Re R viewing the T viewing the i T tle Insurance i Commitment

Transcription

1 Reviewing the Title Insurance Commitment

2 Goals of the webinar The topic will be Reviewing Title Insurance Commitments and will focus on how to read one and understand the requirements and exceptions.

3 What is Title Insurance? Title insurance is insurance against loss or damage resulting from defects or failure of title to a particular parcel of realty; or from the enforcement of liens existing against it at the time of the insurance. Protection title insurance provides to the insured party: A title insurance policy affords lenders and owners protection ti against loss or damage up to the face amount of the policy; together with costs, attorney's fees and expenses arising out of all liens upon and all defects in the title except those specifically excluded or excepted.

4 Benefits of Title Insurance Coverage is not limited i to matters relating to and shown on the public records: title insurance covers hidden defects, which are not disclosed by public records. Title insurance covers loss resulting from errors, omissions and mistakes of judgment made by title examiners (whether occasioned by negligence, g lack of professional skill or otherwise.) Unless specifically excepted, title insurance covers loss arising out of erroneous and inadequate surveys, and unrecorded and undiscovered rights of parties in possession. Title insurers are regulated and supervised by state insurance departments. The coverage afforded by a title policy remains in effect as long as the insured has an interest in the property. Title insurance companies assume liability for certain known risks under reasonable circumstances. Title insurance is offered for a one-time premium. Title policies insure against unmarketability of title.

5 Mortgagee (Loan) Policy of Title Insurance A mortgagee (Loan) policy insures A lender whose debt is secured by a deed of trust or mortgage encumbering real estate The title insurance guarantees that the lender has a valid and enforceable lien. The insurance is for the face amount of the policy, and declines as the principal loan balance declines. A mortgagee (Loan) policy affords coverage to the named lender (insured) and all subsequent holders of the note through h assignments. A mortgagee (Loan) policy affords owner's coverage to a mortgagee or its corporate subsidiary in the event the lender acquires title pursuant to foreclosure or a deed in lieu of foreclosure.

6 Covered Risks: The Covered Risks that appear on a Loan Policy (Mortgagee): The Covered Risks that appear on a Loan Policy (Mortgagee): ONAM & VAMP Ownership-Insures against loss/damage if the ownership is different than stated in Sch. A; Notice-insures against loss/damage as a result of matters of public record; Notice insures against loss/damage as a result of matters of public record; Access-insures against loss/damage if the insured cannot get to the property; not quality of access; Marketability-insures against loss/damage as a result of losing title based on the marketability of the property; AND Validity-assures the lender the lien on the property is valid; Assignability-assures the lender the lien on the property is assignable and assignees will be covered as if they were the insured named in Sch. A; M/M Liens-assures the lender that the deed of trust/mortgage has priority against M/M liens in certain situations; Priority-assures the lender that the lien being insured is in a first position.

7 Covered Risks (cont.): The Covered Risks also include coverage for the little gap ; the period of time between closing and the recording of the insured instruments- Any defect in or lien or encumbrance on the Title or other matter included in Covered Risks 1 through 13 that has been created or attached or has been filed or recorded in the Public Records subsequent to Date of Policy and prior to the recording of the Insured Mortgage in the Public Records.; and The duty to defend clause- The Company will also pay the costs, attorneys fees, and expenses incurred in defense of any matter insured against by this Policy, but only to the extent t provided d in the Conditions.

8 Exclusions from Coverage: The Exclusions from Coverage that appear in the Mortgagee (Loan) Policy jacket include, but are not limited to: Loss or damage suffered as a result of: Acts of the insured Creditors Rights, not of record Eminent Domain, not of record A loan that violates the usury laws of the state Failure to comply w/ Doing Business laws of a state Issues known to the insured, not of public record and/or not revealed to the insurer

9 Conditions Conditions listed in the Policy yjacket include, but are not limited to: Defined Terms, including but not limited to: Amount of Insurance- The amount stated in Schedule A, as may be increased or decreased by endorsement to this policy; Date of Policy-The date designated as Date of Policy in Schedule A; Insured- the owner of the Indebtedness and each successor in ownership of the Indebtedness; Mortgage- Mortgage, deed of trust, trust deed, or other security instrument, including one evidenced by electronic means authorized by law; Knowledge-Actual knowledge, not constructive knowledge or notice that may be imputed to an Insured by reason of the Public Records or any other records that impart constructive notice of matters affecting the Title; Land-The land described in Schedule A, and affixed improvements that by law constitute real property. The term Land does not include any property beyond the lines of the area described in Schedule A, nor any right, title, interest, estate, or easement in abutting streets, roads, avenues, alleys, lanes, ways, or waterways, but this does not modify or limit the extent that a right of access to and from the Land is insured by this policy.

10 Conditions i (cont.) Continuation of Coverage- The coverage of this policy shall continue in force as of Date of Policy in favor of an Insured after acquisition of the Title by an Insured or after conveyance by an Insured, but only so long as the Insured retains an estate or interest in the Land Proof of Loss- If the company is unable to determine the loss, it may require a signed proof of loss. The proof of loss must describe the defect, lien, encumbrance, or other matter insured against by this policy that constitutes the basis of loss or damage and shall state, to the extent possible, the basis of calculating the amount of the loss or damage. Payment of Loss- When liability and the extent of loss or damage have been definitely fixed in accordance with these Conditions, the payment shall be made within 30 days. Reduction in coverage based on payment of claim- All payments under this policy, except payments made for costs, attorneys fees, and expenses, shall reduce the Amount of Insurance by the amount of the payment. Arbitration- All arbitrable matters when the Amount of Insurance is $2,000,000 or less shall be arbitrated at the option of either the Company or the Insured. All arbitrable matters when the Amount of Insurance is in excess of $2,000,000 shall be arbitrated only when agreed to by both the Company and the Insured. Arbitration i pursuant to this policy and under the Rules shall be binding upon the parties. This Condition is altered when the VA-141 endorsement is attached to the Policy of Title Insurance. The VA-141 states that Arbitration in the Commonwealth of Virginia is non-binding. Where to file a claim- Any notice of claim and any other notice or statement in writing required to be given to the Company under this policy must be given to the Company at Investors Title Insurance Company, P.O. Drawer 2687, Chapel Hill, North Carolina

