Title Insurance: What You Don't Know Can Hurt You

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ICSC Michigan Continuing Education Program for Real Estate Professionals “Urban vs. Suburban Retail—What’s In Store for Michigan” Thursday, February 9, 2017 7:30 am – 3:30 pm Suburban Collection Showplace 46100 Grand River Avenue Novi, MI 48374

Presented by:

Gregg A. Nathanson, Esq. Couzens Lansky 39395 West Twelve Mile, Suite 200 Farmington Hills, MI 48331 248-489-8600 [email protected] www.couzens.com

Meredith Weingarden, Esq. Chicago Title Insurance Company 4450 44th Street, Suite E Grand Rapids, MI 49512 616-957-2714 [email protected] www.ctic.com

The information contained herein does not attempt to give specific legal advice. For advice in particular situations, the services of a competent real estate attorney should be obtained. These materials are the exclusive property of Gregg A. Nathanson, Esq., and Meredith Weingarden, and no reprint or other use of the information contained herein is permitted without Mr. Nathanson's or Ms. Weingarden's express prior written authorization.

1. Introduction

 What is title insurance?

 What are the different types of title insurance policies?

 Basics of a title insurance policy- Schedule A (insuring provisions), Schedule B-I (requirements) and Schedule B- II (exceptions) Exclusions from coverage and Conditions

 What is 'without standard exceptions'?

 Understanding Schedule B - II property specific exceptions

2. Abengoa Bioenergy decision

 In 2006, Abengoa Bioenergy hired Chicago Title for a “radius search”.

 They intended to build a plant in Kansas, and they needed to get the property re- zoned.

 They needed the names of all of the parties who would have to get notice of the proposed re-zoning.

 They paid $800 for a “certificate” with that information, and liability was limited to the amount paid for it.

 The re-zoning was granted, but it was then discovered that some people who should have received notice were missed, because they filed suit. Redoing that process took three months.

 In the meantime, Abengoa decided to build the plant in Illinois instead, at a greater cost.

 They tendered a claim to Chicago Title, which was denied based on the limitation of liability in the certificate. Then they filed suit, alleging negligence, negligent misrepresentation (for missing 7 owners) and breach of contract.

 The trial was held over a 9 day period in July 2014. After two hours of jury deliberation, the jury found in favor of Abengoa to the tune of $48,422,300, the exact amount their expert had testified to.  The court refused to allow evidence of the limitation of liability clause at trial, because they said it was not part of the contract between CTIC and Abengoa, which was formed when the order for the search was placed by phone.

3. New ALTA Title Insurance Commitment (Revised August 1, 2016)

 The prior discussion leads right into this one…what is the new commitment, and why was it adopted?

 Two goals: Clarity in the fact that a commitment is only for insuring title as it is described in the commitment and is not an abstract or opinion of title AND clarity in liability for a loss that a Proposed Insured suffered as a result of reliance on the commitment.

 There is a new notice that disclaims liability for negligence in search and exam, and asserts that a commitment is an offer to issue one or more policies as to its terms, but nothing more.

 New commitment clearly terminates after a date certain (180 days).

 In a big change, the commitment isn’t effective until there is a name in the Proposed Insured section, and a number in the Proposed Amount. No TBDs.

 Clarifies that the commitment can be amended to add an adverse matter at any time, even for a matter that arose prior to the commitment date, and the liability to the company for that amendment is limited.

 limits the Company’s liability to actual expenses that occurred “in the interval between the Company’s delivery to the Proposed Insured of the Commitment and the delivery of the amended Commitment” resulting from good faith reliance to comply with requirements, eliminate Exceptions or acquire title

 Limits liability for changes the Proposed Insured requested or knew about.

 Limits liability to expenses the Proposed Insured would not have suffered if they had been on the commitment from the beginning.

 Liability limited to actual expenses in good faith or proposed policy amount (which is why no more TBD).

 Liability based on contract, not negligence. Only Proposed Insured can file a claim. Until Policy issued, Commitment is exclusive agreement. When Policy issued, liability under Commitment ends. All changes must be in writing. Deletion or modification of Exception does not obligate further coverage.

 Schedules add 4 standard requirements: Pay the agreed amount for the estate to be insured, notify the Company of anybody who has or will get an interest in the land that we don’t know about, pay the premiums for the policy, execute satisfactory documents to create the interest to be insured.

4. Insuring Land Contracts, Leasehold and Option Interests

 How to insure a land contract vendee interest?

 A leasehold endorsement (to an owner's policy) insures tenant against eviction based on landlord/owner's defective title-- Examine the fee title at the date of the creation of the lease. Determine that there are no conditions or limitations on the fee title which would prevent or cause defects in the creation of the leasehold estate.

 Determine that the leasehold is validly created and that the lease, or a short form memorandum thereof, is in recordable form. The “memorandum” or “short form” lease must be executed by both parties, contain a legal description and reflect any other matters that may be required by state law, such as option or rights to renew.

 Search the Lessee for judgments and other matters which may affect the Lessee’s title.

 Much like the former leasehold policy forms, the endorsements include a definition of the insured Leasehold Estate, method of evaluating the estate, and provisions for miscellaneous items of loss. The Leasehold Estate continues to be defined as the right of possession for the term of the lease. The Lease Term has been expanded to include any renewal or extended term, if a valid option to renew or extend is contained in the lease

 What are recoverable damages under leasehold endorsement?

 Valuation of Estate or Interest Insured” provides that after the Insured has been evicted, the Insured’s loss or damage shall consist of the costs of rental of similar space minus the rent, which is no longer required to be paid. Miscellaneous items of loss include the reasonable cost of removing and relocating any personal property on the land for the first 100 miles. The insurer is liable for expenses incurred securing a replacement leasehold equivalent to the insured one. The insurer is also liable for the fair market value, at the time of eviction, of the interest of the Insured as Lessor under any sublease or lease it may have entered into. Damages for breach of such leases or subleases are also covered.

 An option endorsement (to an owner's policy) insures optionee has a valid and enforceable land purchase option

 Option interest must be coupled with real property interest to be insurable since an option is personal property

 The option is usually coupled with a tenant's leasehold interest

 Technically, the option endorsement doesn’t actually insure the validity or enforceability of the option; it insures the optionee as to the execution, authorization or forgery in respect to execution of the option

 Provides coverage against the existence, in the Public Records, of previously granted options

5. Real Property Tax Sales

 Why are title companies reluctant to insure property purchased at a tax sale? Still concerned with a due process challenge.

