Numbered Item 1 of Schedule A states whether a loan policy or an Owner's policy, or both, will be issued pursuant to the commitment and gives the face amount of each policy. (Note that the language may be modified to specify other policy types, if necessary.) The amount of the loan policy will be the same as the loan amount shown on the insured deed of trust. The Owner's policy will normally be in the amount of the purchase price of the property. Under certain conditions, the amount of the Owner's policy may exceed the purchase price of the property.
Item 1 also lists the name of each proposed insured. The Purchaser will be the insured under the Owner's policy, and in the case of the loan policy, the insured will be the Lender. The Lender's closing instructions may specify particular language to be used in this item.
|1. Policy or Policies to be Issued:||Amount|
|(a) ALTA<sup>®</sup>Owner's Policy (1992)||$100,000.00|
|Proposed Insured: Tom Jones|
|(b) ALTA <sup>®</sup> Loan Policy (1992)||$90,000.00|
|Proposed Insured: Any National Bank|
Other Policy Types
The commitment may specify a variety of other types of policies. For example:
- Leasehold Policy
- Contruction Loan Policy
- Short Form Residential Loan Policy
- Policy forms from years other than 1992
- Junior Loan Policy
- Homeowner's Title Policy
Owner's Policy Amount
An owner's policy must always be written for the amount of the purchase price, but in the event no sale is involved, then, for the present fair market value of the premises in question, including improvements, except under the following circumstances:
Where the premises are unimproved, but the owner intends to erect improvements thereon in the immediate future, the policy may be written for the value or purchase price of the vacant land and the estimated cost of the improvements to be erected thereon, but if so written, the following must be inserted at the end of Schedule B of the policy:
Note: It is agreed between the Company and the insured that, in the event of a loss hereunder, the liability of the Company shall be limited to the present value of said land as now improved, but shall automatically increase by the amount expended for improvements placed thereon in good faith, and without actual notice of adverse claim, but in no event shall exceed the amount of this policy, to wit, $ (here insert amount shown in the insuring clause of the policy.)
Depending upon the type of loan transaction being closed, the Lender's closing instructions may require you to use certain language in conjunction with its designation as the insured in the loan policy. Examples might include:
- Any National Bank, its successors and assigns, as their interests may appear.
- Any National Bank, and the Secretary of Housing and Urban Development.
- Any National Bank, and the VA