11 Loan Policy Jackets: The two Loan Policy Jackets issued most often are: 2006 Loan Policy of Title 2012 Short Form Loan Policy Insurance of Title Insurance Also known as the long form loan Contains Sch. A only policy Schedule B of the Short Form Loan Policy Contains 6 parts in all: Incorporates all of the Covered The Policy Jacket which Risks, Exclusions from Coverage contains: the Covered Risks, and Conditions contained in the Exclusions from Coverage, the long form policy; contains pre-printed exceptions Conditions; & and assurances, including, briefly: Schedule A Restrictions are not violated and do Schedule B, Pt. I which shows not contain a forfeiture f or the Exceptions from reversion of title Easements of record do not Coverage. encroach and will not interfere Schedule B, Pt. II which notes with or damage the improvements any matters subordinate to the Minerals of record do not impair lien of the insured mortgage or use of property deed of trust in Schedule A.

12 Loan Policy Jackets (cont.): 2006 Loan Policy of Title Insurance-Sch. A Policy Number; Loan Number (if known); Address Reference: the physical address of the property being insured; Policy date: the earlier of either the examiner's certification date or recording date and time of the insured instrument; Designation of the amount of insurance and name of the party or lender to be insured; Names of the parties title is vested in; The type of estate or interest, i.e., fee simple; The insured deed of trust or mortgage; The legal l description i of the property; and Check the box provisions for incorporation of the following endorsements: ALTA Condominium ALTA Condominium ALTA 5-06 Planned Unit Development ALTA Planned Unit Development ALTA 6-06 Variable Rate ALTA Variable Rate/Negative Amortization ALTA Environmental Protection ALTA 9-06 Restrictions, Encroachments and Minerals ALTA Leasehold Loan ALTA Future Advance Priority ALTA Future Advance Knowledge ALTA Future Advance Reverse Mortgage ALTA Location 2012 Short Form Loan Policy of Title Insurance-Sch. A Policy number: Loan number: (if known); Address Reference: the physical address of the property being insured; County and State; t Amount of Insurance; Premium: Policy premium; not including fees or any other charges; Mortgage Amount; Mortgage Date: Date of recorded d Mortgage Date of policy: at a.m./p.m. Date the transaction closed at 8:00am or recording date and time of the insured instrument Names of Insured: Lender including any and/or clause as applicable Name of Borrower(s): Name of Mortgagor(s) Addendum Checkbox, if necessary Endorsements Checkbox, if any Hard copies of the Endorsements will not be included if the box is checked

13 Loan Policy Jackets (cont.): 2006 Loan Policy of Title 2012 Short Form Loan Policy Insurance-Sch. B of Title Insurance-Sch. B Schedule B, Pt. I which shows Incorporates all of the Covered Risks, Exclusions from Coverage and the Exceptions from Conditions contained in the long form policy; Coverage. These are detailed contains pre-printed exceptions and exceptions to coverage as of assurances, a including, briefly: the date of the Policy, added by the underwriter; and Schedule B, Pt. II which notes reversion of title Easements of record do not any matters subordinate to the lien of the insured mortgage or deed of trust in Schedule A. Restrictions are not violated and do not contain a forfeiture or encroach and will not interfere with or damage the improvements Minerals of record do not impair use of property Additional Schedule B exceptions will be listed on an Addendum d to the Short Form Policy.

14 Covered Risks: The Covered Risks that appear on an Owner s Policy: ONAM Ownership-Insures against loss/damage if the ownership is different than stated in Sch. A; Notice-insures insures against loss/damage as a result of matters of public record; Access-insures against loss/damage if the insured cannot get to the property; not quality of access; Marketability-insures against loss/damage as a result of losing title based on the marketability of the property; The Covered Risks also include coverage for the little gap ; the period of time between closing and the recording of the insured instruments- Any defect in or lien or encumbrance on the Title or other matter included in Covered Risks 1 through 9 that has been created or attached or has been filed or recorded in the Public Records subsequent to Date of Policy and prior to the recording of the Insured Mortgage in the Public Records.; and The duty to defend clause- The Company will also pay the costs, attorneys fees, and expenses incurred in defense of any matter insured against by this Policy, but only to the extent provided in the Conditions.

15 Exclusions from Coverage: Exclusions from Coverage that appear in the Owner s Policy Jacket include, but are not limited to: Loss or damage suffered as a result of: Acts of the insured Creditors Rights, not of record Eminent Domain, not of record Issues known to the insured, not of public record and/or not revealed to the insurer

16 Conditions: Conditions listed in the Policy Jacket include, but are not limited to: Defined Terms, including but not limited to: Amount of Insurance- The amount stated in Schedule A, as may be increased or decreased by endorsement to this policy; Date of Policy-The date designated as Date of Policy in Schedule A; Insured- the owner of the Indebtedness and each successor in ownership of the Indebtedness; Mortgage- Mortgage, deed of trust, trust deed, or other security instrument, including one evidenced by electronic means authorized by law; Knowledge-Actual knowledge, not constructive knowledge or notice that may be imputed to an Insured by reason of the Public Records or any other records that impart constructive notice of matters affecting the Title; Land-The land described in Schedule A, and affixed improvements that by law constitute real property. The term Land does not include any property beyond the lines of the area described in Schedule A, nor any right, title, interest, estate, or easement in abutting streets, roads, avenues, alleys, lanes, ways, or waterways, but this does not modify or limit the extent that a right of access to and from the Land is insured by this policy.