 Under what circumstances might a title company insure property purchased at a tax sale?

 Research county file for proper notice (FOIA request)

 Quit claim deeds and releases from interested parties

 Quiet title action

6. New Construction Issues

 Why are title companies reluctant to insure new construction? Michigan is a broken priority state, very lender unfriendly.

 When will a title company insure new construction?

 Enough money in the loan to complete construction

 Reviewing draws for proper sworn statements and lien waivers

 Escrowed funds to cover potential liability from existing liens

 Financial statements and indemnities from creditworthy indemnitors

7. Addressing Old Undischarged Mortgages

 Have lender or their successor/assignee execute discharge

 ReQuire is a service that will track down a mortgage lender and obtain a discharge for a fee

 Record Affidavit with evidence of payment

 Indemnification

 Quiet title action

8. Entity Issues

 Different types of entities (corporation, LLC, Limited partnership, trust)

 Organizational and authorizing documents

 Layered entity structures requires multiple levels of documentation

9. Questions and Answers

Attachments

1. Option Endorsement (ALTA Form 46-06)

2. Leasehold Endorsement - Owner's (ALTA Form 13.06)

3. Leasehold Endorsement - Loan (ALTA Form 13.1-06)

4. Commitment for Title Insurance (Adopted 6-17-06, Revised 8-01-16)

5. Owner's Policy of Title Insdurance (Adopted 6-17-06)

Attached to Policy No._____ Issued by CHICAGO TITLE INSURANCE COMPANY

1. The insurance provided by this endorsement is subject to the exclusions contained in Section 4 of this endorsement, the Exclusions from Coverage, the Exceptions from Coverage contained in Schedule B, and the Conditions in the policy. 2. For the purposes of this endorsement: (a) “Option” means the document recorded in the Public Records on (Insert date of recording) at: (Insert recording information). (b) “Option Parcel” means the Land [or that portion of the Land] described in Schedule A [as: (Insert land description)]. (c) “Optionor” means the person who executed the Option as the grantor. 3. The Company insures against loss or damage sustained by the Insured by reason of: (a) Any defect in the execution of the Option resulting from: (i) forgery, incompetency, incapacity, or impersonation of the Optionor; (ii) failure of the Optionor to have authorized the Option; or (iii) the Option not being properly signed, witnessed, sealed, acknowledged, notarized, or delivered by the Optionor. (b) Any right to acquire an estate or interest in the Option Parcel granted to another person in a document recorded in the Public Records at Date of Policy if the document is not excepted in Schedule B. 4. This endorsement does not insure against loss or damage and the Company will not pay costs, attorneys’ fees, or expenses that arise by reason of: (a) The invalidity or unenforceability of the Option, but this exclusion does not limit the coverage provided in Section 3(a) above; (b) The failure of the Insured to fulfill the terms and conditions of the Option; (c) The unenforceability, avoidance, or rejection of the Option under the provisions of the Bankruptcy Code of the United States, state insolvency, state or federal receivership, or creditors’ rights laws; or (d) The failure of the recorded Option to impart constructive notice, but this exclusion does not limit the coverage provided in Section 3(a) (iii) above.

This endorsement is issued as part of the policy. Except as it expressly states, it does not (i) modify any of the terms and provisions of the policy, (ii) modify any prior endorsements, (iii) extend the Date of Policy, or (iv) increase the Amount of Insurance. To the extent a provision of the policy or a previous endorsement is inconsistent with an express provision of this endorsement, this endorsement controls. Otherwise, this endorsement is subject to all of the terms and provisions of the policy and of any prior endorsements.

By: ______Authorized Signatory

ALTA Endorsement Form 46-06 (Option) (8/1/15) ©American Land Title Association

ENDORSEMENT

Attached to Policy No. ______

Issued By Chicago Title Insurance Company

1. As used in this endorsement, the following terms shall mean:

a. "Evicted" or "Eviction": (a) the lawful deprivation, in whole or in part, of the right of possession insured by this policy, contrary to the terms of the Lease or (b) the lawful prevention of the use of the Land or the Tenant Leasehold Improvements for the purposes permitted by the Lease, in either case as a result of a matter covered by this policy.

b. "Lease": the lease described in Schedule A.

c. "Leasehold Estate": the right of possession granted in the Lease for the Lease Term.

d. "Lease Term": the duration of the Leasehold Estate, as set forth in the Lease, including any renewal or extended term if a valid option to renew or extend is contained in the Lease.

e. "Personal Property": property, in which and to the extent the Insured has rights, located on or affixed to the Land on or after Date of Policy that by law does not constitute real property because (i) of its character and manner of attachment to the Land and (ii) the property can be severed from the Land without causing material damage to the property or to the Land.

f. "Remaining Lease Term": the portion of the Lease Term remaining after the Insured has been Evicted.

g. "Tenant Leasehold Improvements": Those improvements, in which and to the extent the Insured has rights, including landscaping, required or permitted to be built on the Land by the Lease that have been built at the Insured's expense or in which the Insured has an interest greater than the right to possession during the Lease Term.

2. Valuation of Estate or Interest Insured:

If in computing loss or damage it becomes necessary to value the Title, or any portion of it, as the result of an Eviction of the Insured, then, as to that portion of the Land from which the Insured is Evicted, that value shall consist of the value for the Remaining Lease Term of the Leasehold Estate and any Tenant Leasehold Improvements existing on the date of the Eviction. The Insured Claimant shall have the right to have the Leasehold Estate and the Tenant Leasehold Improvements affected by a defect insured against by the policy valued either as a whole or separately. In either event, this

ALTA 13-06 Leasehold - 72E718 1 of 3 Owner's (4-2-12)

Copyright American Land Title Association. All rights reserved. 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

determination of value shall take into account rent no longer required to be paid for the Remaining Lease Term.

