Security Title Endorsement Guide

MEZZANINE FINANCING ALTA 16-06 (06-17-06)

This endorsement provides insurance to a lender whose loan is secured not by a lien against the

land but rather by some form of security against the beneficial interest of the business entity that

owns the Land. The security may be a pledge of and security interest in the stock in a

corporation, partnership interest in a partnership, or membership interest in a limited liability

company. The endorsement is made a part of an Owner’s Policy rather than a Loan Policy,

because the lender’s personal property security interest is not being insured so no Loan Policy is

issued to the lender. The endorsement assigns the rights under the policy of the Insured owner of

the Land to the defined Mezzanine Lender. The endorsement provides that the Company will not

assert as a defense matters known to the Insured owner, as long as they were not known to the

Mezzanine Lender. It further provides that the Company will not deny liability on the basis that

ownership interests in the Insured have been transferred to or acquired by the Mezzanine Lender.

Conditions paragraph 7 (b) is amended to provide that the Company can terminate its liability

under the policy by paying the Mezzanine Lender rather than the Insured. Exclusions from

Coverage Nos. 3 (a), (b), (c) or (e) are amended with respect to defects, liens, encumbrances,

adverse claims or other matters which were not known to the Mezzanine Lender, or failure of the

Mezzanine Lender to pay value.

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