From Barns to Big BoxesRedux 2012

New Laws, New Economy

Commercial Development Financing

DEVELOPMENT FINANCING

DEVELOPMENT FINANCING:The Lender’s Perspective

• Loan vs. Owner’s Policy• Special coverages & endorsements, might include:

– Future Advance / Revolving Credit– Mechanics’ Liens– Survey issues– Governmental Issues – Subdivision & Zoning

• Entities

Initial Development Loan Closing

• Whom do you represent – the lender or the developer?• How are Declarant rights addressed in:

– Deed of Trust– Loan Agreement and documents– Your attorney’s title opinion to the lender…

BE CAREFUL WHAT YOU OPINE!!• How are marketing materials, Public Offering Statement or

HUD Reports, releases, approval/consents to development documents addressed?

• Subordinations of potential lien claimants• Future advance terms

Development Loan Documentation Scenarios

• MiniDoc Lending – pre-printed basic documents• MidstreamDoc Lending • FullDoc Lending – retained counsel to assure all

issues addressed, including:– Detailed release provisions– Assignment of development rights and special

declarant’s rights, development plans & specs, etc.– Review/approval rights

What do Deed of Trust, Loan Agreement & other recorded & unrecorded closing documents

address?

• All right title and interest to the Land & appurtenant interests (save & except released parcels)

– CONTRAST: Just individual units• General, nonspecific assignment• Development rights• Declarant rights• All rights under the Declaration• Specific itemization• Consent to Declaration, Future Annexation• Liabilities for common areas / improvements

Solutions

• Get developer to assign declarant rights, even though they are no longer involved

• Problem:– They won’t cooperate– They are in bankruptcy– They are dissolved or otherwise “gone”

3 CRITICAL TIMESTo Analyze Title, Development

and Title Insurance

ORIGINAL DEVELOPMENT

LAND ACQUISITION

& LOAN

FORECLOSURE OR

DEED IN LIEU

POST-FORECLOSURE

SALE TO NEW

“DEVELOPER(S)” OR LOT

PURCHASERS

The Deed of TrustCritical Elements

Drafter & Drafting

• Preparer’s name must be shown on face of the deed or deed of trust, no matter where prepared. GS 47-17.1

• Abstracting title, drafting legal documents & giving legal advice is practice of law. Unauthorized practice of law:

• Civil Liability – GS 84-10.1• Disallowance of fees – GS 84-10.1• Criminal Liability – GS 84-8• Exclusion: State vs. Pledger (bank counsel

drafting docs to which it is a party)

• Deed of Trust not invalid if:• No Trustee Named• Trustee same as beneficiary• Cure = Substitution of Trustee (not markup)

********• Trustee no longer required as party to:

• Releases• Subordinations• Modifications• Satisfactions• Civil actions, condemnations, bankruptcy, special proceedings &

PENALTY for joinder• Exceptions:

– TRUSTEE STILL REQUIRED FOR FORECLOSURE– Where Deed of Trust requires joinder of Trustee

Trustee on Deed of Trust(GS §45-10 & GS §45-45.3 )

Session Law 2011-312

Future Advance / Construction Loans (G.S. §45-68)

Deed of Trust must state:1. Max. principal amount2. Given wholly or partly secure future advances &/OR

future obligations, & renewals, extensions, modifications - In Re Foreclosure of Hall

3. Period within which such future obligations may be incurred -- not longer than 30 years

Alternative -- Contrast:

GS §45-82 (Equity Line of Credit)

Future Advance (Art. 7) Equity Line of Credit (Art. 9)

• Open end (revolving line of credit) ORClosed end (construction loan)

• “Dragnet” or “spreader”• Show on its face:

– For future advances &/or obligations

– Maximum principal amount secured at any one time

– Future advances/obligations within 30 years of date

• Revolving line of credit only• Future advances under original

obligation only – not future obligations

• Show on its face:– Equity line of credit under

Art 9, Ch. 45 of the NC Gen. Statutes

– Maximum principal amount secured at any one time

Future Advance Deeds of Trust Changes(G.S. Ch. §45, Art. 7)