3. Additional items of loss covered by this endorsement:

If the Insured is Evicted, the following items of loss, if applicable to that portion of the Land from which the Insured is Evicted shall be included, without duplication, in computing loss or damage incurred by the Insured, but not to the extent that the same are included in the valuation of the Title determined pursuant to Section 2 of this endorsement, any other endorsement to the policy, or Section 8(a)(ii) of the Conditions:

a. The reasonable cost of (i) removing and relocating any Personal Property that the Insured has the right to remove and relocate, situated on the Land at the time of Eviction, (ii) transportation of that Personal Property for the initial one hundred miles incurred in connection with the relocation, (iii) repairing the Personal Property damaged by reason of the removal and relocation, and (iv) restoring the Land to the extent damaged as a result of the removal and relocation of the Personal Property and required of the Insured solely because of the Eviction.

b. Rent or damages for use and occupancy of the Land prior to the Eviction that the Insured as owner of the Leasehold Estate may be obligated to pay to any person having paramount title to that of the lessor in the Lease.

c. The amount of rent that, by the terms of the Lease, the Insured must continue to pay to the lessor after Eviction with respect to the portion of the Leasehold Estate and Tenant Leasehold Improvements from which the Insured has been Evicted.

d. The fair market value, at the time of the Eviction, of the estate or interest of the Insured in any lease or sublease permitted by the Lease and made by the Insured as lessor of all or part of the Leasehold Estate or the Tenant Leasehold Improvements.

e. Damages caused by the Eviction that the Insured is obligated to pay to lessees or sublessees on account of the breach of any lease or sublease permitted by the Lease and made by the Insured as lessor of all or part of the Leasehold Estate or the Tenant Leasehold Improvements.

f. The reasonable cost to obtain land use, zoning, building and occupancy permits, architectural and engineering services and environmental testing and reviews for a replacement leasehold reasonably equivalent to the Leasehold Estate.

g. If Tenant Leasehold Improvements are not substantially completed at the time of Eviction, the actual cost incurred by the Insured, less the salvage value, for the Tenant Leasehold Improvements up to the time of Eviction. Those costs include costs incurred to obtain land use, zoning, building and occupancy permits, architectural and engineering services, construction management services, environmental testing and reviews, and landscaping.

ALTA 13-06 Leasehold - 72E718 2 of 3 Owner's (4-2-12)

4. This endorsement does not insure against loss, damage or costs of remediation (and the Company will not pay costs, attorneys' fees or expenses) resulting from environmental damage or contamination.

Dated:

Countersigned: ______Authorized Signatory

ALTA 13-06 Leasehold - 72E718 3 of 3 Owner's (4-2-12)

ENDORSEMENT

Attached to Policy No. ______

Issued By Chicago Title Insurance Company

1. As used in this endorsement, the following terms shall mean:

b. "Lease": the lease described in Schedule A.

c. "Leasehold Estate": the right of possession granted in the Lease for the Lease Term.

d. "Lease Term": the duration of the Leasehold Estate, as set forth in the Lease, including any renewal or extended term if a valid option to renew or extend is contained in the Lease.

f. "Remaining Lease Term": the portion of the Lease Term remaining after the Tenant has been Evicted.

g. "Tenant": the tenant under the Lease and, after acquisition of all or any part of the Title in accordance with the provisions of Section 2 of the Conditions of the policy, the Insured Claimant.

h. "Tenant Leasehold Improvements": Those improvements, in which and to the extent the Insured has rights, including landscaping, required or permitted to be built on the Land by the Lease that have been built at the Tenant’s expense or in which the Tenant has an interest greater than the right to possession during the Lease Term.

ALTA 13.1-06 Leasehold - 72E717 1 of 3 Loan (4-2-12)

2. Valuation of Estate or Interest Insured:

If in computing loss or damage it becomes necessary to value the Title, or any portion of it, as the result of an Eviction of the Tenant, then, as to that portion of the Land from which the Tenant is Evicted, that value shall consist of the value for the Remaining Lease Term of the Leasehold Estate and any Tenant Leasehold Improvements existing on the date of the Eviction. The Insured Claimant shall have the right to have the Leasehold Estate and the Tenant Leasehold Improvements affected by a defect insured against by the policy valued either as a whole or separately. In either event, this determination of value shall take into account rent no longer required to be paid for the Remaining Lease Term.

3. Additional items of loss covered by this endorsement:

If the Insured acquires all or any part of the Title in accordance with the provisions of Section 2 of the Conditions of this policy and thereafter is Evicted, the following items of loss, if applicable to that portion of the Land from which the Insured is Evicted shall be included, without duplication, in computing loss or damage incurred by the Insured, but not to the extent that the same are included in the valuation of the Title determined pursuant to Section 2 of this endorsement, any other endorsement to the policy, or Section 8(a)(iii) of the Conditions:

d. The fair market value, at the time of the Eviction, of the estate or interest of the Insured in any lease or sublease permitted by the Lease and made by the Tenant as lessor of all or part of the Leasehold Estate or the Tenant Leasehold Improvements.

e. Damages caused by the Eviction that the Insured is obligated to pay to lessees or sublessees on account of the breach of any lease or sublease permitted by the Lease and made by the Tenant as lessor of all or part of the Leasehold Estate or the Tenant Leasehold Improvements.

ALTA 13.1-06 Leasehold - 72E717 2 of 3 Loan (4-2-12)

Dated:

Countersigned: ______Authorized Signatory

ALTA 13.1-06 Leasehold - 72E717 3 of 3 Loan (4-2-12)

American Land Title Association Commitment for Title Insurance Adopted 6-17-06 Revised 08-01-2016

COMMITMENT FOR TITLE INSURANCE ISSUED BY BLANK TITLE INSURANCE COMPANY

NOTICE

IMPORTANT—READ CAREFULLY: THIS COMMITMENT IS AN OFFER TO ISSUE ONE OR MORE TITLE INSURANCE POLICIES. ALL CLAIMS OR REMEDIES SOUGHT AGAINST THE COMPANY INVOLVING THE CONTENT OF THIS COMMITMENT OR THE POLICY MUST BE BASED SOLELY IN CONTRACT.

THIS COMMITMENT IS NOT AN ABSTRACT OF TITLE, REPORT OF THE CONDITION OF TITLE, LEGAL OPINION, OPINION OF TITLE, OR OTHER REPRESENTATION OF THE STATUS OF TITLE. THE PROCEDURES USED BY THE COMPANY TO DETERMINE INSURABILITY OF THE TITLE, INCLUDING ANY SEARCH AND EXAMINATION, ARE PROPRIETARY TO THE COMPANY, WERE PERFORMED SOLELY FOR THE BENEFIT OF THE COMPANY, AND CREATE NO EXTRACONTRACTUAL LIABILITY TO ANY PERSON, INCLUDING A PROPOSED INSURED.

