- Real Estate Tip: ALTA 34-06 - The Endorsement That Saves The Day
- October 22, 2014 | Author: Richard W. Smith
- Law Firm: Bernstein Shur - Portland Office
Buyers and developers who are focused on negotiating terms of transactions, projecting future income and meeting deadlines, can often ignore real estate title issues until a defect in a title threatens to derail a closing. Timing is everything and defects have a way of surfacing when the closing date is in sight and delay is not an option.
A frequent response to a sudden title defect is to get affirmative coverage from the title insurance company, which can take many forms and provide different coverages. Negotiating transaction-specific coverage is always a possibility, as is selecting one of the American Land Title Association’s endorsement forms. The all-purpose endorsement, ALTA 34-06, can start the affirmative coverage discussion regardless of the specific type of title defect that has surfaced.
The ALTA 34-06 endorsement will recite the title defect and:
- Indemnify the buyer if the defect results in a final judgment against the buyer
- Make the buyer whole if a future buyer or lender refuses to buy or lend because they cannot get similar title insurance coverage for a new purchase or loan
- Pay the buyer’s attorneys’ fees and costs in defending the title against the identified defect
By combining several concepts often found in specifically negotiated affirmative coverage clauses, the ALTA 34-06 endorsement provides a convenient shortcut and may be the white knight that saves the (closing) day.