• Obligations secured can be specifically or generallydescribed

• To extent balance outstanding exceeds maximum, it is secured but does not have priority over subsequent liens– Exclusion: advances to protect collateral retain priority

• Deed of Trust secured– identified specific notes, – present advance of -0- & – future advances through date certain (April 18, 2008)– Did not include future obligations, renewals, modifications or extensions– Hypothecation Addendum included “present or future indebtedness,

obligation . . . or any extension, modification or renewal thereof”• RESULT: Since no advances were made prior to April 18, 2008, and given the

lack of sufficient “dragnet” language of the deed of trust itself, a purported “renewal” and advance made after that date were NOT SECURED BY THE DEED OF TRUST

• MORAL: Include broad “dragnet” or “spreader” language & make draws / renewals within stated limited periods.

Future Advance Deeds of Trust ChangesIn Re: Foreclosure of Hall

2003 deed of trust securing a 2003 Note &“all renewals or extensions of any obligation” was held to also secure the 2005 refinance Note, even though that 2005 Note was clearly to be secured by a new recorded 2005 Deed of trust.

-Branch Banking and Trust Co. v. Chicago Title Ins. Co.

Future Advance Deeds of Trust ChangesOther Cases

An extension granted after the period for advances had expired lost priority vis-à-vis intervening liens.

-McNeary’s Arborists, Inc. v. Capital Group

Hypothecated Securities

Current or future obligation referenced in deed of trust to incorrect borrower, held not secured.

-In re Enderle-Trustee Services, Inc. v. R.C. Koonts & Sons Masonry

• Tenancy by entireties property• Loan to and Note from Husband only• Deed of trust and Note undated• Both initialed and signed DOT, identified Note as from both (ERROR), but

had provision that co-signer only to mortgage grant and convey their interest

• RESULT: Despite errors, this was sufficient to be clear which Note intended

-In re Beckhart

Equity Line of Credit(G.S. §45, Art. 9)

• Substantially re-written• Definitions• NO Prepayment penalty G.S. § 45-82.4

– Exclusion: “Termed out” equity line balance – G.S. §24-9(c) • Advances to protect collateral retain priority -- G.S. §45-82• Extending period for advances – G.S. §45-82.1• Termination of equity lines – G.S. §45-82.2• Cancellation of deed of trust – G.S. §45-82.3

Action From … Lender Requirement

Notice re: Future AdvancesG.S. §45-82.3

• Borrower (or legal representative)

• Attorney for Borrower

• Title insurance company insuring property

• Attorney or Bankfor sale or refi

• Owner of the property

• Qualified lienholder (subsequent, but not intended to be subordinate)

(1) Either terminate advances or provide not secured by the property

(2) Provide balance to the requester to release the property

(3) Satisfy deed of trust of record when paid in full

*Notice to Borrower (?)

Release Provisions

Developer plans to convey portions of the land to other developers:

- Condo developers- Retail developers

Does the Deed of Trust contain provisions obligating lender to release these lots or units from the lien of the deed of trust on specific conditions?

Common Release Conditions

• No Event of Default then exists • Delivery to the Lender of the form of release instrument

– Lot or Parcel to be released– Ingress, egress, and utilities – In form and substance satisfactory to the Lender

• Delivery to Lender of a copy of the final recorded plat – Approved by the appropriate Governmental Authorities– Satisfactory to Lender

• Delivery to the Lender of:– Closing statement for the applicable Lot– Payment of a release fee [per calculation set out in loan

docs]

Assignments of Leases

Schedule A should NOT insure assignment of leases, which is a personal property interest … even though

exception in Sch. B.

HUD Regulatory Agreements

• Can add to deed of trust identification provision in Schedule A – “as affected by “ [HUD Regulatory Agreement]

• Schedule B: We are not insuring the validity, enforceability or priority of the HUD regulatory agreements notwithstanding that they appear in Schedule A.