17 Conditions (cont.) Continuation of Coverage- The coverage of this policy shall continue in force as of Date of Policy in favor of an Insured after acquisition of the Title by an Insured or after conveyance by an Insured, but only so long as the Insured retains an estate or interest in the Land Proof of Loss- If the company is unable to determine the loss, it may require a signed proof of loss. The proof of loss must describe the defect, lien, encumbrance, or other matter insured against by this policy that constitutes the basis of loss or damage and shall state, to the extent possible, the basis of calculating the amount of the loss or damage. Payment of Loss- When liability and the extent of loss or damage have been definitely fixed in accordance with these Conditions, the payment shall be made within 30 days. Reduction in coverage based on payment of claim- All payments under this policy, except payments made for costs, attorneys fees, and expenses, shall reduce the Amount of Insurance by the amount of the payment. Arbitration- All arbitrable matters when the Amount of Insurance is $2,000,000 or less shall be arbitrated at the option of either the Company or the Insured. All arbitrable matters when the Amount of Insurance is in excess of $2,000,000 shall be arbitrated only when agreed to by both the Company and the Insured. Arbitration pursuant to this policy and under the Rules shall be binding upon the parties. This Condition is altered when the VA-141 endorsement is attached to the Policy of Title Insurance. The VA-141 states t that t Arbitration ti in the Commonwealth of Virginia i i is non-binding. Where to file a claim- Any notice of claim and any other notice or statement in writing required to be given to the Company under this policy must be given to the Company at Investors Title Insurance Company, P.O. Drawer 2687, Chapel Hill, North Carolina

18 Commitment of Title Insurance What is a commitment? An agreement to issue policy according to the terms of the Commitment How much coverage and effective date? When we show the policy amount and your name as the proposed insured in Schedule A, the Commitment becomes effective as of the Commitment Date shown in Schedule A. What is the Commitment Date The Commitment Date is that title through which title has been certified. If there is a delay in the recording offices of a particular county, the certification date could be a few weeks prior to the order date of the commitment (usually the date the work is entered ed into our operating system or received by the office). Does the commitment expire? If the Requirements shown in this Commitment have not been met within six (6) months after the Commitment Date, our obligation under this Commitment will end. Also, our obligation under this Commitment will end when the Policy is issued and then our obligation to you will be under the Policy.

19 Commitment of Title Insurance (cont.): What are the different parts of the commitment jacket? The Provisions in Schedule A. The Requirements in Schedule B-I. The Exceptions in Schedule B-II. The Conditions on Jacket. The Commitment is not valid without Schedule hd A and Sections I and II of Schedule B.

20 Commitment of Title Insurance (cont.): Defined Terms in the Commitment: Mortgage means mortgage, deed of trust or other security instrument. Public Records means title records that give constructive ti notice of matters affecting your title according to the state statutes where your land is located.

21 Commitment of Title Insurance (cont.): Clauses within the Commitment: LATER DEFECTS The Exceptions in Schedule B - Section II may be amended to show any defects, liens or encumbrances that appear for the first time in the public records or are created or attach between the Commitment Date and the date on which all of the Requirements (a) and (c) of Schedule B - Section I are met. We shall have no liability to you because of this amendment. The Later Defects clause is also known as the Gap Exception. This informs the proposed insured that the period of time from the Commitment Date to the closing date is not covered under the commitment and in order to be covered, an update on title must be performed in order to close the gap EXISTING DEFECTS-If any defects, liens or encumbrances existing at Commitment Date are not shown in Schedule B, we may amend Schedule B to show them. If we do amend Schedule B to show these defects, liens or encumbrances, we shall be liable to you according to Paragraph 4 below unless you knew of this information and did not tell us about it in writing. The Existing Defects clause means if the information in Schedule B is incomplete, we can make it whole by amending Schedule B. However, if the incomplete information is relied upon we will be liable to the insured because of the error or omission, unless the proposed insured knew of the issue, but failed to inform the title company of it prior to the closing date.

22 Commitment of Title Insurance Clauses within the Commitment: (cont.): LIMITATION OF OUR LIABILITY-Our only obligation is to issue to you the Policy referred to in this Commitment, when you have met its Requirements. If we have any liability to you for any loss you incur because of an error in this Commitment, our liability will be limited to your actual loss caused by your relying on this Commitment when you acted in good faith to: Comply with the Requirements shown in Schedule B - Section I OR Eliminate with our written consent any Exceptions shown in Schedule B - Section II. We shall not be liable for more than the Policy Amount shown in Schedule A of this Commitment and our liability is subject to the terms of the Policy form to be issued to you. The Limitation of our Liability clause states that errors in the Commitment that resulted in a loss to the insured when title was being cleared, is the responsibility of the title insurance company, but only the actual loss cause by the reliance of the commitment and only up to the policy amount show in Schedule A.