THE COMPANY’S OBLIGATION UNDER THIS COMMITMENT IS TO ISSUE A POLICY TO A PROPOSED INSURED IDENTIFIED IN SCHEDULE A IN ACCORDANCE WITH THE TERMS AND PROVISIONS OF THIS COMMITMENT. THE COMPANY HAS NO LIABILITY OR OBLIGATION INVOLVING THE CONTENT OF THIS COMMITMENT TO ANY OTHER PERSON.

COMMITMENT TO ISSUE POLICY

Subject to the Notice; Schedule B, Part I—Requirements; Schedule B, Part II—Exceptions; and the Commitment Conditions, Blank Title Insurance Company, a ______(the “Company”), commits to issue the Policy according to the terms and provisions of this Commitment. This Commitment is effective as of the Commitment Date shown in Schedule A for each Policy described in Schedule A, only when the Company has entered in Schedule A both the specified dollar amount as the Proposed Policy Amount and the name of the Proposed Insured.

If all of the Schedule B, Part I—Requirements have not been met within ______(insert the time period) after the Commitment Date, this Commitment terminates and the Company’s liability and obligation end.

COMMITMENT CONDITIONS

1. DEFINITIONS (a) “Knowledge” or “Known”: Actual or imputed knowledge, but not constructive notice imparted by the Public Records. (b) “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 to be insured by the Policy. (c) “Mortgage”: A mortgage, deed of trust, or other security instrument, including one evidenced by electronic means authorized by law.

This page is only a part of a 2016 ALTA® Commitment for Title Insurance[ issued by ______]. This Commitment is not valid without the Notice; the Commitment to Issue Policy; the Commitment Conditions; Schedule A; Schedule B, Part I—Requirements; [and] Schedule B, Part II—Exceptions[; and a counter-signature by the Company or its issuing agent that may be in electronic form].

Copyright 2006-2016 American Land Title Association. All rights reserved. The use of this Form (or any derivative thereof) 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. American Land Title Association Commitment for Title Insurance Adopted 6-17-06 Revised 08-01-2016

(d) “Policy”: Each contract of title insurance, in a form adopted by the American Land Title Association, issued or to be issued by the Company pursuant to this Commitment. (e) “Proposed Insured”: Each person identified in Schedule A as the Proposed Insured of each Policy to be issued pursuant to this Commitment. (f) “Proposed Policy Amount”: Each dollar amount specified in Schedule A as the Proposed Policy Amount of each Policy to be issued pursuant to this Commitment. (g) “Public Records”: Records established under state statutes at the Commitment Date for the purpose of imparting constructive notice of matters relating to real property to purchasers for value and without Knowledge. (h) “Title”: The estate or interest described in Schedule A.

2. If all of the Schedule B, Part I—Requirements have not been met within the time period specified in the Commitment to Issue Policy, this Commitment terminates and the Company’s liability and obligation end.

3. The Company’s liability and obligation is limited by and this Commitment is not valid without: (a) the Notice; (b) the Commitment to Issue Policy; (c) the Commitment Conditions; (d) Schedule A; (e) Schedule B, Part I—Requirements; [and] (f) Schedule B, Part II—Exceptions[; and (g) a counter-signature by the Company or its issuing agent that may be in electronic form].

4. COMPANY’S RIGHT TO AMEND The Company may amend this Commitment at any time. If the Company amends this Commitment to add a defect, lien, encumbrance, adverse claim, or other matter recorded in the Public Records prior to the Commitment Date, any liability of the Company is limited by Commitment Condition 5. The Company shall not be liable for any other amendment to this Commitment.

5. LIMITATIONS OF LIABILITY (a) The Company’s liability under Commitment Condition 4 is limited to the Proposed Insured’s actual expense incurred in the interval between the Company’s delivery to the Proposed Insured of the Commitment and the delivery of the amended Commitment, resulting from the Proposed Insured’s good faith reliance to: (i) comply with the Schedule B, Part I—Requirements; (ii) eliminate, with the Company’s written consent, any Schedule B, Part II— Exceptions; or (iii) acquire the Title or create the Mortgage covered by this Commitment. (b) The Company shall not be liable under Commitment Condition 5(a) if the Proposed Insured requested the amendment or had Knowledge of the matter and did not notify the Company about it in writing. (c) The Company will only have liability under Commitment Condition 4 if the Proposed Insured would not have incurred the expense had the Commitment included the added matter when the Commitment was first delivered to the Proposed Insured. (d) The Company’s liability shall not exceed the lesser of the Proposed Insured’s actual expense incurred in good faith and described in Commitment Conditions 5(a)(i) through 5(a)(iii) or the Proposed Policy Amount.

(e) The Company shall not be liable for the content of the Transaction Identification Data, if any. (f) In no event shall the Company be obligated to issue the Policy referred to in this Commitment unless all of the Schedule B, Part I—Requirements have been met to the satisfaction of the Company. (g) In any event, the Company’s liability is limited by the terms and provisions of the Policy.

6. LIABILITY OF THE COMPANY MUST BE BASED ON THIS COMMITMENT (a) Only a Proposed Insured identified in Schedule A, and no other person, may make a claim under this Commitment. (b) Any claim must be based in contract and must be restricted solely to the terms and provisions of this Commitment. (c) Until the Policy is issued, this Commitment, as last revised, is the exclusive and entire agreement between the parties with respect to the subject matter of this Commitment and supersedes all prior commitment negotiations, representations, and proposals of any kind, whether written or oral, express or implied, relating to the subject matter of this Commitment. (d) The deletion or modification of any Schedule B, Part II—Exception does not constitute an agreement or obligation to provide coverage beyond the terms and provisions of this Commitment or the Policy. (e) Any amendment or endorsement to this Commitment must be in writing [and authenticated by a person authorized by the Company]. (f) When the Policy is issued, all liability and obligation under this Commitment will end and the Company’s only liability will be under the Policy.

7. IF THIS COMMITMENT HAS BEEN ISSUED BY AN ISSUING AGENT The issuing agent is the Company’s agent only for the limited purpose of issuing title insurance commitments and policies. The issuing agent is not the Company’s agent for the purpose of providing closing or settlement services.

8. PRO-FORMA POLICY The Company may provide, at the request of a Proposed Insured, a pro-forma policy illustrating the coverage that the Company may provide. A pro-forma policy neither reflects the status of Title at the time that the pro-forma policy is delivered to a Proposed Insured, nor is it a commitment to insure.

[9. ARBITRATION The Policy contains an arbitration clause. All arbitrable matters when the Proposed Policy Amount is $2,000,000 or less shall be arbitrated at the option of either the Company or the Proposed Insured as the exclusive remedy of the parties. A Proposed Insured may review a copy of the arbitration rules at .]