• Properly identifying entities• Judgments in favor of US

– PMDT Preempted under US Code– IRS Tax Liens – Slodov case

• No instantaneous seisin for construction loans• Information may affect vesting

– Use of new entity, SPE or tenancy-by-entireties• Subordinate matters – potential problems for sale

or refinance• Lack of competency to hold title• Commercial Broker Liens• Business Personal Property Taxes

Searching Buyer-Borrower Info:Let Us Count Some Why’s

The American Land Title AssociationPolicies & Endorsements

“ALTA”

Underwriting Philosophy

ALTA Owner’s Policy (6-17-06)

ALTA Loan Policy (6-17-06)

Owner’s vs. Loan

Claims Comparison

Owner’s Policy

Title defect may result in animmediate monetary claim by

owner/insured.

e.g. – fence encroachment and subsequent removal

Lender’s Policy

Title defect results in a claim ONLY when:

1. Debt accelerated by lender2. Lender foreclosed or

exhausted remedies3. Lender has not received full

payment of amount owed4. Lender shows that covered

title defect caused the shortfall in recovery (See Marble Bank)

Core Coverages ComparisonOWNER’S POLICY

1. Title not vested as shown2. Any defect, lien or encumbrance

on title (forgery, fraud, unauthorized conveyance, invalid POA, unrecorded document, taxes due or payable, certain encroachments)

3. Unmarketable title4. Lack of right of access to and from

the land5. Zoning, ordinance or gov.

regulation violation, exercise of policy power or eminent domain filed in Public Records.

6. Previous creditors’ rights violation or untimely recording.

LOAN POLICY

1-6 similar to Owners.7. Insured Mortgage not property

created, signed, acknowledged, delivered

8. Priority of any lien/encumbrance over Insured Mortgage

9. Lack of priority over mechanics’ liens contracted or commenced prior to Date of Policy or for construction loan

10.Lack of priority over assessments for street improvements under construction or completed

11. Invalidity of Assignments shown in the policy

EXTENDED COVERAGE = No General Exceptions for:

1. Taxes and assessments not shown on the records of the taxing authority or the public records.

2. Rights or claims of parties in possession not shown by the public records and which could be ascertained by an inspection of the property. Includes:i. tenants with unrecorded leases ii. those claiming by adverse possessioniii. those who are in possession and claiming under some other

theory 3. Unrecorded easements or claims of easements or encumbrances4. Encroachments, overlaps, shortage of area, boundary line disputes

and any other matter which would be disclosed by an accurate survey of the property.

5. Unpatented mining claims, reservations in patents, water rights, claims or title to water.

6. Any rights to mechanics' and materialmen's liens not shown by public records

Exclusions from CoverageALTA Loan Policy (6/17/06)

Exclusions from Coverage - continued

Common Myth and Urban Legend

A Loan policy automatically becomes owner’s coverage post-foreclosure if the insured lender purchases…

Title Insurance: Coverage vs. Exception

• Standard coverages for title matters - EXAMPLES:– Access– Specific property described – the “Land”– Ownership

• Affirmative coverages specifically crafted based on the situation• Affirmative coverage – continuing loan policy coverage (limitations) in

post-foreclosure owner’s policy• Exceptions

– Does not imply affirmatively covered – EXAMPLES:• Plats• Declarations (incl. HOA dues, easements, ARC)• Easements

– Any matters that cannot clearly be identified as no longer applicable– Survey matters, especially post-closing changes

• Exclusions from Coverage– Matters known and not disclosed to title insurer

(from lender-relationship with borrower)– Matters suffered, assumed or agreed by

insured (consents, reviews)

Title Insurance Coverages

Owner Loan PriorityHOA Dues Current No Yes

Title to & description of common elements

No (unless condo) No (unless condo)

Access Yes YesCreditors’ rights – this

transactionNo No

Creditors’ rights – prior transaction

Yes Yes

Property described Yes Yes

Appurtenances, generally

No No

Title Insurance Coverages (if requirements met)

Owner Loan Priority

No rights of other parties in possession (unless

exception)

Yes Yes

Needed utility easements If certified If certified

Mechanics’ Liens Yes Yes

Common element improvements

No No

Title Insurance Coverages (if requirements met)

