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New & Revised ALTA Energy & Mineral Endorsements. Land Use, Leasing, and Title Issues Panel U. of Pittsburgh School of Law Energy Law & Policy Institute 2013 Presented by: Stacie Wagner Patterson, Pennsylvania State Counsel. Unique Challenges. Energy Projects and Title insurance.

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New revised alta energy mineral endorsements

New & Revised ALTA Energy & Mineral Endorsements

Land Use, Leasing, and Title Issues Panel

U. of Pittsburgh School of Law Energy Law & Policy Institute 2013

Presented by: Stacie Wagner Patterson, Pennsylvania State Counsel


Energy projects and title insurance

Unique Challenges

Energy Projects and Title insurance


Unique challenges
Unique Challenges

  • Multiple landowners and parcels

    • Managing the parties

    • Title updates

    • Corrective actions

  • Timing issues and project costs

  • High liability and internal approval requirements


Unique challenges1
Unique Challenges

  • Underwriting Issues

    • Severable Improvements

    • Severed coal, oil, gas, mineral interests/surface entry

    • Contiguity

    • Loss

    • Encroachments

    • Various types of insured interests



Energy project endorsements valuation
Energy Project Endorsements: Valuation

  • Issued when Amount of Insurance includes the aggregate of

    • Full Value of the Land or Leasehold and/or Easement Estate AND

    • Full Value of the Severable Improvements AND

    • Full Value of Electricity Facility


New tirbop energy project endorsements
New TIRBOP Energy Project Endorsements

  • 1400 (ALTA 31) – Severable Improvements (Owner’s/Loan)

  • 1410 (ALTA 36)/1420 (ALTA 36.1) – Energy Project – Leasehold Easement (Owner’s/Loan)

  • 1430 (ALTA 36.2)/1440 (ALTA 36.3) – Energy Project – Leasehold (Owner’s/Loan)


New tirbop energy project endorsements1
New TIRBOP Energy Project Endorsements

  • 1450 (ALTA 36.4)/1460 (36.5)– Energy Project – CC&Rs – Land Under Development (Owner’s/Loan)

  • 1470/1471 (ALTA 36.6)– Energy Project – Encroachments (Owner’s Loan)



Background nationwide case
Background – Nationwide case

  • Nationwide Life Ins. Co. sued Commonwealth Land Title Insurance Company under the following provision of ALTA 9:

    • Any instrument referred to in Schedule B… that… provides for an option to purchase, right of first refusal, or the prior approval of a future purchaser or occupant.

  • Nationwide claimed that there existed a right of prior approval in a covenant

  • Title policy listed Declaration of Covenants as exception, but not the specific right


  • Background nationwide case1
    Background – Nationwide case

    • Court ruled in favor of Nationwide

    • Court interpreted the phrase “Any instrument” to mean that the ALTA 9 protected against anything found in a Schedule B document that contained CC&Rs, not just options to purchase, rights of first refusal or prior approval rights


    Background nationwide case2
    Background – Nationwide case

    • Industry Response to Nationwide:

      • Revise ALTA 9 series to better define coverage

      • Unbundle ALTA 9 coverage

      • Create new endorsements to ensure the selection of the right endorsements to address the particular risk of a transaction


    Prior tirbop 1030 1031 1032 alta 9 9 1 and 9 2
    Prior TIRBOP 1030, 1031 & 1032(ALTA 9, 9.1, and 9.2)

    • Contained 4 unrelated types of coverage:

      • Covenants, conditions and restrictions

      • Private rights

      • Encroachments

      • Minerals


    Revised alta 9
    Revised ALTA 9

    • 1030(ALTA 9) – Restrictions, Encroachments, Minerals (Loan)

    • 1031(ALTA 9.1) – CC&Rs Unimproved Land (Owner’s)

    • 1032(ALTA 9.2) – CC&Rs Improved Land (Owner’s)

    • 1033 (ALTA 9.6) – Private Rights (Loan)

    • 1034 (ALTA 9.7)/1035 (ALTA 9.8) – Restrictions, Encroachments, Minerals – Land Under Development (Loan/Owner’s)


    New tirbop 1030 alta 9
    New TIRBOP 1030 (ALTA 9)

    • Coverage still includes:

      • Covenants, conditions and restrictions

      • Encroachments

      • Minerals and Any Other Subsurface Substance

      • Not for future improvements (ALTA 9.7 or 1034)

    • Removed coverage for:

      • Private Rights (now contained in 1033)


    New tirbop 1030 alta 91
    New TIRBOP 1030 (ALTA 9)

    • New Carve-Outs for (inter alia):

      • Contamination

      • Explosion

      • Fire

      • Fracturing Vibration

      • Earthquake or Subsidence

      • Negligence by a person or an Entity exercising a right to extract or develop minerals or other subsurface substances


    New tirbop 1031 1032 owners only alta 9 1 9 2
    New TIRBOP 1031 & 1032 (Owners Only) (ALTA 9.1 & 9.2)

    • Coverage still includes

      • Covenants, conditions and restrictions

    • Removed coverage for:

      • Private rights

      • Encroachments (now contained in 1313)

      • Future exercise of mineral rights (now contained in 1340, 1350 & 1360)


    New tirbop 1035 alta 9 8
    New TIRBOP 1035 (ALTA 9.8)

    • Same coverage as 1031 and 1032 but extends to Future Improvements to be built according to identified plans



    New tirbop 1340 1350 1360 alta 35 35 1 35 5
    New TIRBOP 1340, 1350 & 1360 (ALTA 35, 35.1 & 35.5)

    • 1340 – Enforced removal or alteration of buildings resulting from future exercise of mineral rights

    • 1350 – Enforced removal or alteration of improvements (structures on the land including paved roads, walkways, parking areas, driveways, etc., but excluding crops, landscaping, etc.) from future exercise of mineral rights

    • 1360 – same as 1350 but adds future improvements as shown on identified plans


    New tirbop 1340 1350 1360 alta 35 35 1 35 51
    New TIRBOP 1340, 1350 & 1360 (ALTA 35, 35.1 & 35.5)

    Carve-outs as mentioned re 1030 (ALTA 9) but also for:

    “the exercise of rights described in _________”


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