Page 118 - Guide to the Most Requested Commercial Title Insurance Endorsements eBook

ALTA Table of Contents Quick Reference Index

ENDORSEMENT 1 2 3 1 2 3 4 5 6

CONSTRUCTION LOAN – LOSS OF PRIORITY ENDORSEMENT SERIES
ALTA ENDORSEMENTS 32, 32.1, 32.2

I. Purpose:

The ALTA 32 series endorsements are used when the lien of an insured mortgage or
deed of trust securing a construction loan does not have absolute priority over
potential mechanic’s liens.

The ALTA 32 series endorsements may be issued with loan policies only.

II. Coverage Provided:

a. The ALTA 32 (Construction Loan): Provides coverage only to the extent that the
disbursements for the services and/or materials were designated for payment in
the documents supporting a construction loan advance disbursed by or on
behalf of the Insured on or before the date of This endorsement does
not require the title insurer or its agent to disburse the construction funds.

b. The ALTA 32.1 (Construction Loan – Direct Payment): Provides coverage only to
the extent that direct payments to the labor and material suppliers have been
made by the title insurer or by the Insured with the title insurer’s written
approval, and only for services, labor, materials or equipment for which the
mechanic’s lien is This endorsement requires that construction
disbursements be made by the title insurer either making direct payments to
labor and material suppliers or by specifically authorizing the Insured in writing
that such payments be made.

c. The ALTA 32.2 (Construction Loan – Insured’s Direct Payment): Provides
coverage only to the extent that direct payments to the labor and material
suppliers has been made by the Insured or on the Insured’s behalf on or before
the date of coverage and only for services, labor, materials or equipment for
which the mechanic’s lien is This endorsement does not require the
title insurer or its agent to disburse the construction funds.

III. Title Tips:

a. The title insurer will review various documents including, but not limited to, the
construction loan agreement(s); construction contract and schedule; statement of
sources and uses; draw requests; disbursement records; contractor’s sworn
statements; and the owner’s sworn statements, or similar documents, in order to
obtain sufficient information to allow the issuance of an ALTA 32 series
endorsement.

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