Owner Loan Priority

Prior deeds of trust Yes Yes

Roads –public/accepted

No No

Association –operation/standing

No No

Declarant’s Rights See discussion See discussion

Development Rights See discussion See discussion

Title Insurance Exceptions

Owner Loan Priority

Declarations – consented or ratified Yes Yes

Declarations extinguished by foreclosure

Removed if requirements met

Removed if requirements met

Plats Yes Yes

Common elements Yes Yes

Creditors’ Rights Coverage

• NOT on this transaction to be insured (if not caused by delayed or ineffective recording)

• DOES apply for prior transactions

RECOMMENDATION:Pre-approval by title insurer counsel of

deed in lieu (obligation forgiven) or foreclosure (high bid)

Within last 4 years

FMV of property (current appraisals)VS.

Lender’s Instructions

• Deed of Trust recorded• Commitment Requirements satisfied• Deed of Trust is first lien on the real property • Future advances insured• No exception for unfiled mechanics’ & materialmen’s

liens• Subject only to the Permitted Exceptions• Commit to issue ALTA Loan Policy (6-17-06) with

requested endorsements• In strict accordance with requirements in lender’s letter

Failure to timely record:Violates Good Funds Settlement Act (residential) & Probably RPC 191

“Prior to authorizing funding, Lender shall receive pro-forma extended coverage loan

policy”

Marked Commitment

Once requirements marked as “met”, document information inserted, premium paid and gap exception marked “deleted”,

Company committed to issue policy in conformity with markup

Pro Forma Policy

NOT an actual policy nor a confirmation that requirements met.

Just a “pro forma” of what will be issued when and if requirements met

Mark-ups and Pro Formas

GapExclusion from Coverage

Defects, liens, encumbrances, adverse claims or other matters, if any, created first appearing in the public records or attaching

– subsequent to Commitment effective date but – prior to the recording (the date the proposed Insured

acquires for value of record the estate or interest or mortgage thereon)

Lender “Gap” Requirement

Title Company hereby irrevocably commits to:• issue title insurance policy to Lender, ISAOA • dated as of later of (i) time of the recording or (ii) funding• containing recording information • identical to the marked title commitment

or pro forma policy & endorsements• with “gap coverage”

(between funding & recording)

ALTA Endorsements for Lenders

• 3 Zoning (unimproved)– 3.1 improved and in compliance– 3.2 construction plans & specs

• 4 Condominium• 5 Planned Unit Development• 6 Variable Rate Mortgage• 8.2 Environmental [COMMERCIAL]• 9 series Restrictions, Encroachments, Minerals (for

Lenders) • 10 Assignment of Mortgage

– 10.1 … with downdate• 11 Modifications

– 11.1 … with downdate• 12 Aggregation or Tie-in• 13.1 Leasehold Loan

Typical Commercial Endorsements(the “Lender Laundry List”)

• 14 Future Advances– 14.1 can be used but less coverage because excepts

“knowledge” of lender – 14.2 is for letter of credit

• 15’s Nonimputation– Just transferring entity interests; no deed so no priority

protection by recording • 16 Mezzanine Financing

– No deed of trust; endorsement to owner’s policy but benefits lender

• 17 Access (direct)– 17.1 Access over insured easement

• 17.2 Utility access• 18 Single Tax Parcel

– 18.1 Multiple tax parcels (might include easements)• 19 Contiguity of multiple parcels

– 19.1 Contiguity of single parcel with other parcels/easements/roads not insured

Typical Commercial Endorsements(the “Lender Laundry List”) – cont’d

• 20 First Loss (multiple parcels)• 22 Location (address & use)• 23 Co-insurance (rather than “mirror

image” policies with another insurer) only on LARGE transactions, national level approval of premiums and coverages

• 24 Lender doing business• 25 Same as survey

– 25.1 Same as portion of survey• 26 Subdivision compliance• 27 Usury (only if entities, not individuals)

Typical Commercial Endorsements(the “Lender Laundry List”) – cont’d

• 28 Easement encroachment; useful for blanket easements affirmative coverage

• 29’s “Interest Rate Swaps” (yes, the “D” word – derivatives)

• 30 Shared Appreciation (1-4 Family Residential)• 30.1 Shared Appreciation Commercial

