An ALTA-style title commitment for a $310,000 purchase lists an unreleased 2006 mortgage of $48,000 under Schedule B, Part I—Requirements. The proposed insured seeks coverage without an exception for that mortgage. What must happen to this requirement?
Correct Answer
A) Resolve the requirement to the title insurer's satisfaction, such as through a recorded release or an expressly approved alternative
A. Obtain an insurer-accepted resolution before relying on the requested coverage. Part I identifies requirements, whereas Part II identifies exceptions. A listed requirement is not automatically satisfied by proceeding with closing. Scope and exceptions: Insuring over a lien is not a borrower entitlement or a release of that lien. Actual forms, state law and underwriting determine acceptable resolution and policy coverage. Source: Requirements, exceptions and commitment conditions — https://www.alta.org/news-and-publications/news/20170525-The-New-2016-ALTA-Commitment-Expressing-Limitations-on-Liability
Why This Is the Correct Answer
A. Obtain an insurer-accepted resolution before relying on the requested coverage. Part I identifies requirements, whereas Part II identifies exceptions. A listed requirement is not automatically satisfied by proceeding with closing. Scope and exceptions: Insuring over a lien is not a borrower entitlement or a release of that lien. Actual forms, state law and underwriting determine acceptable resolution and policy coverage.
Why the Other Options Are Wrong
Option B: It reduces the loan amount by $48,000 under the lender's title rules
Subtracting $48,000 from the loan is not a title-clearing rule.
Option C: It has expired by law, since a 2006 lien is more than 15 years old
Age alone does not establish expiration under an unspecified jurisdiction.
Option D: It is a Schedule B-II exception and will simply survive the closing day
It confuses a Part I requirement with a Part II exception.
Exam Tip
Resolve title requirements; do not mistake a commitment for issued coverage.
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