policy. Instead, it is a draft of Schedules A and B for an entire subdivision that you create and ATG co-exams and keeps on file. As individual properties are purchased, you will write each title policy using the master policy as a prior.


Not only does this procedure prevent claims, but it also provides your office with the ability to quickly issue cutoff policies, so that you can keep up with the developer's sales. This efficiency is born from the fact that a master policy contains all the proper exceptions and information for every lot or unit without having to re-examine the plat on each transaction.


Take the following steps to create a master policy:

  1. Conduct a title search, examine prior title evidence, and prepare a commitment for the entire parcel that forms the subdivision or condominium. Take all the steps in examining title that you would ordinarily follow to prepare a commitment.



  2. Schedule A: Do not enter a proposed insured or an Amount of Insurance on Schedule A. Be sure to show the current titleholder. Use the legal description of the plat in the same format as you will show the legal description for the lots or units:

    Subdivision Example: "Lots 1-35 of ATG's Place, on a plat of subdivision dated January 1, 2003, located in Title County, State of Illinois, recorded at Plat Book 1, Page 1, as Document No. 1111 in the Title County Recorder's Office."


    Condominium Example: "Units 1-6, together with their percentage interests in the common elements, of ATG's Condominium, a condominium dated January 1, 2003, located in Title County, State of Illinois, recorded at Plat Book 1, Page 1, as Document No. 1111 in the Title County Recorder's Office." For a condominium, review the declaration to determine whether there are parking or storage units that will also be insured, and if so, include them in the legal description as well.



  3. Schedule B: There are some exceptions to be raised in addition to the exceptions you raise for items found on the prior and search. Raise any exceptions necessary for the type of entity holding title to the subdivision (corporation, LLC, partnership exceptions, etc.). For new subdivisions, raise an exception for drainage tiles, feeders or laterals if any adjoining property is used as a farm. On conversion condominiums, except any open leases on units in the building.



  4. Schedule B: Raise an exception for the declaration of subdivision or condominium. Note whether the declaration provides for assessments, liens for assessments, a right of first refusal, or if it allows for forfeiture or reversion of title for violations of the restrictions.



  5. Schedule B: Review the plat for encumbrances or restrictions and raise exceptions for them as necessary. For each lot in a subdivision, raise exceptions for the setback lines, easements, or any other encumbrances shown on the plat for the lots and indicate what lot the exception applies to. You may consolidate these exceptions for simplicity. For example, "Front building setback line of 25' on the north side of lots 1-10 and the south side of lots 11-25."



  6. Send the following documents to the ATG Underwriting Department for co-exam:
    1. Proposed master policy;
    2. Plat;
    3. Owner's Declaration, containing covenants, conditions and restrictions;
    4. Prior title evidence;
    5. Search notes; and
    6. Any other relevant documents.


  7. The Underwriting Department will review all documents for compliance with the statutes and ATG's underwriting requirements. ATG will prepare and send you a written approval or suggested changes for approval.



  8. Once any necessary revisions have been made, fax the revised master policy to the Underwriting Department for approval. Upon approval, you may use the master policy as prior title evidence for every lot or unit in the subdivision or condominium. ATG will keep the master policy on file.



  9. ATG will provide you with a special rate for all lots or units contained within the subdivision or condominium complex. Reference the confirmation number for the special rate on the Accounting Information Schedule for each policy insuring any property contained within the master policy to assure that you receive the special pricing advantage.

New developments are detailed and sometimes complicated to create, but the master policy provides an orderly way to review them and an efficient procedure for producing cutoff policies. Please contact the Underwriting Department with any questions or concerns you may have about the master policy process at 800.252.0402 or 312.372.8361, orlegal@atgf.com

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