Efficiencies Created By the 2021 ALTA Policies

While ALTA has updated the commitment and policy forms to make them more uniform, the new 2021 forms also include efficiencies so it is no longer necessary to include separate exceptions for exclusions specifically stated in the policy jackets or for matters included in the revised preamble contained in the Schedule B of the Policy. Below is a breakdown of these changes and how they impact the issuance of title policies:

1. No longer need to include an exception which provides that the policy does not insure against loss resulting from a discrepancy in the area or acreage or to edit the legal description to remove references to area or acreage. Exclusion 7 of the 2021 ALTA Owner Policy and Exclusion 9 of the 2021 ALTA Loan Policy now make it clear that any discrepancy in the quantity of the area, square footage, or acreage of the Land or of any improvement to the Land is excluded from coverage.

2. No longer need to clarify that an exception for covenants which include a discriminatory covenant is not intended to except or republish the discriminatory covenant. The preamble on Schedule B of the 2021 ALTA Owner and Loan Policies now indicates that the policy treats any discriminatory covenant in a document referenced in Schedule B as redacted, repudiated, removed and not republished or recirculated and that only the remaining covenants in the document are excepted from coverage. The 2021 ALTA Owner and Loan Policies also include a new definition for “Discriminatory Covenant.”

3. No longer need to include an exception for terms and provisions of an insured lease or an insured easement. The preamble on Schedule B of the 2021 ALTA Owner and Loan Polices now provides that the policy does not insure against loss or damage, and the company will not pay costs, attorneys’ fees, or expenses resulting from the terms and conditions of any lease or easement identified in Schedule A.

4. No longer need to include an exception when the transaction involves a potential PACA-PSA Trust risk. Exclusion 5 of the 2021 ALTA Owner Policy and Exclusion 7 of the 2021 ALTA Loan Policy now carve out coverage for PACA-PSA Trust risk. The policies also include a new definition for “PACA-PSA Trust.”

5. No longer need to issue an ALTA 39 Policy Authentication Endorsement. The preamble of the 2021 ALTA Owner and Loan Policies acknowledges that the insurer will not deny liability because the policy is issued electronically or lacks any signatures.

The information contained in this document was prepared by First American Title Insurance Company (“FATICO”) for informational purposes only and does not constitute legal advice. FATICO is not a law firm and this information is not intended to be legal advice. Readers should not act upon this without seeking advice from professional advisers.

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