Understanding ALTA Title Insurance Expanded Coverage Policy

Many people are familiar with the "expanded" version of the ALTA title insurance loan policy. These special policies can only be used for land that has a 1-to 4-family home or residential condominium unit built on it.

This expanded ALTA policy gives lenders more protection than a standard policy. One important feature is that it automatically includes certain endorsements without needing to attach them separately. There are two types of this policy:

• Expanded Coverage Residential Loan Policy – Current Assessments
• Expanded Coverage Residential Loan Policy – Assessments Priority

What Title Insurance Endorsements Are Included

Like earlier versions, the 2021 policy includes several endorsements by reference. As mentioned, these endorsements are considered part of the policy without needing to be physically attached. Paragraph 28 under the “Covered Risks” section explains this.

Here are the endorsements included by reference:

• *ALTA 4 – Condominium – Assessment Priority or ALTA 4.1 – Condominium – Current Assessments
• *ALTA 5 – Planned Unit Development – Assessment Priority or ALTA 5.1 – Planned Unit Development – Current Assessments
• ALTA 6 – Variable Rate Mortgage
• ALTA 6.2 – Variable Rate Mortgage – Negative Amortization
• ALTA 8.1 – Environmental Lien Protection (subject to state laws listed in Schedule B)
• *ALTA 9 – Restrictions, Encroachments, Minerals – Loan Policy or ALTA 9.6.1 – Private Rights – Current Assessments – Loan Policy
• *ALTA 9.6 – Private Rights – Loan Policy or ALTA 9.10 – Restrictions, Encroachments, Minerals – Current Violations – Loan Policy

Important Notes About the ALTA Title Insurance Endorsements

Some of these endorsements (marked with an asterisk in the original list) depend on which version of the expanded coverage policy is used. The difference between the two versions matters because it relates to how the law in your state oversees the priority of common area fees in condominiums and planned unit developments.

Knowing which policy to use depends on the property location and how that state's law treats the priority of assessments or dues owed by homeowners.

What It Means for Mortgage Title Insurance to Be “Incorporated by Reference”

When endorsements are incorporated by reference, you don’t need to attach them separately to the policy. This can save time and reduce paperwork during ALTA loan policy preparation.

Although these forms are approved in many states, they are not available everywhere. Unsure if a certain version can be used in your state or whether it is appropriate? Contact your local Stewart underwriter for guidance.

Interested in learning more? Explore these other underwriting tips.

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