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New & Revised ALTA Energy & Mineral Endorsements

New & Revised ALTA Energy & Mineral Endorsements. Land Use, Leasing, and Title Issues Panel U. of Pittsburgh School of Law Energy Law & Policy Institute 2013 Presented by: Stacie Wagner Patterson, Pennsylvania State Counsel. Unique Challenges. Energy Projects and Title insurance.

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New & Revised ALTA Energy & Mineral Endorsements

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  1. New & Revised ALTA Energy & Mineral Endorsements Land Use, Leasing, and Title Issues Panel U. of Pittsburgh School of Law Energy Law & Policy Institute 2013 Presented by: Stacie Wagner Patterson, Pennsylvania State Counsel

  2. Unique Challenges Energy Projects and Title insurance

  3. Unique Challenges • Multiple landowners and parcels • Managing the parties • Title updates • Corrective actions • Timing issues and project costs • High liability and internal approval requirements

  4. Unique Challenges • Underwriting Issues • Severable Improvements • Severed coal, oil, gas, mineral interests/surface entry • Contiguity • Loss • Encroachments • Various types of insured interests

  5. Energy project series

  6. Energy Project Endorsements: Valuation • Issued when Amount of Insurance includes the aggregate of • Full Value of the Land or Leasehold and/or Easement Estate AND • Full Value of the Severable Improvements AND • Full Value of Electricity Facility

  7. New TIRBOP Energy Project Endorsements • 1400 (ALTA 31) – Severable Improvements (Owner’s/Loan) • 1410 (ALTA 36)/1420 (ALTA 36.1) – Energy Project – Leasehold Easement (Owner’s/Loan) • 1430 (ALTA 36.2)/1440 (ALTA 36.3) – Energy Project – Leasehold (Owner’s/Loan)

  8. New TIRBOP Energy Project Endorsements • 1450 (ALTA 36.4)/1460 (36.5)– Energy Project – CC&Rs – Land Under Development (Owner’s/Loan) • 1470/1471 (ALTA 36.6)– Energy Project – Encroachments (Owner’s Loan)

  9. ALTa 9 Series

  10. Background – Nationwide case • Nationwide Life Ins. Co. sued Commonwealth Land Title Insurance Company under the following provision of ALTA 9: • Any instrument referred to in Schedule B… that… provides for an option to purchase, right of first refusal, or the prior approval of a future purchaser or occupant. • Nationwide claimed that there existed a right of prior approval in a covenant • Title policy listed Declaration of Covenants as exception, but not the specific right

  11. Background – Nationwide case • Court ruled in favor of Nationwide • Court interpreted the phrase “Any instrument” to mean that the ALTA 9 protected against anything found in a Schedule B document that contained CC&Rs, not just options to purchase, rights of first refusal or prior approval rights

  12. Background – Nationwide case • Industry Response to Nationwide: • Revise ALTA 9 series to better define coverage • Unbundle ALTA 9 coverage • Create new endorsements to ensure the selection of the right endorsements to address the particular risk of a transaction

  13. Prior TIRBOP 1030, 1031 & 1032(ALTA 9, 9.1, and 9.2) • Contained 4 unrelated types of coverage: • Covenants, conditions and restrictions • Private rights • Encroachments • Minerals

  14. Revised ALTA 9 • 1030(ALTA 9) – Restrictions, Encroachments, Minerals (Loan) • 1031(ALTA 9.1) – CC&Rs Unimproved Land (Owner’s) • 1032(ALTA 9.2) – CC&Rs Improved Land (Owner’s) • 1033 (ALTA 9.6) – Private Rights (Loan) • 1034 (ALTA 9.7)/1035 (ALTA 9.8) – Restrictions, Encroachments, Minerals – Land Under Development (Loan/Owner’s)

  15. New TIRBOP 1030 (ALTA 9) • Coverage still includes: • Covenants, conditions and restrictions • Encroachments • Minerals and Any Other Subsurface Substance • Not for future improvements (ALTA 9.7 or 1034) • Removed coverage for: • Private Rights (now contained in 1033)

  16. New TIRBOP 1030 (ALTA 9) • New Carve-Outs for (inter alia): • Contamination • Explosion • Fire • Fracturing Vibration • Earthquake or Subsidence • Negligence by a person or an Entity exercising a right to extract or develop minerals or other subsurface substances

  17. New TIRBOP 1031 & 1032 (Owners Only) (ALTA 9.1 & 9.2) • Coverage still includes • Covenants, conditions and restrictions • Removed coverage for: • Private rights • Encroachments (now contained in 1313) • Future exercise of mineral rights (now contained in 1340, 1350 & 1360)

  18. New TIRBOP 1035 (ALTA 9.8) • Same coverage as 1031 and 1032 but extends to Future Improvements to be built according to identified plans

  19. ALTa 35 Series—Mineral Set

  20. New TIRBOP 1340, 1350 & 1360 (ALTA 35, 35.1 & 35.5) • 1340 – Enforced removal or alteration of buildings resulting from future exercise of mineral rights • 1350 – Enforced removal or alteration of improvements (structures on the land including paved roads, walkways, parking areas, driveways, etc., but excluding crops, landscaping, etc.) from future exercise of mineral rights • 1360 – same as 1350 but adds future improvements as shown on identified plans

  21. New TIRBOP 1340, 1350 & 1360 (ALTA 35, 35.1 & 35.5) Carve-outs as mentioned re 1030 (ALTA 9) but also for: “the exercise of rights described in _________”

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