SURVEY COVERAGE ON CONSTRUCTION PROPERTY


Any time construction has been done on a property within six months prior to the issuance of the title insurance policy, whether it is new construction or re-construction that changes the footprint of a building, you must collect a new boundary survey before waiving Standard Exceptions numbered two or three on the Mortgagee Policy (MPA), which relate to survey matters. This requirement applies to all types of property in all locations: residential, commercial, farmland, etc.


The survey requirement extends to situations where you plan to issue an MPA on a mortgage that will either finance or refinance a construction loan. If you write an MPA, include the two Standard Exceptions for survey matters on Schedule B. If you are writing a Construction Loan Policy (MPC), all the Standard Exceptions will appear on Schedule B automatically.


In either case, advise the lender that the common practice is for lenders to take the mortgagee policy subject to the Standard Exceptions for survey matters and then obtain a survey once the project is complete. Review the survey to determine whether it reveals any matters (such as encroachments) that must be raised as specific Schedule B exceptions.


If you are writing an MPC policy, you can add specific Schedule B exceptions and delete the Standard Exceptions for survey matters using the Construction Loan Disbursement Endorsement (ATG Form 2015). If you are writing an MPA, use the Date Down Endorsement 2 (ATG Form 2017) to make the same changes. In some cases, ATG may be willing to waive the requirement of a survey to provide survey coverage on new construction, depending upon the facts of the situation. For such approval, you must call the Underwriting Department to discuss the matter.


If you have any questions about construction or survey coverage, please contact the Underwriting Department, legal@atgf.com, 312.752.1990, or 217.403.0101.

© ATG UB0609vol1no2

 

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