Security Title Endorsement Guide

CONSTRUCTION LOAN ALTA 32-06 (Construction Loan – Loss of Priority) (02-03-11) ALTA 32.1-06 (Construction Loan – Loss of Priority-Direct Payment) (04-02-13) ALTA 32.2-06 (Construction Loan –Loss of Priority- Insured’s Direct Payment) (04-02-13)

These endorsements, together with the 33-06 (Disbursement) replace the ALTA Construction

Loan Policy and the Construction Loan Policy Endorsements A through D which have been

decertified and are no longer available.

These endorsements were developed to give limited coverage where priority has been lost.

They only give coverage to the extent of work that the lender has paid for, with the ALTA 32-06

and the ALTA 32.1-06 further limited to liens filed by parties that have been identified on a draw

request either paid by the Insured or the Company. They do not give coverage over other

inchoate liens that can prime the construction mortgage. The 32-06 covers payment as

disclosed by a draw request.

ALTA Endorsement 32.1-06 is designed for loan policies during construction in situations

where the mortgage or deed of trust can never have priority over mechanic’s liens or where the

mortgage or deed of trust has lost priority to mechanic’s liens (e.g., due to commencement of

work prior to the recording of the mortgage or deed of trust). However, this endorsement may

also be used for situations where the mortgage or deed of trust has priority over mechanic’s

liens.

Specifically, the ALTA 32.1-06 insures only to the extent that direct payment to the Mechanic's

Lien claimant has been made by the Company or by the Insured with the Company's written

approval. It does not insure against loss or damage by reason of any mechanic's lien arising

from services, labor, material or equipment:

a Furnished after Date of Coverage; or

to the extent that a Mechanic's Lien claimant was not directly paid by the Company or by the

Insured with the Company's written approval.

The endorsement contemplates that the Company or its agent will be involved in the direct

payment to specific mechanic's lien claimants – either by making the payment or by approving

it.

The ALTA 32.2-06 covers a lien filed for payment of previously paid amounts by the title insurer

or with the title insurer’s consent.

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