2006 or 2021 in 2023? Up to you. But definitely 2021 in 2024

December 12, 2022

Related PeopleAndrew Luczak Glubisz

Practice AreasFinancial Services

According to the American Land Title Association (ALTA), “The ALTA standard policy forms have been formally revised over the years to reflect changes in the marketplace brought about by evolving business practices, expectations of insureds, laws, regulations and legal decisions. Advancements in electronic notarizations, changes in certain consumer and creditor’s rights law and case law developments were primary drivers leading to the latest revision of the ALTA Loan and Owner’s policies and numerous other ALTA forms.”

With the Board of Governors of ALTA approving recommended changes to its 2006 title policy forms in May of 2021, the most recent formal revisions to policy jackets went into effect on July 30, 2021. However, as the 2022 calendar year comes to a close, most policies continue to be issued on the 2006 form. Why?

The answer is likely quite simple. Most people have no idea that ALTA changed its forms and continue to request 2006 policies. As we move into 2023, title companies will undoubtedly start to seek instruction from its customers as to whether a policy is to be issued on a 2006 or 2021 jacket (or perhaps even require a 2021 jacket). Why? Again, the answer is likely quite simple. Come 2024, all policies will certainly be issued on a 2021 jacket.

Given that the standard loan policy issued for the last 15 years or so has been the 2006 form, what does this mean for our lending clients? It means that they should seek to learn and understand what has changed and how to best protect themselves in light of such changes. Most notable among them, from the standpoint of a commercial lender, include the following: (i) coverage now extends to documents that were signed electronically or notarized remotely (where permissible); (ii) policies issued in electronic form are deemed fully and formally covered without the need for an original jacket or separate endorsement; (iii) the definition of “Public Records” now excludes “alternate filing systems,” including those pertaining to environmental protection, zoning, building or public safety (among others), which slightly changes certain covered risks; (iv) presumed improvement to the coverage over the invalidity or unenforceability of a security instrument; and (v) narrower coverage for indebtedness, which only extends to the amount of loan principal disbursed as of the date of policy, accrued interest, prior protective advances and reasonable expenses of foreclosure.

Only a handful of changes are material from the standpoint of a loan policy. However, certain of these changes deal with reduced coverage. Please contact a Chuhak & Tecson attorney for help navigating such reduced coverage by way of endorsement(s) or if you have any questions regarding the new 2021 policy jacket. 

Client alert authored by: Andrew Luczak Glubisz (312 849 4133), principal.

This Chuhak & Tecson communication is intended only to provide information regarding developments in the law and information of general interest. It is not intended to constitute advice regarding legal problems and should not be relied upon as such.