Because title insurance only covers errors occurring through a particular date, there are occasions when a party wants a more current date on their existing policy, or to obtain a new policy with a more current date. The most common occurrence when this is required is when a borrower and lender agree to modify a mortgage, or when a lender assigns a mortgage. Especially where a modification includes loaning additional funds to the borrower, the lender wants to be certain that their mortgage has the same priority over other liens as to all of the funds advanced.
Title Records Search
In order to issue an endorsement which extends the effective date of the policy, a new search of the records must be made. A letter report is then presented to the relevant parties showing what documents have been filed during the period from the policy date to the current date of the county records. This report does not actually affect the policy, but provides information to decide what needs to be done prior to closing on the proposed modification.
Based upon what the letter report reveals, a specimen endorsement will be provided to the lender, showing how we expect the final endorsement to appear. This endorsement will include “standard” policy exceptions related to gap, parties in possession, mechanic’s liens, survey matters, etc, which occur after the original policy date, unless these are separately resolved as part of the current transaction.
In addition to abstracting and examination fees, an additional premium will be charged for this endorsement, which is generally some percentage of the original premium plus an amount for any additional funds advanced under the mortgage. The premium relates to the fact coverage period for the policy has been expanded. The amount of this premium will depend on factors such as the length of time the policy is extended, the policy amount, and particular risk factors which apply.