§14.22 - ALTA Loan Policy

• Jurisdiction: Washington

§14.22 ALTA LOAN POLICY

The ALTA Loan Policy, adopted on June 17, 2006, is usually required for loans made in Washington, particularly major construction and permanent financing. The affirmative coverages are similar to those on the ALTA Owner's Policy, but include additional matters concerning validity, enforceability, and priority of the insured mortgage. They are also subject to the conditions, the exclusions, and the exceptions shown in Schedule B. The affirmative coverages include the eight items paraphrased in §14.21 above plus the following:

(1) Invalidity or unenforceability of the lien of the insured mortgage upon the estate or interest described in Schedule A due to the same types of "hidden risks" identified with respect to the vesting of title.

(2) Priority of liens or encumbrances over the lien of the insured mortgage.

(3) Priority of the lien of the insured mortgage over any statutory lien for labor or material arising either from work contracted for or commenced prior to the policy date or from work done after the policy date if financed by proceeds from the insured mortgage, and for assessments for street improvements under construction or completed on the policy date.

(4) Invalidity or unenforceability of any assignment shown in Schedule A.

(5) The coverage relating to creditors' rights focuses on the invalidity or unenforceability (or avoidance) of the insured mortgage rather than on the vesting of the title.

Lenders will generally require the ALTA Loan Policy with extended coverage for first liens or nonresidential transactions. Lenders making second lien loans or equity loans may accept standard coverage loan policies, where general exceptions are shown in Schedule B.

A collateral assignment or pledge of other real property rights, fixtures, or personal property interests is not insured or otherwise shown in Schedule A...