410/789.8400

Stewart Title Guaranty Company
609 Global Way - Suite 122
Linthicum Heights, MD 21090
410/789.8400
410/789.8407 fax

Maryland Bulletin 2000-1

T0: All Maryland and D.C. Agents
FROM: Joe Blume, District Manager
RE: ALTA Residential Homeowners Policy

As an update to Stewart Title Guaranty Company's previous memo regarding the ALTA Residential Homeowners Policy, this bulletin will provide answers to questions which have been asked. You will note that you can view the National Legal Department's memo, as well as other underwriting information and forms, by connecting to Stewart Title's virtual underwriter web site at www.vuwriter.com. After reviewing this memo, please feel free to contact either Rick Harvey, our District Underwriting Counsel, or me, with any questions you may have.

During the upcoming weeks new Rate Manuals and Rate Schedules will be mailed to your office.

The Homeowner's Policy of Title Insurance
(To Be Issued On Single Family Residential and Condominiums Only Located On Platted Land)

The American Land Title Association adopted the Homeowner's Policy of Title Insurance on October 17, 1998. At this time no accompanying lender's policy has been adopted. Currently, you may use the ALTA Loan Policy, Short Form Loan Policy or issue a Gold Loan Policy (9867).

The Homeowner's Policy of Title Insurance is very similar to the Gold policy. While you may continue to issue the Gold Owner's Policy, we recommend issuance ofthe new Homeowner's Policy of Title Insurance. Again, there is no new Residential Loan Policy for residential property; you may continue to issue the Gold Loan Policy, Short Forth Policy or ALTA Loan Policy.

The ALTA Homeowner's Policy of Title Insurance provides more coverage to owners than the Gold Owner's Policy or other ALTA Owner's Policies. The ALTA Homeowner's Policy contains %8 insuring clauses ("Covered Risks"). You may refer to Exhibit "A "for highlights of the additional coverage offered under this policy.

The ALTA Homeowner's Policy of Title Insurance policies will have a premium charge equal to 120% of the cost of tire owner's premium (plus additional charges where applicable for extended coverage). Exhibit "B" to this Bulletin sets forth these rate brackets.

The ALTA Homeowner's Policy includes the following:

• Homeowner's Policy of Title Insurance Jacket includes
  • Owner's Information Sheet
  • Table of Contents
  • Owner's Coverage Statement
  • Covered Risks
  • Exclusions
  • Conditions
• Homeowner's Policy of Title Insurance - Schedule "A"
• Homeowner's Policy of Title Insurance - Schedule "B" Exceptions

The following guidelines must be followed when issuing the Homeowner's Title Policy:

• Issue only on single family residence or residential condominium.
• Issue only on improved land. This should be verified by a review of tax/assessmentrecords. If the search does not reflect improvements, you must do a visual inspection.
• Issue only on a bona fide sale, not existing ownership by insured.
• Issue only on (a) a platted lot or (b) condominium unit. Do not issue on metes and bounds or other property without underwriting approval.
• Verify by tax/assessment search that the proposed insured property is a single family residence with address to be shown in Schedule "A." If the tax/assessment search does not reflect residence, inspect or otherwise verify. Compare the address in tax/assessment search to the address shown on the contract, if available. Do not show the zip code on Schedule .,A, .
• Verify with the homeowners association that assessments are paid current, that there is no known restriction violation (if the association has this information) and that any right of first refusal will not be exercised in the current transaction (if there is a right of first refusal).
• Verify that there is no pending or current construction ongoing.
• If builder sale or new construction, verify either that a) the builder is known in the community as a residential builder or contractor, or b) certificate of occupancy or local equivalent has been issued, or c) utilities are now available to the land.
• Verify that all bills have been paid on any prior construction within the lien period.
• Require Seller to execute Affidavit as to Debts and Liens (form A&D&L revised January 2000) and also Owner's Affidavit currently required.
• A copy of the required homeowner's affidavit, as well as the affidavit as to debts and liens is enclosed. You may e-mail Pat Lehr at plehr@stewart.com if you would like us to e-mail you the text of these documents, which you can then cut and paste into a document you may save on your hard drive, or we will e-mail you a WordPerfect 9.0 file with the text. Please include your preference in your e-mail, as well as which forms are needed.
• Verify by review of restrictions/covenants that the land may be used as a residence. Except as provided above, no survey or inspection is required.
• Policy may be dated and issued on the date of settlement if your requirements have been met, funds disbursed and you are in a position to promptly record. You may show that date as the date of policy and you do not need to show recording information in Schedule "A."
• The subdivision should be a platted subdivision that (a) is established, or (b) is being developed by a known reputable developer or builder.
• Use our Schedule "A" with its pre-printed Deductibles and Caps, or add those numbers to Schedule "A" if you print your own forms.