• 32 & 33 Construction & disbursement– In NC we would probably do our own version combining the

downdate and the amount of disbursements– The ALTA 32 forms do not fit cleanly with our mechanics’ lien

priority statute if we have obtained appropriate subordinations at original closing as required

Typical Commercial Endorsements(the “Lender Laundry List”) – cont’d

• 34 Identified Risk Coverage (Affirmative Coverage)

• 35 Mineral and Other Subsurface Substances (Buildings)

• 35.1 Mineral and Other Subsurface Substances (Improvements)

• 35.2 Mineral and Other Subsurface Substances (Described improvements)

Typical Commercial Endorsements(the “Lender Laundry List”) – cont’d

ALTA Standard Policy Exception:

Exclusion from coverage for loss or damages sustainedby reason of any law, ordinance or governmental

regulation which restricts, regulates or prohibits the occupancy or use and enjoyment of the land as well as the character or location of improvements situated on

the insured property.

ZONING AND SUBDIVISION!!!!!!!

Governmental Regulation

ALTA Endorsement Form 3 & 3.1 Zoning – Permitted Uses

How to Get the InformationFor the Zoning Endorsement

• New ALTA/ACSM surveys say title companies provide ???

• Cities won’t give compliance letters• Engineering firm? Surveyor?• Attorney?• CAUTION: Risky to opine on who is entitled

to notice without full title exam

ALTA Endorsement Forms8.1-06 (Residential) and 8.2-06 (Commercial): Environmental Protection Lien

• Title certification should confirm that no liens were found in the county Public Records.

• If any, consult Chicago Title NC counsel.

Modifications

Must possess all elements necessary for contract• In writing• Identify parties• Consideration• Delivery and Acceptance• Description of land affected

Daniel Boone Complex, Inc. v. FurstRecordation for priority vis-à-vis third parties (unless not a novation or future advance/equity line protection) GS 47-20; GS 45-68, GS 45-81

CAUTION: Modifications with Structural Changes

• Transfer/assumption/guarantees• New or additional parties• Release of obligors• Capitalizing interest• Additional caps or advances• Changes in interest rate• Maturity of existing lien expired• Advance/Obligations period expired• Additional collateral• Released collateral – change in size of project

ALTA Endorsement Form 11 & 11.1: Modifications

• New exceptions – Subordinate (still)– Priority (if risk of novation)

• Creditors’ rights exception• Record within 30 days

ALTA Endorsement Form 14Future Advance

• Future Advance Mortgage• Requires compliance with

– N.C.G.S. 45-68 or – N.C.G.S. 45-81

• Re-advances

Date Down

• Bring policy effective date forward• Add intervening items as

Schedule B-2 subordinate matters• For Lender’s information only / peace of

mind

Any advance made forty-five (45) days or more following the filing of a Notice of Federal Tax Lien is subordinate to the FTL. See 26 U.S.C. 6321-6323(c)(4)

Future Advance Endorsements

• ALTA Endorsement Form 14 ( Future Advance - Priority) Assures continued priority of future advances.

– Preferred for North Carolina– Knowledge of intervening defect, lien, encumbrance

won’t render advance uninsured

• ALTA Endorsement Form 14.1 (Future Advance -Knowledge) Provides the same coverage as Form 14, but excludes coverage for advances made after insured has knowledge of an intervening lien, encumbrance or other matter affecting title.

Pending disbursement of the full proceeds of the loan secured by the deed of trust insured, this policy insures only to the extent of the amount actually disbursed, but increases as each disbursement is made in good faith and without knowledge of any defects in, or objections to the title, up to the face amount of the policy.

Policy Language(in addition to Future Advance Endorsements)

REQUEST ALTA 14 !!

NOTE: DOES NOT ADDRESS COVERAGE OF POST-POLICY MATTERS!!!

ALTA Endorsement Form 17 (Direct) • Access and Entry• Owner & Lender• Requires:

– Survey– Direct Access

COMPARE: ALTA Endorsement Form 17.1 (Easement)

ALTA Endorsement Forms 17-06 & 17.1-06 Access

Insuring Access

Actual vehicular access

vs.

