COMMONWEALTH LAND TITLE CANS HOUSE LOCATION SURVEYS

MSS has learned that Commonwealth Land Title Insurance has authorized deletion of the survey exception on mortgagee policies on owner-occupied homes in Maryland under certain conditions, without a house location survey. Commonwealth is a significant title company in the Maryland market.

Effective a week ago, the company authorized its agents and attorneys to issue title insurance policies without obtaining house location surveys. A Special Risk Endorsement Fee of $50 will be charged. The company expects "immediate positive results" from the new program.

OHIO INSURANCE DEPARTMENT CHALLENGES EXCEPTIONS

The Ohio Department of Insurance, at the urging of the Professional Land Surveyors of Ohio, has told title companies that an exception without benefit of a survey is a violation of Ohio insurance law.

The transaction must involve issuance of a purchase money, refinance or second mortgage loan policy of title insurance, and the lender to be insured must be an institutional lender. The program does not apply to commercial property or vacant land. It also excludes "seller take back" loans. Commonwealth's standard survey exception states: Encroachments, overlaps, boundary line disputes, or other matters which would be disclosed by an accurate survey or inspection of the land." Agents may now add a statement that reads, "The final loan policy will include an endorsement deleting exception _ above." Owners of the property will have to execute a standard affidavit disclosing any encroachments over the apparent lot lines, boundary line disputes, wetlands located on or abutting the property or any improvements appearing to lie on or over any known easements.

Buyers will be required to sign an "ELECTION TO USE SURVEY ENDORSEMENT FOR LENDER" form which states: " In lieu of requiring a location survey, many lenders will accept Commonwealth's "Survey Endorsement." The Survey Endorsement costs $50.00 and can be offered to you if the current owner of the property signs a statement declaring that there are no survey problems known to the owner." The election form further states: "I understand that neither obtaining a location survey nor our election to use the Survey Endorsement will result in title insurance protection against such survey problems to me as Buyer/Borrower. The Survey Endorsement is purchased solely to satisfy a Lender's requirements and to avoid the higher expense of a location survey."OHIO INSURANCE DEPARTMENT SAYS SURVEY EXCEPTION VIOLATES STATE LAW

Surveyors and the title insurance industry in Ohio are engaged in battle over the matter of survey exceptions there. The state society, which was prepared to litigate the matter in court, brought the issue to a head there by requesting the insurance department to clarify whether title insurance policies could be issued with the survey exception deleted without benefit of a survey. The state agency sent this notice to all title insurance agents, agencies and companies: " It has come to the Department's attention that certain Ohio underwriters and/or agents are insuring over the standard survey exception in mortgage policies without any evidence of a survey. The Department has concluded that this practice violated Chapter 3953 of the Revised Code. Insuring over the exception without benefit of survey is a casualty approach which, regardless of the amount of risk involved, is a violation for title insurance underwriters which, as monoline companies, are authorized to write only title insurance. "In any circumstance, when the title insurer waives, with evidence of survey, the survey exception for the mortgagee policy, the exception shall also be waived for the owner's policy of title insurance " In a letter to an attorney for the society, the chief of the department's enforcement division said that the election by a lender not to acquire a survey can have an effect on the coverages available to an owner or purchaser. For example, if a survey is not obtained, the standard exceptions are, as a rule, not deleted from the owner's policy. In contrast to the loan policy, such exceptions are printed on the owner's policy as filed. It could therefore happen that a risk could be covered under the loan policy but not the owner's policy. Also, in cases where survey risks are insured in a loan policy without the benefit of a survey, it is possible that a loss could arise, however remote, that would have been flagged by a survey. MSS has provided information on the Ohio matter to the Maryland Insurance Administration and asked for an opinion on its applicability here. Stay tuned for further developments.