Additional Covered Risks (Insuring Clauses) and Coverages in the Policy:

1. Future Forgery and Future Ownership Claims: post policy forgery, impersonation, and adverse ownership coverage will protect the insured against loss if someone else claims to own the title (Covered Risk Seven).
2. Actual pedestrian and vehicular access based on a legal right (Covered Risk 11).
3. Forced correction or removal of an existing violation of covenants, conditions or restrictions (Covered Risk 12).
4. Loss of title because of a violation, before the insured acquired title, of covenants, conditions or restrictions (Covered Risk 13).
5. Existing violations of subdivision laws or regulations, resulting in inability to obtain a building permit, requiring correction or removal of the violation, or refusal to perform a contract to buy, lease or make a mortgage loan (Covered Risk 14). This Covered Risk is subject to a Deductible Amount and Maximum Dollar Limit of Liability (shown in Schedule ..A).
6. Forced removal or remedy of an existing structure (other than a boundary wall or fence) because any part of the structure was built without obtaining a proper building permit. (Covered Risk 15). This Covered Risk is subject to a Deductible Amount and Maximum Dollar Limit of Liability.
7. Forced removal or remedy of existing structures (other than a boundary wall or fence) because they violate an existing zoning law or zoning regulation (Covered Risk 16). Forced remedy (but not forced removal) is subject to a Deductible Amount and Maximum Dollar Limit of Liability.
8. Encroachments of: a) existing structures onto a neighbor's land (Covered Risk 18); b) neighbor's existing structures onto the Land (Covered Risk l9); c) existing structures onto an easement or over a building set-back line (Covered Risk 20); or, d) neighbor's structures (other than boundary walls or fences) onto the Land after Policy Dare (Covered Risk 25).
9. Damage to existing structures because ofuse or maintenance of any easement (CoveredRisk 21).
10. Damage to existing or future improvements because of the future use of the surface of the land to extract or develop minerals, water, or other substances (Covered Risk 22).
11. Supplemental taxes for an period before Policy Dare because of construction or change of ownership or use that occurred before Policy Date (Covered Risk 24).
12. The residence with the address shown in Schedule A is not located on the land at Policy Date (Covered Risk 28).
13. Gap Coverage as to matters recorded before the insured's Deed (Condition 1.£).
14. Continuation of Coverage for (a) a spouse of the insured who receives title because of dissolution of marriage; (b) the Trustee to whom the insured conveys; or, © the beneficiaries of the insured's trust upon death of the insured (Condition 2.b.).
15. Stated substitute residence rental expenses and expenses of relocation, if the insured cannot use the Land (Condition 6.b.(2)).
16. Automatic Increased Coverage of up to 150% of Policy Amount over 5 years (Condition Nine).

These additional coverages are extensive and require additional underwriting. You should also do your normal search and except to matters in Schedule B. If you cannot comply with our underwriting guidelines, please call our underwriting personnel at 410/547.9100.

Exhibit "B"

The ALTA Homeowner's Policy of Title Insurance Premium Rates

Your Title Insurance Policy is a legal contract between You and Us.

It applies only to a one-to-four family residence and only if each insured named in Schedule A is a Natural Person. If the Land described in Schedule A of the Policy is not an improved residential lot on which there is located a one-to-four family residence, or if each insured named in Schedule A is not a Natural Person, contact Us immediately.

The Policy insures You against actual loss resulting from certain Covered Risks. These Covered Risks are listed beginning on page one of the Policy. The Policy is limited by:

• Provisions of Schedule A
• Exceptions in Schedule B
• Our Duty to Defend against Legal Actions On Page two
• Exclusions on page two
• Conditions on pages two and three.

You should keep the Policy even if You transfer your title to the land.

If you want to make a claim, see paragraph 3 under Conditions on page two.

You do not owe any more premiums for the Policy.

This sheet is not Your insurance Policy. It is only a brief outline of some of the important Policy features. The Policy explains in detail Your rights and obligations and Our rights and obligations. Since the Policyand not this sheet-is the legal document,

YOU SHOULD READ THE POLICY VERY CAREFULLY.

If you have any questions about Your Policy, contact:

Stewart Title Guaranty Company
P.O. Box 2029
Houston TX 77252-2029
1-800-729-1902