[Transaction Identification Data for reference only: Issuing Agent: Issuing Office: ALTA® Universal ID: Loan ID Number: Commitment Number: Issuing Office File Number: Property Address:] [Revision Number:]

SCHEDULE A

1. Commitment Date:

2. Policy to be issued: (a) [2006 ALTA® Owner’s Policy][2006 ALTA® Loan Policy][_____ ALTA® ______Policy] Proposed Insured: ______Proposed Policy Amount: $______[(b) [2006 ALTA® Owner’s Policy][2006 ALTA® Loan Policy][_____ ALTA® ______Policy] Proposed Insured: ______Proposed Policy Amount: $______] [(c) [2006 ALTA® Owner’s Policy][2006 ALTA® Loan Policy][_____ ALTA® ______Policy] Proposed Insured: ______Proposed Policy Amount: $______]

3. The estate or interest in the Land described or referred to in this Commitment is ______(Identify estate covered, i.e., fee, leasehold, etc.)

4. Title to the [______] estate or interest in the Land is at the Commitment Date vested in:

5. The Land is described as follows:

BLANK TITLE INSURANCE COMPANY

By: Authorized Signatory

SCHEDULE B, PART I Requirements

All of the following Requirements must be met:

1. The Proposed Insured must notify the Company in writing of the name of any party not referred to in this Commitment who will obtain an interest in the Land or who will make a loan on the Land. The Company may then make additional Requirements or Exceptions.

2. Pay the agreed amount for the estate or interest to be insured.

3. Pay the premiums, fees, and charges for the Policy to the Company.

4. Documents satisfactory to the Company that convey the Title or create the Mortgage to be insured, or both, must be properly authorized, executed, delivered, and recorded in the Public Records. (Documents to be listed here)

(Additional Requirements may be listed here by number)

SCHEDULE B, PART II Exceptions

THIS COMMITMENT DOES NOT REPUBLISH ANY COVENANT, CONDITION, RESTRICTION, OR LIMITATION CONTAINED IN ANY DOCUMENT REFERRED TO IN THIS COMMITMENT TO THE EXTENT THAT THE SPECIFIC COVENANT, CONDITION, RESTRICTION, OR LIMITATION VIOLATES STATE OR FEDERAL LAW BASED ON RACE, COLOR, RELIGION, SEX, SEXUAL ORIENTATION, GENDER IDENTITY, HANDICAP, FAMILIAL STATUS, OR NATIONAL ORIGIN.

The Policy will not insure against loss or damage resulting from the terms and provisions of any lease or easement identified in Schedule A, and will include the following Exceptions unless cleared to the satisfaction of the Company:

[1. Any defect, lien, encumbrance, adverse claim, or other matter that appears for the first time in the Public Records or is created, attaches, or is disclosed between the Commitment Date and the date on which all of the Schedule B, Part I—Requirements are met.]

(Additional Exceptions may be listed here by number)

CHICAGO TITLE INSURANCE COMPANY

POLICY NO.:

OWNER’S POLICY OF TITLE INSURANCE Issued by Chicago Title Insurance Company

Any notice of claim and any other notice or statement in writing required to be given the Company under this Policy must be given to the Company at the address shown in Section 18 of the Conditions.

COVERED RISKS

SUBJECT TO THE EXCLUSIONS FROM COVERAGE, THE EXCEPTIONS FROM COVERAGE CONTAINED IN SCHEDULE B, AND THE CONDITIONS, CHICAGO TITLE INSURANCE COMPANY, a Nebraska corporation (the “Company”) insures, as of Date of Policy and, to the extent stated in Covered Risks 9 and 10, after Date of Policy, against loss or damage, not exceeding the Amount of Insurance, sustained or incurred by the Insured by reason of:

1. Title being vested other than as stated in Schedule A.

2. Any defect in or lien or encumbrance on the Title. This Covered Risk includes but is not limited to insurance against loss from

(a) A defect in the Title caused by

(i) forgery, fraud, undue influence, duress, incompetency, incapacity, or impersonation;

(ii) failure of any person or Entity to have authorized a transfer or conveyance;

(iii) a document affecting Title not properly created, executed, witnessed, sealed, acknowledged, notarized, or delivered;

(iv) failure to perform those acts necessary to create a document by electronic means authorized by law;

(v) a document executed under a falsified, expired, or otherwise invalid power of attorney;

(vi) a document not properly filed, recorded, or indexed in the Public Records including failure to perform those acts by electronic means authorized by law; or

(vii) a defective judicial or administrative proceeding.

(b) The lien of real estate taxes or assessments imposed on the Title by a governmental authority due or payable, but unpaid.

(c) 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 located on the Land onto adjoining land, and encroachments onto the Land of existing improvements located on adjoining land.

3. Unmarketable Title.

4. No right of access to and from the Land.

5. The violation or enforcement of any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or relating to

72306 (6/06) ALTA Owner’s Policy (6/17/06)

(a) the occupancy, use, or enjoyment of the Land;

(b) the character, dimensions, or location of any improvement erected on the Land;

(d) environmental protection

if a notice, describing any part of the Land, is recorded in the Public Records setting forth the violation or intention to enforce, but only to the extent of the violation or enforcement referred to in that notice.

6. An enforcement action based on the exercise of a governmental police power not covered by Covered Risk 5 if a notice of the enforcement action, describing any part of the Land, is recorded in the Public Records, but only to the extent of the enforcement referred to in that notice.

7. The exercise of the rights of eminent domain if a notice of the exercise, describing any part of the Land, is recorded in the Public Records.

8. Any taking by a governmental body that has occurred and is binding on the rights of a purchaser for value without Knowledge.

9. Title being vested other than as stated Schedule A or being defective

(a) as a result of the avoidance in whole or in part, or from a court order providing an alternative remedy, of a transfer of all or any part of the title to or any interest in the Land occurring prior to the transaction vesting Title as shown in Schedule A because that prior transfer constituted a fraudulent or preferential transfer under federal bankruptcy, state insolvency, or similar creditors’ rights laws; or

(b) because the instrument of transfer vesting Title as shown in Schedule A constitutes a preferential transfer under federal bankruptcy, state insolvency, or similar creditors’ rights laws by reason of the failure of its recording in the Public Records

(i) to be timely, or

(ii) to impart notice of its existence to a purchaser for value or to a judgment or lien creditor.

