Common use of Exceptions to Coverage Clause in Contracts

Exceptions to Coverage. With respect to the exceptions, the following applies: a) Each Title Policy shall afford the broadest coverage available in the state in which the subject property is located. b) The “standard” exceptions (such as for parties in possession or other matters not shown on public records) must be deleted to the extent permitted by law or regulation. c) The “standard” exception regarding tenants in possession under residential leases, should also be deleted. In the alternative, the exception should read substantially as follows: “Rights or claims of parties in possession under residency agreements, as residents only, without any right of first refusal to purchase any portion of the property.” For commercial properties, a rent roll should be attached in lieu of the general exception. d) The standard survey exception to the Title Policy must be modified to read “shortages in area” only. e) Any exception for taxes, assessments, or other lienable items must expressly insure that such taxes, assessments, or other items are not yet due and payable. f) Any lien, encumbrance, condition, restriction, or easement of record must be listed in the Title Policy, and the Title Policy must affirmatively insure against all loss or damage due to encroachments upon insured easements, if any. g) The Title Policy may not contain any exception for any filed or unfiled mechanics’ or materialmen’s liens.