Agenda Item:2012- 69 (Amended)

Submitted by:Jim Gosdin and John Rothermel

On Behalf of:Stewart Title Guaranty Company

Address:1980 Post Oak Blvd., Suite 710

Houston, Texas 77056

Telephone No.:(713) 625-8228

______

Stewart Title Guaranty Company petitions the Commissioner to adopt the following new Severable Improvements Endorsement (Form T-___):

Severable Improvements

ENDORSEMENT
Attached to Policy No. ______
Issued by
COMPANY

1. As used in this endorsement, "Severable Improvement" means property affixed to the Land on or after Date of Policy that by law does not constitute real property because:

a. of its character and manner of attachment to the Land; and

b. it can be severed from the Land without causing material damage to it or to the Land.

2. In the event of a loss by reason of a defect, lien, encumbrance, or other matter covered by this Policy ("Defect"), the calculation of the loss shall include (but not to the extent that these items of loss are included in the valuation of the Title determined pursuant to Section 8 of the Conditions or any other endorsement to the Policy):

a. the diminution in value of the Insured's interest in any Severable Improvement resulting from the Defect, reduced by the salvage value of the Severable Improvement; and

b. the reasonable cost actually incurred by the Insured in connection with the removal or relocation of the Severable Improvement resulting from the Defect and the cost of transportation of that Severable Improvement for the initial one hundred miles incurred in connection with the relocation.

3. This endorsement relates solely to the calculation of the Insured's loss resulting from a claim based on a defect, lien, encumbrance or other matter otherwise insured against by the Policy. This Policy does not insure against loss or damage (and the Company will not pay any costs, attorneys' fees or expenses) relating to:

a. the attachment, perfection or priority of any security interest in the Severable Improvement;

b. the vesting or ownership of title to or rights in any Severable Improvement;

c. any defect in or lien or encumbrance on the title to any Severable Improvement; or

d. the determination of whether any specific property is real or personal in nature;

This endorsement is issued as part of the policy. Except as it expressly states, it does not (i) modify any of the terms and provisions of the policy, (ii) modify any prior endorsements, (iii) extend the Date of Policy, or (iv) increase the Amount of Insurance. To the extent a provision of the policy or a previous endorsement is inconsistent with an express provision of this endorsement, this endorsement controls. Otherwise, this endorsement is subject to all of the terms and provisions of the policy and of any prior endorsements.

[Witness clause optional]

BLANK TITLE INSURANCE COMPANY

By: ______
Authorized Signatory

______

Justification

From time to time Owners and Lenders are concerned whether items which are part of the security of a loan are actually real or personal property. For example, some of the constituent parts of a petroleum refinery or other chemical plant or turbines used in a wind farm may have substantial value but individually might be removed without destruction of the entire project. In such cases, title insurance currently is available only for the land value and the items which by law cannot be removed without damage to the improvements. Thus causing exposure to the parties and diminished product to be sold by the title industry. This endorsement addresses the concerns of both parties and industry.

The form does not insure that severable items are or are not real or personal property. It does affect the measure of damages available if there are title defects that cause:

a.the diminution in value of the Insured's interest in any Severable Improvement resulting from the Defect, reduced by the salvage value of the Severable Improvement; and

b.the reasonable cost actually incurred by the Insured in connection with the removal or relocation of the Severable Improvement resulting from the Defect and the cost of transportation of that Severable Improvement for the initial one hundred miles incurred in connection with the relocation (this coverage is similar to the coverage in the leasehold endorsements already approved by the Commissioner).

The amendment eliminates 3.e. (“removable items as opposed to Improvements”).

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