10. 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 deed or other instrument of transfer in the Public Records that vests Title as shown in Schedule A.

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.

IN WITNESS WHEREOF, CHICAGO TITLE INSURANCE COMPANY has caused this policy to be signed and sealed by its duly authorized officers.

Countersigned:______Authorized Signatory

72306 (6/06) ALTA Owner’s Policy (6/17/06)

CHICAGO TITLE INSURANCE COMPANY

SCHEDULE A

Name and Address of Title Insurance Company:

Policy No.: Address Reference: PROPERTY STREET, County, State

Amount of Insurance: $ Premium: $

Date of Policy:

1. Name of Insured:

BUYER

2. The estate or interest in the Land that is insured by this policy is:

A Fee

3. Title is vested in:

BUYER

4. The Land referred to in this policy is described as follows:

SEE EXHIBIT "A" ATTACHED HERETO AND MADE A PART HEREOF

THIS POLICY VALID ONLY IF SCHEDULE B IS ATTACHED

72306A (6/06) 1 ALTA Owner’s Policy (6/17/06)

Policy No. CHICAGO TITLE INSURANCE COMPANY

LEGAL DESCRIPTION

EXHIBIT "A"

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE COUNTY OF[FILL IN], STATE OF [FILL IN], AND IS DESCRIBED AS FOLLOWS:

[Legal Description].

APN:

72306 (6/06) 2 ALTA Owner’s Policy (6/17/06) Policy No.

CHICAGO TITLE INSURANCE COMPANY

SCHEDULE B

EXCEPTIONS FROM COVERAGE

This policy does not insure against loss or damage, and the Company will not pay costs, attorneys’ fees, or expenses that arise by reason of:

1. Paragraphs are inserted here.

72306B (6/06) 3 ALTA Owner’s Policy (6/17/06)

EXCLUSIONS FROM COVERAGE

The following matters are expressly excluded from the coverage of this policy, and the Company will not pay loss or damage, costs, attorneys’ fees, or expenses that arise by reason of: 1. (a) Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or relating to (i) the occupancy, use, or enjoyment of the Land; (ii) the character, dimensions or location of any improvement erected on the Land; (iii) the subdivision of land; or (iv) environmental protection; or the effect of any violation of these laws, ordinances, or governmental regulations. This Exclusion 1(a) does not modify or limit the coverage provided under Covered Risk 5. (b) Any governmental police power. This Exclusion 1(b) does not modify or limit the coverage provided under Covered Risk 6. 2. Rights of eminent domain. This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 8. 3. Defects, liens, encumbrances, adverse claims, or other matters: (a) created, suffered, assumed, or agreed to by the Insured Claimant; (b) not Known to the Company, not recorded in the Public Records at Date of Policy, but Known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy; (c) resulting in no loss or damage to the Insured Claimant; (d) attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risk 9 and 10); or (e) resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Title. 4. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors’ rights laws, that the transaction vesting the Title as shown in Schedule A, is (a) a fraudulent conveyance or fraudulent transfer; or (b) a preferential transfer for any reason not stated in Covered Risk 9 of this policy. 5. Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching between Date of Policy and the date of recording of the deed or other instrument of transfer in the Public Records that vests Title as shown in Schedule A.

CONDITIONS

1. DEFINITION OF TERMS heirs, devisees, survivors, personal are both wholly-owned by the same The following terms when used in representatives, or next of kin; person or Entity, or this policy mean: (B) successors to an (4) if the grantee is (a) “Amount of Insurance”: The Insured by dissolution, merger, a trustee or beneficiary of a trust amount stated in Schedule A, as may consolidation, distribution ,or created by a written instrument be increased or decreased by reorganization; established by the Insured named in endorsement to this policy, increased (C) successors to an Schedule A for estate planning by Section 8(b), or decreased by Insured by its conversion to another purposes. Sections 10 and 11 of these kind of Entity; (ii) With regard to (A), (B), Conditions. (D) a grantee of an (C), and (D) reserving, however, all (b) “Date of Policy”: The date Insured under a deed delivered rights and defenses as to any designated as ‘Date of Policy” in without payment of actual valuable successor that the Company would Schedule A. consideration conveying the Title have had against any predecessor (c) “Entity”: A corporation, (1) if the stock, Insured. partnership, trust, limited liability shares, memberships, or other equity (e) “Insured Claimant”: An Insured company, or other similar legal entity. interests of the grantee are wholly- claiming loss or damage. (d) “Insured”: The Insured named owned by the named Insured, (f) “Knowledge” or “Known”: in Schedule A. (2) if the grantee Actual knowledge, not constructive (i) The term “Insured” also wholly owns the named Insured, knowledge or notice that may be includes (3) if the grantee is imputed to an Insured by reason of the (A) successors to the Title wholly-owned by an affiliated Entity of Public Records or any other records of the Insured by operation of law as the named Insured, provided the that impart constructive notice of distinguished from purchase, including affiliated Entity and the named Insured matters affecting the Title.

72306 (6/06) ALTA Owner’s Policy (6/17/06)

