During July 2021, ALTA officially released the first comprehensive set of revisions to its entire suite of commitments, policies and endorsements since 2006. This article provides an overview of the most noteworthy changes and impacts the revised forms will have on your day-to-day title operations.
Doma is offering three courses on NATIC University, which offer an in-depth dive into these new ALTA forms:
Course 1 covers the Owner’s Policy and Loan Policy.
Course 2 covers the Commitments, Short Form Residential Loan Policies and Endorsements.
Course 3 covers the Homeowner’s Policy and the Extended Coverage Residential Loan Policies, including their short form versions.
All three courses are available for viewing by NATIC/Doma agents and can be found in the General Electives section of NATIC University.
Adoption and use of the new forms throughout the country is expected to be gradual, as well as somewhat piecemeal, for a variety of reasons. First, many jurisdictions require regulator filing and approval. Where this is the case, the new forms may receive enhanced scrutiny and perhaps state-specific required revisions. This is especially the case in those jurisdictions which already use state-specific versions or variants of the prior editions of the ALTA forms. With this in mind, all of the forms may not ultimately be approved in every jurisdiction.
Second, software vendors require time to properly program the regulator-approved versions of the forms and roll them out to their customers. Third, customers in the marketplace must indicate their willingness to accept the 2021 forms. As a result, the existing set of title insurance commitments, policies and endorsements you currently use remain available for use for the foreseeable future. When the time comes to switch over to the new forms in a particular jurisdiction, you can count on receiving a NATIC/Doma Bulletin with all the particulars.
As for premiums, nothing changes simply because the underlying forms have changed. You should continue to rate the new policies and endorsements with NATIC/Doma’s current rate manuals and schedules which are available on AgentLink.
ALTA made a deliberate effort to minimize the changes to the look and feel of the forms, especially the schedules where information is inserted by title agents. There are just a few changes to the form fields’ ordering and to the terminology used for those form fields. These are covered in detail in the NATIC/Doma on-demand courses.
There are too many substantive changes to the coverages, conditions and exclusions to address in this article. The most important ones are covered in detail in the three courses. On balance, ALTA believes the new forms provide improved coverage for insureds under all versions of the new editions of the Owner’s and Loan Policies.
If asked to select just one change, as the most important change to the policy coverages that impact the day-to-day title practices of NATIC/Doma agents, I would call out the new continuation of coverage provisions in the Owner’s Policy, which is accomplished through changes to the definition of the Insured.
In the 2021 Owner’s Policy, a deed from the named Insured to any one of the following new parties will result in the grantee automatically being an Insured under that policy:
1) A spouse who receives the title because of a dissolution of marriage;
2) A transferee by a transfer effective on the death of an Insured as authorized by law (for example, transfer on death deeds and lady bird deeds);
3) A transferee of a partial interest to another Insured in Item 1 of Schedule A.
The only forms not receiving review and revisions at the time of the July release are the Residential Limited Coverage Mortgage Modification Policy, the Residential Limited Coverage Junior Loan Policy and the U.S. Policy. The mortgage modification and junior loan policies are currently undergoing revisions and will likely be released sometime during 2022. When released and made available in your jurisdiction, NATIC/Doma will distribute a Bulletin with the particulars.
All of the endorsements mentioned below are discussed in greater detail in the NATIC/Doma courses.
The below listed endorsements were reviewed and determined to not require revision in order to be used with the 2021 forms. As a result, the following endorsements may continue to be used with both the earlier and new editions of the policy forms. These are ALTA Endorsement Numbers: 1, 5, 5.1, 7, 8.2, 9, 9.1, 9.2, 9.3, 9.6, 9.6.1, 9.7, 9.8, 9.9, 9.10, 13, 13.1, 15, 15.1, 15.2, 16, 17, 17.1, 17.2, 18, 18.1, 18.2, 18.3, 19, 19.1, 19.2, 20, 22, 23, 23.1, 24, 25, 25.1, 28, 28.1, 28.2, 28.3, 29, 29.1, 29.2, 29.3, 31, 33, 34, 35, 35.1, 35.2, 35.3, 36, 36.1, 36.2, 36.3, 36.4, 36.5, 36.6, 36.7, 36.8, 37, 38, 39, 40, 40.1, 41, 41.1, 41.2, 41.3, 42, 43, 44, 45, 46. For now, all of these endorsements continue to contain a “-06” in their numbering. Even so, they may be issued with both the existing and 2021 edition of the policies.
The below listed endorsements were reviewed and determined to require revisions in order to be used with the 2021 forms. As a result, the following endorsements were revised and released for use only with the 2021 edition of the policies. These are ALTA Endorsement Numbers: 3, 3.1, 3.2, 3.3, 3.4, 4, 4.1, 6, 6.2, 7.1, 7.2, 8.1, 10, 10.1, 11, 11.1, 11.2, 12, 12.1, 14, 14.1,14.2, 14.3, 26, 27, 30, 30.1, 32, 32.1, 32.2, and 32.2. The new versions of these endorsements do not contain a “-06” in their numbering. Be certain to use the right endorsement version with the policy forms you issue.
ALTA revised and issued a new version of the 23.1 endorsement. Once it is approved for use in your jurisdiction, you should begin to use it and “retire” the earlier version from your forms library. Once approved, the new version may be issued with both the 2021 and earlier policy editions. Issuance of the 23.1 endorsement requires prior NATIC/Doma underwriting approval.
ALTA has issued one brand new endorsement, the 34.1 endorsement, Identified Exception and Identified Risk Coverage. Once it is approved for use in your jurisdiction, it may be issued with both the 2021 and earlier policy editions. Issuance of the 34.1 endorsement requires prior NATIC/Doma underwriting approval. The premium for this endorsement will be the same as for the 34.
Finally, ALTA has issued four endorsements and three addenda to be used only with the pre-2021 forms. These are the so-called “Operative Law” endorsements and addenda. They are meant to deal with potential issues that may arise in connection with former tribal lands due to the McGirt case, decided by the U.S. Supreme Court in 2020. Doma agents are not expected to encounter a need to issue any of the Operative Law endorsements or addenda. Should this expectation change, a NATIC/Doma Bulletin will be issued with guidance.
If you have any questions or concerns about the 2021 ALTA forms, including their availability or use, please reach out to your NATIC/Doma underwriting counsel at [STATE][email protected]
Philip Holtsberg is Senior Underwriting Counsel and Rates Counsel at North American Title Insurance Company/Doma.