In 2013 the Texas Commissioner of Insurance adopted a number of changes to the Texas Basic Manual of Rules, Rates and Forms for the Writing of Title Insurance in the State of Texas (the "Texas Title Manual"). Those changes became effective January 3, 2014. A few of the more significant changes are summarized below. For more information, and to subscribe to updates to the Texas Title Manual, visit the Texas Land Title Association's website.
- Procedural Rule P-57 was amended to include "Fairway language" for an optional coverage in the T-26 Additional Insured Endorsement.The amended endorsement now will allow transfer of an interest in a limited liability company without being deemed to create a new entity, thus voiding the title policy's coverage. (The reference is to Fairway Dev. Co. v. Title Ins. Co. of Minn., 621 F. Supp. 120 (N.D. Ohio 1985), in which the court held that the assignment of partnership interests to the remaining partner and a new unrelated purchaser resulted in a termination of the partnership insured by the title policy at issue and the creation of a new partnership that therefore lacked standing to bring a claim under the title policy issued to the original partnership).
- A new Commercial Environmental Protection Lien endorsement (Form T-36.1) was adopted. Unlike many other jurisdictions, Texas previously allowed this coverage only on residential property. The new endorsement is consistent with the ALTA 8.2-06 endorsement commonly available in other jurisdictions. NOTE: Although approved, this endorsement will not be available until a Rate Rule and a Procedural Rule are proposed and adopted by the Texas Department of Insurance.
- A new Procedural Rule (P-72) and endorsement form (T-54) were adopted to address situations in which an item's status as real or personal property is disputed. The endorsement affects the measure of damages available if certain title defects cause a diminution of value or result in certain specified costs.
- Endorsement Forms T-19 and T-19.1 (Restrictions, Encroachments, Minerals) were amended to more closely conform with ALTA forms 9-06 and 9.1, and to include language insuring against covenant violations.
- Several other endorsements were amended to more closely track the corresponding ALTA forms. Included among these are T-16 (Loan Policy Aggregation), T-14 (Leasehold Owner's Policy), T-4R (Residential Leasehold), T-5 (Leasehold Loan Policy).
Again, a fuller description of the newly effective changes can be found in the update bulletin on TLTA's website.
Laura McClellan
Thompson & Knight LLP
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