23 Commitment of Title Insurance Schedule A: Schedule A of the Commitment of Title Insurance: Schedule A includes information relevant to the transaction, including: Sch A, No. 1: The date/time title is certified through If no specific time is provided, 8:00 AM is used The Commitment Number

24 Commitment of Title Insurance Schedule A (cont.): Schedule A of the Commitment of Title Insurance: Sch. A, No. 2: Shows the proposed Owner s Policy that will be issued, coverage amount of the owners policy (can be the fair market value of the property) and the proposed insured (mortgagor) under the owner s policy: Shows the proposed Loan Policy that will be issued, the coverage amount of the loan (mortgagee) policy (should be the amount of the lien encumbering the property), the proposed insured (lender) and the loan language that is specific to the type of loan being issued Conventional; or Veterans Affairs; or Housing and Urban Development Loan

25 Commitment of Title Insurance Schedule A (cont.): Schedule A of the Commitment of Title Insurance: Sch. A, No. 3: The current fee title holder of the insured premises at the time the Commitment has been issued. Sh Sch. A, No. 4: The Legal Description of the insured premises; Including the state/commonwealth and county where the property lies: Typically taken from the last vesting deed found in the chain of title Can be a lot/block description Or A Metes/Bounds Description

26 Commitment of Title Insurance Schedule B: Schedule B, Section I of the Commitment of Title Insurance: sets forth requirements that must be complied with prior to the issuance of the title policy. Requirements are: Matters of public record that affect the property; are standard forms needed on most transactions, including a final update on title; speak to the potential priority i of the lien being insured; speak to the ownership of the property; p ensure there are no clouds on title

27 Commitment of Title Insurance Schedule B (cont.): Some requirements are typical for a transaction and are only for forms ; Oh Other requirements are necessary for the conveyance or mortgaging of the property; Some requirements that are for the release of liens; Some are out of the ordinary requirements If a Non-Individual is the proposed insured or current fee title holder of the insured premises, there are certain requirements that need to be fulfilled to ensure the property is being conveyed/mortgaged properly If the transaction being insured is a construction loan, there e are specific c requirements e e that one would see on a commitment.

28 Commitment of Title Insurance Schedule B: Schedule B, Section II of the Commitment of Title Insurance: Typical exceptions on a standard transaction include, but are not limited to: Taxes not yet due and payable, Easements of record, plat matters of record There are Exceptions that may not be found in the public records, but still affect the property. They are usually found after reviewing the legal description of the insured premises and/or a survey of the insured premises. The include, but are not limited to: Riparian Rights (water), Railroad Rights-of-way, Cemetery (ingress/egress) There are Exceptions that are listed as being on the Mortgagee Policy or Owner s Policy only

29 Commitment of Title Insurance Schedule B (cont.): Schedule B, Section II of the Commitment of Title Insurance: Typically survey coverage is automatically extended, along with other affirmative assurances, but there are times when Survey Coverage would not be automatically extended to the lender (i.e. a poor legal description). The Exception that would be used specifically deletes Covered Risk 2 (c). There are Exceptions that either limit or eliminate coverage afforded to the insured party under the Covered Risks and/or the Conditions shown in the Policy Jacket, including, but no limited to Access Issues, Mobile Home Issues, other fee title holders, limited search period There are Exceptions that are typical of a Construction Transaction. The inclusion of these types of Exceptions limit the amount of loss that may be recovered as stated in the Conditions shown on the Policy Jacket. The use of these Exceptions limit the loss to the amount of funds disbursed up to the face amount of the policy.

30 INVESTORS TITLE INSURANCE COMPANY P.O. Drawer 2687 Chapel Hill, North Carolina ALTA COMMITMENT FORM This Commitment is not complete without appropriate Schedules and corresponding Jacket unless otherwise agreed in writing. DATED 08/26/2013 SCHEDULE A 1. Commitment Date 08/01/2013 Time 08:00 AM Comm. No TN 2. Policy (or Policies) to be issued: (a) Owner s Policy ALTA 2006 Policy Amount $ 250, Proposed Insured THOMAS JEFFERSON (b) Loan Policy ALTA 2006 Policy Amount $ 248, Proposed Insured BANK NAME ITS SUCCESSORS AND/OR ASSIGNS, AS THEIR INTEREST MAY APPEAR 3. Fee simple interest in the land described in this Commitment is owned, at the Commitment Date by: George Washington 4. The land referred to in this Commitment is in the Commonwealth of VA County of Accomack and described as follows: TYPICAL LOT/BLOCK LEGAL DESCRIPTION: LOT 1, BLACKACRE SUBDIVISION, AS SHOWN IN PLAT BOOK 1, PAGE 2 RECORDED IN ACCOMACK COUNTY, VIRGINIA TYPICAL METES/BOUNDS LEGAL DESCRIPTION: Issued through the Office of: Bankers Title of East Tennessee P.O. Box Main St. Knoxville, NC Tel. (865) / Fax (865) Authorized Countersignature Form No A Page 1

31 INVESTORS TITLE INSURANCE COMPANY P.O. Drawer 2687 Chapel Hill, North Carolina Commitment No TN BEGINNING AT A POINT IN MCHENRY S EAST LINE, SAID POINT BEING S 08 DEG. 17 W FROM MCHENRY S NORTHEAST CORNER IN THE CENTER OF LITTLE CREEK; THENCE LEAVING MCHENRY AND SEVERING THE LAND OF PARRISH S 43 DEG. 56 E 89.36; THENCE S 29 DEG. 36 E 14.92; THENCE S 59 DEG. 05 E 22.11; THENCE S 72 DEG. 58 E 23.57; THENCE S 26 DEG. 31 E 28.76; THENCE S 83 DEG. 18 E 30.26; THENCE S 59 DEG. 13 E 27.07; THENCE S 58 DEG. 38 E 22.12; THENCE S 49 DEG. 03 E THENCE S 40 DEG. 21 E 29.98; THENCE S 39 DEG. 44 E 28.58; THENCE S 36 DEG. 06 E 24.75; THENCE S 22 DEG. 06 E 26.21; THENCE S 12 DEG. 10 E 20.89; THENCE S 01 DEG. 32 E 32.43; THENCE S 09 DEG. 59 E 2.09 TO A POINT IN DYER LONG ROAD; THENCE WITH THE MARGIN OF SAID ROAD S 52 DEG. 29 W 80.90; THENCE S 48 DEG. 48 W TO A POINT, BEING A CORNER OF SWEENEY; THENCE LEAVING DYER LONG ROAD WITH SWEENEY S LINE N 44 DEG. 38 W TO A POINT IN MCHENRYS LINE, BEING A CORNER OF SWEENEY; THENCE WITH MCHENRY S LINE N 08 DEG. 19 E ; THENCE N 08 DEG. 17 E TO THE POINT OF BEGINNING. CONTAINING 1.64 ACRES, MORE OR LESS, AS SURVEYED BY ALFRED M. BARTLETT, R.L.S. #762 ON JULY 11, 1996 AND REVISED ON MAY 15, 1998, JUNE 10, 1998 AND MAY 17, Form No A Page 2