(g) “Land”: The land described in these Conditions, (ii) in case insured, or to prevent or reduce loss or Schedule A, and affixed improvements Knowledge shall come to an Insured damage to the Insured. The Company that by law constitute real property. hereunder of any claim of title or may take any appropriate action under The term “Land” does not include any interest that is adverse to the Title, as the terms of this policy, whether or not property beyond the lines of the area insured, and that might cause loss or it shall be liable to the Insured. The described in Schedule A, nor any right, damage for which the Company may exercise of these rights shall not be an title, interest, estate, or easement in be liable by virtue of this policy, or (iii) admission of liability or waiver of any abutting streets, roads, avenues, if the Title, as insured, is rejected as provision of this policy. If the Company alleys, lanes, ways, or waterways, but Unmarketable Title. If the Company is exercises its rights under this this does not modify or limit the extent prejudiced by the failure of the Insured subsection, it must do so diligently. that a right of access to and from the Claimant to provide prompt notice, the (c) Whenever the Company Land is insured by this policy. Company’s liability to the Insured brings an action or asserts a defense (h) “Mortgage”: Mortgage, deed of Claimant under the policy shall be as required or permitted by this policy, trust, trust deed, or other security reduced to the extent of the prejudice. the Company may pursue the litigation instrument, including one evidenced 4. PROOF OF LOSS to a final determination by a court of by electronic means authorized by law. In the event the Company is competent jurisdiction, and it expressly (i) “Public Records”: Records unable to determine the amount of reserves the right, in its sole established under state statutes at loss or damage, the Company may, at discretion, to appeal from any adverse Date of Policy for the purpose of its option, require as a condition of judgment or order. imparting constructive notice of payment that the Insured Claimant 6. DUTY OF INSURED CLAIMANT matters relating to real property to furnish a signed proof of loss. The TO COOPERATE purchasers for value and without proof of loss must describe the defect, (a) In all cases where this policy Knowledge. With respect to Covered lien, encumbrance, or other matter permits or requires the Company to Risk 5(d), “Public Records” shall also insured against by this policy that prosecute or provide for the defense of include environmental protection liens constitutes the basis of loss or any action or proceeding and any filed in the records of the clerk of the damage and shall state, to the extent appeals, the Insured shall secure to United States District Court for the possible, the basis of calculating the the Company the right to so prosecute district where the Land is located. amount of the loss or damage. or provide defense in the action or (j) “Title”: The estate or interest 5. DEFENSE AND PROSECUTION proceeding, including the right to use, described in Schedule A. OF ACTIONS at its option, the name of the Insured (k) “Unmarketable Title”: Title (a) Upon written request by the for this purpose. Whenever requested affected by an alleged or apparent Insured, and subject to the options by the Company, the Insured, at the matter that would permit a prospective contained in Section 7 of these Company’s expense, shall give the purchaser or lessee of the Title or Conditions, the Company, at its own Company all reasonable aid (i) in lender on the Title to be released from cost and without unreasonable delay, securing evidence, obtaining the obligation to purchase, lease, or shall provide for the defense of an witnesses, prosecuting or defending lend if there is a contractual condition Insured in litigation in which any third the action or proceeding, or effecting requiring the delivery of marketable party asserts a claim covered by this settlement, and (ii) in any other lawful title. policy adverse to the Insured. This act that in the opinion of the Company 2. CONTINUATION OF INSURANCE obligation is limited to only those may be necessary or desirable to The coverage of this policy shall stated causes of action alleging establish the Title or any other matter continue in force as of Date of Policy matters insured against by this policy. as insured. If the Company is in favor of an Insured, but only so long The Company shall have the right to prejudiced by the failure of the Insured as the Insured retains an estate or select counsel of its choice (subject to to furnish the required cooperation, the interest in the Land, or holds an the right of the Insured to object for Company’s obligations to the Insured obligation secured by a purchase reasonable cause) to represent the under the policy shall terminate, money Mortgage given by a purchaser Insured as to those stated causes of including any liability or obligation to from the Insured, or only so long as action. It shall not be liable for and will defend, prosecute, or continue any the Insured shall have liability by not pay the fees of any other counsel. litigation, with regard to the matter or reason of warranties in any transfer or The Company will not pay any fees, matters requiring such cooperation. conveyance of the Title. This policy costs, or expenses incurred by the (b) The Company may reasonably shall not continue in force in favor of Insured in the defense of those causes require the Insured Claimant to submit any purchaser from the Insured of of action that allege matters not to examination under oath by any either (i) an estate or interest in the insured against by this policy. authorized representative of the Land, or (ii) an obligation secured by a (b) The Company shall have the Company and to produce for purchase money Mortgage given to right, in addition to the options examination, inspection, and copying, the Insured. contained in Section 7 of these at such reasonable times and places 3. NOTICE OF CLAIM TO BE Conditions, at its own cost, to institute as may be designated by the GIVEN BY INSURED CLAIMANT and prosecute any action or authorized representative of the The Insured shall notify the Company proceeding or to do any other act that Company, all records, in whatever promptly in writing (i) in case of any in its opinion may be necessary or medium maintained, including books, litigation as set forth in Section 5(a) of desirable to establish the Title, as ledgers, checks, memoranda,

72306 (6/06) ALTA Owner’s Policy (6/17/06)

correspondence, reports, e-mails, the Company will pay any costs, (a) If the Company establishes disks, tapes, and videos whether attorneys’ fees, and expenses incurred the Title, or removes the alleged bearing a date before or after Date of by the Insured Claimant that were defect, lien or encumbrance, or cures Policy, that reasonably pertain to the authorized by the Company up to the the lack of a right of access to or from loss or damage. Further, if requested time of payment and that the Company the Land, or cures the claim of by any authorized representative of is obligated to pay; or Unmarketable Title, all as insured, in a the Company, the Insured Claimant (ii) To pay or otherwise settle reasonably diligent manner by any shall grant its permission, in writing, for with the Insured Claimant the loss or method, including litigation and the any authorized representative of the damage provided for under this policy, completion of any appeals, it shall Company to examine, inspect, and together with any costs, attorneys’ have fully performed its obligations copy all of these records in the fees, and expenses incurred by the with respect to that matter and shall custody or control of a third party that Insured Claimant that were authorized not be liable for any loss or damage reasonably pertain to the loss or by the Company up to the time of caused to the Insured. damage. All information designated as payment and that the Company is (b) In the event of any litigation, confidential by the Insured Claimant obligated to pay. including litigation by the Company or provided to the Company pursuant to Upon the exercise by the Company of with the Company’s consent, the this Section shall not be disclosed to either of the options provided for in Company shall have no liability for loss others unless, in the reasonable subsections (b)(i) or (ii), the or damage until there has been a final judgment of the Company, it is Company’s obligations to the Insured determination by a court of competent necessary in the administration of the under this policy for the claimed loss jurisdiction, and disposition of all claim. Failure of the Insured Claimant or damage, other than the payments appeals, adverse to the Title, as to submit for examination under oath, required to be made, shall terminate, insured. produce any reasonably requested including any liability or obligation to (c) The Company shall not be information, or grant permission to defend, prosecute, or continue any liable for loss or damage to the secure reasonably necessary litigation. Insured for liability voluntarily assumed information from third parties as 8. DETERMINATION AND EXTENT by the Insured in settling any claim or required in this subsection, unless OF LIABILITY suit without the prior written consent of prohibited by law or governmental This policy is a contract of the Company. regulation, shall terminate any liability indemnity against actual monetary loss 10. REDUCTION OF INSURANCE; of the Company under this policy as to or damage sustained or incurred by REDUCTION OR TERMINATION OF that claim. the Insured Claimant who has suffered LIABILITY 7. OPTIONS TO PAY OR loss or damage by reason of matters All payments under this policy, OTHERWISE SETTLE CLAIMS; insured against by this policy. except payments made for costs, TERMINATION OF LIABILITY (a) The extent of liability of the attorneys’ fees, and expenses, shall In case of a claim under this policy, the Company for loss or damage under reduce the Amount of Insurance by the Company shall have the following this policy shall not exceed the lesser amount of the payment. additional options: of 11. LIABILITY NONCUMULATIVE (a) To Pay or Tender Payment of (i) the Amount of Insurance; The Amount of Insurance shall be the Amount of Insurance. or reduced by any amount the Company To pay or tender payment of the (ii) the difference between the pays under any policy insuring a Amount of Insurance under this policy value of the Title as insured and the Mortgage to which exception is taken together with any costs, attorneys’ value of the Title subject to the risk in Schedule B or to which the Insured fees, and expenses incurred by the insured against by this policy. has agreed, assumed, or taken Insured Claimant that were authorized (b) If the Company pursues its subject, or which is executed by an by the Company up to the time of rights under Section 5 of these Insured after Date of Policy and which payment or tender of payment and that Conditions and is unsuccessful in is a charge or lien on the Title, and the the Company is obligated to pay. establishing the Title, as insured, amount so paid shall be deemed a Upon the exercise by the Company of (i) the Amount of Insurance payment to the Insured under this this option, all liability and obligations shall be increased by 10%, and policy. of the Company to the Insured under (ii) the Insured Claimant shall 12. PAYMENT OF LOSS this policy, other than to make the have the right to have the loss or When liability and the extent of payment required in this subsection, damage determined either as of the loss or damage have been definitely shall terminate, including any liability date the claim was made by the fixed in accordance with these or obligation to defend, prosecute, or Insured Claimant or as of the date it is Conditions, the payment shall be continue any litigation. settled and paid. made within 30 days. (b) To Pay or Otherwise Settle (c) In addition to the extent of With Parties Other Than the Insured or liability under (a) and (b), the With the Insured Claimant. Company will also pay those costs, (i) To pay or otherwise settle attorneys’ fees, and expenses incurred with other parties for or in the name of in accordance with Sections 5 and 7 of an Insured Claimant any claim insured these Conditions. against under this policy. In addition, 9. LIMITATION OF LIABILITY