32 INVESTORS TITLE INSURANCE COMPANY P.O. Drawer 2687 Chapel Hill, North Carolina Commitment No TN SCHEDULE B - SECTION I REQUIREMENTS The following requirements must be met: (a) Pay the agreed amounts for the interest in the land and/or the mortgage to be insured. (b) Pay us the premiums, fees and charges for the policy. (c) Documents satisfactory to us creating the interest in the land and/or the mortgage to be insured, must be signed, delivered and recorded. (d) You must tell us in writing the name of anyone not referred to in this Commitment who will get an interest in the land or who will make a loan on the land. We may then make additional requirements or exceptions. TYPICAL REQUIREMENTS FOR "STANDARD" FORMS ON A TRANSACTION 1. In order to issue final policy(ies) (a) Agency must obtain final title update; and (b) settlement agent must provide all required documentation as noted in Commitment. 2. Receipt of Attorney s Final Certificate, along with all additional required documents, in order to issue a final policy or policies. 3. Provide the attached ITC Privacy Statement to the buyer/borrower at the time of closing. 4. Receipt of copy of properly executed Notice to the owner regarding the availability of title insurance [(Form VA-512), copy enclosed]. TYPICAL REQUIREMENTS FOR THE CONVEYANCE AND MORTGAGE FOR THE PROPERTY BEING INSURED: 5. Duly authorized deed from George Washington, vesting fee simple title in Thomas Jefferson. Form No A Page 3

33 INVESTORS TITLE INSURANCE COMPANY P.O. Drawer 2687 Chapel Hill, North Carolina Commitment No TN 6. Joinder of the spouse of the seller in the execution of the proposed deed, if applicable. 7. An executed Deed of Trust by Thomas Jefferson in favor of Bank Name in the amount of $248, Joinder of the spouse of the proposed owner in Schedule A, as to the execution of Deed of Trust, if applicable. TYPICAL REQUIREMENTS FOR THE RELEASE OF LIENS REPORTED ON THE TITLE SEARCH/ATTORNEY OPINION 9. Cancellation and release of record of the property described herein from the lien of: Deed of Trust from George Washington for the benefit of Bank Name recorded in Book 234 at Page 578, securing a note in the original principal sum of $275,000.00, and any other obligations secured thereby and/or described therein. In the event any lien to be paid and satisfied and cancelled of record is an Equity Line lien, the Certifying Attorney/Settlement Agent is advised to send a written statement in behalf of the mortgagor to the Equity Line lender along with the payoff check instructing the lender to mark the note and deed of trust paid and satisfied and to return both documents for cancellation of record AND instruct the Equity Line lender to close said account and issue no more checks or drafts since the payoff was quoted. (Sample "written statements" are available from this Company upon request.) 10. Cancellation and release of record of judgment in favor of Commonwealth Dentistry recorded in Book 17 at Page 76, in the amount of $1,785.00, plus interest and cost. 11. Termination, payment, satisfaction and cancellation of the UCC/Financing Statement, in favor of An Air Conditioning Company in the amount of $5, recorded in 1234 at 987. Form No A Page 4

34 INVESTORS TITLE INSURANCE COMPANY P.O. Drawer 2687 Chapel Hill, North Carolina Commitment No TN 12. Payment of taxes for the 1st half of 2014, plus any penalties and interest which may accrue, if said taxes become due and payable prior to the recording of the proposed insured Deed of Trust. "OUT OF THE ORDINARY" REQUIREMENTS THAT MIGHT APPEAR ON A COMMITMENT OF TITLE INSURANCE: Receipt of satisfactory evidence that the publication of notice was in compliance with Va. Code Ann (A). 2. Receipt of a copy of the deed of trust and satisfactory evidence that all of the requirements in the deed of trust for foreclosure have been met. 3. Receipt of evidence that the Trustee has the power and authority to transfer title to the property. 4. Receipt of satisfactory evidence that the owner of the property received proper notice in accordance with the Virginia Code and the deed of trust. 5. Receipt and satisfactory review of the Trustees deed. 14. (A) Receipt of certification that the property is being transferred in a bona fide conveyance, and at the time of such conveyance no suit has been commenced for the administration of the assets nor any reports filed for the debts and demands of those entitled; AND (B) (1) receipt of certification by the examining attorney that all inheritance and/or estate taxes and debts in the estate of Martha Washington have been paid; OR (2) receipt of a letter from the attorney representing said estate that there are sufficient funds in the estate to pay said taxes and debts; OR (3) receipt and certification that the proceeds of the sale are being held in escrow by the certifying attorney until said estate is closed. OR (4) the property is being transferred pursuant to court order and the proceeds of the sale are being paid to a special commission pursuant to Va. Code Ann ; Form No A Page 5

35 INVESTORS TITLE INSURANCE COMPANY P.O. Drawer 2687 Chapel Hill, North Carolina Commitment No TN OR (5) receipt of a satisfactory Decedent Debt Bond and a satisfactorily executed Indemnity Agreement for Open Estate (Form No. 564); OR (6) receipt of a satisfactorily executed Indemnity Agreement for Open Estate (Form No. 564) and payment of the "Special Risk Premium." 15. Receipt of copy of Order of Bankruptcy Court releasing insured premises from any liens and transferring the liens to proceeds of sale. 16. Receipt of Order of Sale, or in the alternative, receipt of Order of Abandonment, indicating that the property has been abandoned by the trustee, which Order of Sale or Order of Abandonment expressly states that the sale is authorized and transfers the lien of creditors to the proceeds of sale and allows the property to be sold free and clear of liens. In the alternative, if the Order does not expressly transfer the lien of creditors to the proceeds of sale and allow the property to be sold free and clear of liens, the Company must be provided evidence that said liens are paid in full and the property is released from same OR said liens will appear as EXCEPTIONS IN SCHEDULE B OF THE POLICY. 17. Receipt of a copy of any order entered by the bankruptcy court abandoning the property to the holder of the deed of trust, allowing it to be sold, and/or releasing the property from the automatic stay. IF AN NON-INDIVIDUAL IS THE PROPOSED INSURED OR CURRENT FEE TITLE HOLDER OF THE INSURED PREMISES, THESE ARE TYPICAL REQUIREMENTS TO ENSURE THE PROPERTY IS BEING CONVEYED/MORTGAGED PROPERLY: 18. Receipt of a satisfactory court order authorizing the Trustees of A Church Name to enter into the proposed transaction and designation of the proper parties to execute all associated documents Receipt of copy of filed articles of organization; 2. Receipt of copy of operating agreement; and 3. Receipt of certificate of good standing. Form No A Page 6

36 INVESTORS TITLE INSURANCE COMPANY P.O. Drawer 2687 Chapel Hill, North Carolina Commitment No TN Receipt of copy of filed articles of organization; 2. Receipt of copy of operating agreement authorizing the Company to mortgage the subject property and directing the appropriate party to sign on behalf of the Company; and 3. Receipt of certificate of good standing. 21. Receipt and satisfactory review of the Operating Agreement together with all amendments thereto of The Name of the Proposed Insured, LLC confirming the parties signing the instrument(s) required herein have full and complete authority to bind Washington LLC. Note: Upon receipt and review of said document, the Company may make additional requirements and/or exceptions. IF THE TRANSACTION BEING INSURED IS A CONSTRUCTION LOAN, THESE ARE TYPICAL REQUIREMENTS ONE WOULD SEE ON A COMMITMENT: 22. For each draw, receipt of satisfactory, notarized Waiver and Release of Liens (Form 514a) by all persons performing work or delivering materials, also, satisfaction and cancellation of any recorded liens. 23. Receipt of satisfactory, notarized Affidavit and Agreement Regarding Liens (Form VA 514); also, satisfaction and cancellation of any recorded liens. 24. a. Designation of a Mechanic s Lien Agent in writing by the owner of the real estate; b. Receipt of Building Permit showing MLA designation and assurance the permit was posted in compliance with Va. Code Ann ; c. Receipt of Mechanic s Lien Agent Affidavit wherein the MLA lists and certifies as to all subcontractors and materialmen that have given notice, or certification that no persons have given notice, at each draw. BELOW IS A NOTE INFORMING THE INSURED PARTY THEY MIGHT BE ELIGIBLE FOR A Form No A Page 7

37 INVESTORS TITLE INSURANCE COMPANY P.O. Drawer 2687 Chapel Hill, North Carolina Commitment No TN DISCOUNT IN THE PREMIUM IF THERE IS EVIDENCE OF PRIOR COVERAGE PROVIDED: 25. If this transaction meets the following criteria, you may qualify for a reduced premium: - Title Insurance has been issued on the same property within the last 10 years. If you meet this criterion, please contact the issuing Agent. Form No A Page 8

38 INVESTORS TITLE INSURANCE COMPANY P.O. Drawer 2687 Chapel Hill, North Carolina Commitment No TN SCHEDULE B - SECTION II EXCEPTIONS Any policy we issue will have the following exceptions unless they are taken care of to our satisfaction. TYPICAL EXCEPTIONS ON A STANDARD TRANSACTION INCLUDE, BUT ARE NOT LIMITED TO: 1. Taxes for the year 2013, and subsequent years, not yet due and payable. 2. Easement(s) to The Power Company recorded in Book 3 at Page Easement(s) to The Water Company recorded in Book 5 at Page Easement(s) to The Phone Company recorded in Book 9 at Page Subject to matters shown on recorded Plat Book 1 at Page 2 including a 10 foot Public Utility and Drainage Easement located on the Land. THE EXCEPTIONS SHOWN BELOW ARE NOT FOUND OF PUBLIC RECORD, BUT STILL AFFECT THE PROPERTY. THEY ARE USUALLY FOUND UPON A REVIEW OF THE LEGAL DESCRIPTION OR A SURVEY OF THE INSURED PREMISES. THESE EXCEPTIONS ARE ALSO TYPICALLY FOUND ON THE ADDENDUM TO THE SHORT FORM POLICY JACKET. 6. Title to that portion of the Land lying below the mean high water mark of the creek. 7. Riparian rights incident to the Land. 8. Title to that portion of the Land lying within the bounds of the railroad right of way of Reading Railroad. 9. Title to that portion of the property within the bounds of burial grounds, together with right of ingress and egress thereto. Form No A Page 9