72306 (6/06) ALTA Owner’s Policy (6/17/06)

13. RIGHTS OF RECOVERY UPON is in excess of $2,000,000 shall be to determine the validity of claims PAYMENT OR SETTLEMENT arbitrated only when agreed to by both against the Title that are adverse to (a) Whenever the Company shall the Company and the Insured. the Insured and to interpret and have settled and paid a claim under Arbitration pursuant to this policy and enforce the terms of this policy. In this policy, it shall be subrogated and under the Rules shall be binding upon neither case shall the court or entitled to the rights of the Insured the parties. Judgment upon the award arbitrator apply its conflicts of law Claimant in the Title and all other rendered by the Arbitrator(s) may be principles to determine the applicable rights and remedies in respect to the entered in any court of competent law. claim that the Insured Claimant has jurisdiction. (b) Choice of Forum: Any litigation against any person or property, to the 15. LIABILITY LIMITED TO THIS or other proceeding brought by the extent of the amount of any loss, POLICY; POLICY ENTIRE Insured against the Company must be costs, attorneys’ fees, and expenses CONTRACT filed only in a state or federal court paid by the Company. If requested by (a) This policy together with all within the United States of America or the Company, the Insured Claimant endorsements, if any, attached to it by its territories having appropriate shall execute documents to evidence the Company is the entire policy and jurisdiction. the transfer to the Company of these contract between the Insured and the 18. NOTICES, WHERE SENT rights and remedies. The Insured Company. In interpreting any provision Any notice of claim and any other Claimant shall permit the Company to of this policy, this policy shall be notice or statement in writing required sue, compromise, or settle in the name construed as a whole. to be given to the Company under this of the Insured Claimant and to use the (b) Any claim of loss or damage policy must be given to the Company name of the Insured Claimant in any that arises out of the status of the Title at Chicago Title Insurance Company, transaction or litigation involving these or by any action asserting such claim Attn: Claims Department, Post Office rights and remedies. shall be restricted to this policy. Box 45023, Jacksonville, Florida If a payment on account of a claim (c) Any amendment of or 32232-5023. does not fully cover the loss of the endorsement to this policy must be in Insured Claimant, the Company shall writing and authenticated by an defer the exercise of its right to authorized person, or expressly recover until after the Insured Claimant incorporated by Schedule A of this shall have recovered its loss. policy. (b) The Company’s right of (d) Each endorsement to this subrogation includes the rights of the policy issued at any time is made a Insured to indemnities, guaranties, part of this policy and is subject to all other policies of insurance, or bonds, of its terms and provisions. Except as notwithstanding any terms or the endorsement expressly states, it conditions contained in those does not (i) modify any of the terms instruments that address subrogation and provisions of the policy, (ii) modify rights. any prior endorsement, (iii) extend the 14. ARBITRATION Date of Policy, or (iv) increase the Either the Company or the Insured Amount of Insurance. may demand that the claim or 16. SEVERABILITY controversy shall be submitted to In the event any provision of this arbitration pursuant to the Title policy, in whole or in part, is held Insurance Arbitration Rules of the invalid or unenforceable under American Land Title Association applicable law, the policy shall be (“Rules”). Except as provided in the deemed not to include that provision or Rules, there shall be no joinder or such part held to be invalid, but all consolidation with claims or other provisions shall remain in full controversies of other persons. force and effect. Arbitrable matters may include, but are 17. CHOICE OF LAW; FORUM not limited to, any controversy or claim (a) Choice of Law: The Insured between the Company and the Insured acknowledges the Company has arising out of or relating to this policy, underwritten the risks covered by this any service in connection with its policy and determined the premium issuance or the breach of a policy charged therefor in reliance upon the provision, or to any other controversy law affecting interests in real property or claim arising out of the transaction and applicable to the interpretation, giving rise to this policy. All arbitrable rights, remedies, or enforcement of matters when the Amount of Insurance policies of title insurance of the is $2,000,000 or less shall be jurisdiction where the Land is located. arbitrated at the option of either the Therefore, the court or an Company or the Insured. All arbitrable arbitrator shall apply the law of the matters when the Amount of Insurance jurisdiction where the Land is located

72306 (6/06) ALTA Owner’s Policy (6/17/06)