39 INVESTORS TITLE INSURANCE COMPANY P.O. Drawer 2687 Chapel Hill, North Carolina Commitment No TN THE FOLLOWING EXCEPTIONS SHOWN BELOW ARE TYPICALLY SHOWN ON THE MORTGAGEE POLICY ONLY: 10. Restrictions appearing of record in Book 45 at Page 56, but this policy insures that said restrictions have not been violated and that a future violation thereof will not cause a forfeiture or reversion of Title. 11. Building setback line of 25 feet from the front, 5 feet from the sides and 50 feet from the rear, as shown on the recorded plat of subdivision, which setback has not been violated. THE FOLLOWING EXCEPTIONS WILL BE SHOWN ON THE OWNERS POLICY ONLY: 12. Restrictions appearing of record in Book 45, Page 56, but this policy insures that a violation thereof will not cause a forfeiture or reversion of title. 13. Building setback line of 25 feet from the front, 5 feet from the sides and 50 feet from the rear, as shown on the recorded plat of subdivision. 14. This policy does not insure against loss or damage by reason of the following: a. Roads, ways or easements or claims of easements not shown by the Public Records. b. Any lien, or right to a lien, for services, labor or materials heretofore or hereafter furnished, imposed by law and not shown by the Public Records. c. Pending assessments by any taxing authority not yet filed in the Public Records. THE EXCEPTION BELOW IS COMMONLY SHOWN ON AN OWNER S POLICY UNLESS A "CURRENT AND ACCURATE" SURVEY IS RECEIVED PRIOR TO THE ISSUING OF THE POLICY. HOWEVER, THE EXCEPTION CAN ALSO APPEAR ON A LOAN POLICY IF THE LEGAL DESCRIPTION IS POOR. WHEN INCLUDED ON A OWNERS OR LENDERS POLICY, THE EXCEPTION SPECIFICALLY DELETES COVERED RISK 2(c) FROM THE POLICY JACKET. 15. Any encroachment, encumbrance, violation, variation, or adverse circumstance affecting the Title that would be disclosed by an accurate and complete land survey of the Land. The term "encroachment" includes encroachments of existing improvements Form No A Page 10

40 INVESTORS TITLE INSURANCE COMPANY P.O. Drawer 2687 Chapel Hill, North Carolina Commitment No TN located on the Land onto adjoining land, and encroachments onto the Land of existing improvements located on adjoining land. Paragraph 2 (c) of the Covered Risks is hereby deleted. THE EXCEPTIONS BELOW LIMIT OR ELIMINATE COVERAGE AFFORDED TO THE INSURED PARTY UNDER THE COVERED RISK AND/OR THE CONDITIONS OF THE POLICY: 16. Any matters which would be disclosed by an examination of the Public Records prior to 8/20/ This policy does not insure against loss or damage arising from the inadequacy of the legal description. 18. Right of access to and from the Land. 19. This Policy does not insure against loss or damage as a result of the unmarketability of the property due to the nature and extent of access to it. 20. This policy does not insure against the rights of any outstanding heirs of Marth Washington, deceased. 21. Attention is directed to the definition of "Land" as set out in the Conditions and Stipulations and to the fact that this policy insures the land described in Schedule A hereof and improvements affixed thereto which by law constitute real property, and not the title to any personal property, including mobile homes. 22. This policy does not insure against loss or damage arising from any claim of Unmarketable Title. 23. Subject to the fee simple interest of Samual Adams. 24. Deed of Trust from Samual Adams for the benefit of Commonwealth Bank recorded in Book 17, Page 76, on 8/3/2000 at 8:00 am, securing a note in the original principal sum of $100,000.00, and any other obligations secured thereby and/or described therein. Form No A Page 11

41 INVESTORS TITLE INSURANCE COMPANY P.O. Drawer 2687 Chapel Hill, North Carolina Commitment No TN THE EXCEPTIONS SHOWN BELOW ARE FOUND ON TRANSACTIONS INSURING A CONSTRUCTION LOAN. THE INCLUSIONS OF THESE EXCEPTIONS LIMIT THE AMOUNT OF LOSS THAT MAY BE RECOVERED AS STATED IN THE "CONDITIONS." THESE EXCEPTIONS LIMITED THE LOSS TO THE AMOUNT OF FUNDS DISBURSED UP TO THE FACE AMOUNT OF THE POLICY. 25. Pending disbursement of the full Indebtedness of the loan secured by the Deed of Trust set forth under Schedule A hereof, liability hereunder is limited to the amount of the Indebtedness actually disbursed as of the effective date hereof, but such liability will increase up to the face amount hereof, as each additional advance is made in good faith and without knowledge of any defects in, or objections to the title to the Land. At the time of each advance of Indebtedness, the examination of title to the land must be continued for possible liens or objections intervening between the effective date hereof and the date of such advance. The extension of coverage hereunder to include liability for the amount of any additional advance of Indebtedness is to be evidenced by an endorsement hereto, extending the effective date hereof to the date of such advance and noting an exception to any intervening items disclosed by the continuation of the title examination and not removed or disposed of to the satisfaction of the Company. NOTE: At the time of each disbursement, the Company must be furnished a certification from the Mechanics Lien Agent listing all persons or entities giving notice to the Mechanics Lien Agent, along with Waivers and Releases of Liens, in form and amounts satisfactory to the Company, from all persons posting with the MLA and performing work or furnishing supplies or materials prior to such disbursement. Accordingly, the Lender should not disburse to the Borrower until after receiving assurances that the Company is prepared to issue its endorsement covering the advance. 26. Pending disbursement of the full Indebtedness of the loan secured by the Deed of Trust set forth under Schedule A hereof, liability hereunder is limited to the amount of the Indebtedness actually disbursed as of the effective date hereof, but such liability will increase up to the face amount hereof, as each additional advance is made in good faith and without knowledge of any defects in, or objections to the Title to the land. At the time of each advance of Indebtedness, the examination of title to the land must be continued for possible liens or objections intervening between the effective date hereof and the date of such advance. The extension of coverage hereunder to include liability for the amount of any Form No A Page 12

42 INVESTORS TITLE INSURANCE COMPANY P.O. Drawer 2687 Chapel Hill, North Carolina Commitment No TN additional advance of Indebtedness is to be evidenced by an endorsement hereto, extending the effective date hereof to the date of such advance and noting an exception to any intervening items disclosed by the continuation of the title examination and not removed or disposed of to the satisfaction of the Company. NOTE: At the time of each disbursement, Waivers and Releases of Liens, in form and amounts satisfactory to the Company, from all persons performing work or furnishing supplies or materials prior to such disbursement must be provided to the Company. Accordingly, the Lender should not disburse to the Borrower until after receiving assurances that the Company is prepared to issue its endorsement covering the advance. Form No A Page 13

43 TITLE INSURANCE COMMITMENT Issued by AGREEMENT TO ISSUE POLICY We agree to issue policy to you according to the terms of the Commitment. When we show the policy amount and your name as the proposed insured in Schedule A, this Commitment becomes effective as of the Commitment Date shown in Schedule A. If the Requirements shown in this Commitment have not been met within six (6) months after the Commitment Date, our obligation under this Commitment will end. Also, our obligation under this Commitment will end when the Policy is issued and then our obligation to you will be under the Policy. Our obligation under this Commitment is limited by the following: The Provisions in Schedule A. The Requirements in Schedule B-I. The Exceptions in Schedule B-II. The Conditions on Jacket. This Commitment is not valid without SCHEDULE A and Sections I and II of SCHEDULE B. IN WITNESS WHEREOF, the Company has caused this Commitment to be signed and sealed, to become valid when countersigned by an authorized officer or agent of the Company, all in accordance with its By-Laws. The use of this Form is restricted to ALTA licensees and ALTA members in good standing as of the date of use. All other uses are prohibited. Reprinted under license from the American Land Title Association. Copyright American Land Title Association. All rights reserved. Attest: President Secretary CONDITIONS 1. DEFINITIONS (a) Mortgage means mortgage, deed of trust or other security instrument. (b) Public Records means title records that give constructive notice of matters affecting your title according to the state statutes where your land is located. 2. LATER DEFECTS The Exceptions in Schedule B - Section II may be amended to show any defects, liens or encumbrances that appear for the first time in the public records or are created or attach between the Commitment Date and the date on which all of the Requirements (a) and (c) of Schedule B - Section I are met. We shall have no liability to you because of this amendment. 3. EXISTING DEFECTS If any defects, liens or encumbrances existing at Commitment Date are not shown in Schedule B, we may amend Schedule B to show them. If we do amend Schedule B to show these defects, liens or encumbrances, we shall be liable to you according to Paragraph 4 below unless you knew of this information and did not tell us about it in writing. 4. LIMITATION OF OUR LIABILITY Our only obligation is to issue to you the Policy referred to in this Commitment, when you have met its Requirements. If we have any liability to you for any loss you incur because of an error in this Commitment, our liability will be limited to your actual loss caused by your relying on this Commitment when you acted in good faith to: Comply with the Requirements shown in Schedule B - Section I OR Eliminate with our written consent any Exceptions shown in Schedule B - Section II. We shall not be liable for more than the Policy Amount shown in Schedule A of this Commitment and our liability is subject to the terms of the Policy form to be issued to you. 5. CLAIMS MUST BE BASED ON THIS COMMITMENT Any claim, whether or not based on negligence, which you may have against us concerning the title to the land must be based on this Commitment and is subject to its terms. Form J ALTA Commitment Form 2006

44 TABLE OF CONTENTS AGREEMENT TO ISSUE POLICY Jacket SCHEDULE A Page 1 1. Commitment Date 2. Policies to be Issued, Amounts and Proposed Insureds 3. Interest in the Land and Owner 4. Description of the Land REQUIREMENTS Schedule B-I EXCEPTIONS Schedule B-II CONDITIONS Jacket Commitment of Title Insurance P.O. Drawer 2687 Chapel Hill North Carolina (919) INFORMATION The Title Insurance Commitment is a legal contract between you and the Company. It is issued to show the basis on which we will issue a Title Insurance Policy to you. The Policy will insure you against certain risks to the land title, subject to the limitations shown in the Policy. The Company will give you a sample of the Policy form, if you ask. THE POLICY CONTAINS AN ARBITRATION CLAUSE. ALL ARBITRABLE MATTERS WHEN THE AMOUNT OF INSURANCE IS $2,000,000 OR LESS SHALL BE ARBITRATED AT THE OPTION OF EITHER THE COMPANY OR YOU AS THE EXCLUSIVE REMEDY OF THE PARTIES. YOU MAY REVIEW A COPY OF THE ARBITRATION RULES AT The Commitment is based on the land title as of the Commitment Date. Any changes in the land title or the transaction may affect the Commitment and the Policy. The Commitment is subject to its Requirements, Exceptions and Conditions. THIS INFORMATION IS NOT PART OF THE TITLE INSURANCE COMMITMENT. YOU SHOULD READ THE COMMITMENT VERY CAREFULLY. If you have any questions about the Commitment, contact either the local issuing office or the underwriting Company office shown on this Page.