Bare legal access

ALTA Endorsement 17-06(Access and Entry)

Requires verification and current survey reflecting: • Name of the public street • Street is in fact physically open public street, maintained by a public

authority (city or state) • Land abuts street• Access is not prohibited or limited, either legally (such as controlled

access) or physically (i.e. no physical impediment to vehicular or pedestrian access)

• Right to use existing curb cuts or entries

Assures PEDESTRIAN and ACTUAL VEHICULAR access

ALTA Endorsement 17.1-06(Indirect Access and Entry)

Verification and current survey reflecting: • Identification of private access easement to be insured • Name of the public street to which easement provides access• Recorded easement instrument• Title certification of easement -- exceptions in Schedule B including easement

instrument & matters affecting easement• Street is in fact physically open public street, maintained by a public authority

(city or state)• Land abuts easement & easement abuts street• Access over easement onto street is not prohibited or limited

– legally (such as controlled access) or – physically (i.e. no physical impediment to vehicular or pedestrian access)

• Right to use existing curb cuts or entries, if any, along the easement or street.

Assures INDIRECT access across an easement tract

AccessEasement

“50’ INGRESS/EGRESSEASEMENT”

Controlled Access Highway

•Tract G adjoins a controlledaccess highway.

•Tract G is otherwiselandlocked.

CondemnationInsurable Access?

Certification from attorney that:

1. all of insured land is covered within the tax parcel number(s) assigned to said land and

2. the number(s) do(es) not include any additional land.

NOTE: ALTA 18.1 provides some assurances regarding easements.

ALTA Endorsement Forms 18-06 & 18.1-06 Tax Parcel(s)

ALTA Endorsement Forms 19-06 & 19.1-06 Contiguity

ALTA Endorsement Form 19 (Contiguity-Multiple Parcels)• Contiguity between multiple insured separate parcels• Owner & Lender• Requires:

• Multiple parcels• Survey

COMPARE: ALTA Endorsement Form 19.1Contiguity-Single Parcel - Contiguity between insured parcel and some other parcel

ALTA Endorsement Forms24-06: Doing Business

“Mortgage and deed of trust entered into by unlicensed mortgage broker in violation of the Mortgage Lending Act was not void as a matter of law, such that the note and deed of trust were illegal and unenforceable, but were subject to being declared unenforceable for public policy reasons, and required remand for the trial court to determine whether the note and deed of trust were unenforceable under the facts and circumstances of the case.”

N.C.G.S. 53-243.14 now G.S. 53-244.112In re Foreclosure of Bradburn

Compare, N.C.G.S. 53-166(d), Consumer Financing Act (loans under $10,000; void if violates act)

ALTA Endorsement Forms 25-06 Survey Endorsement

a.k.a. “Same as Survey”

1. Legal description matches survey OR

2. Certification from the attorney or from the surveyor that the property shown on the survey and described in the composite legal description is the same property as that described in the multiple legal descriptions covered by the prior policy.

Same as Survey Endorsement

• Owner & Lender• Requires...Survey!

Survey Coverage

“Lender survey coverage without a survey”- Underwriting Philosophy- Risk

Survey required to give lender coverage- amount of loan- certain endorsements

– Survey– Access – Contiguity– Easements– others

General Survey Exception

• discrepancies• conflicts• access• shortages in area or

boundary lines, • encroachments, • overlaps, • setbacks, • easements or claims of

easements, • riparian rights, and • or other matters

• title to land within – roads, ways, – railroads, – watercourses, – burial grounds, – marshes, – dredged or filled areas or – land below the mean

highwater mark or – within the bounds of any

adjoining body of water

…which would be revealed by a current inspection and accurate survey of the land.

Surveyor’s Statementon Survey

ALTA Standard Policy Exception:

Exclusion from coverage for loss or damages sustainedby reason of any law, ordinance or governmental regulationwhich restricts, regulates or prohibits the occupancy or use

and enjoyment of the land as well as the character or location of improvements situated on the insured property.

ZONING AND SUBDIVISION!!!!!!!

Governmental Regulation

ALTA Endorsement Forms26-06: Subdivision Endorsement

1. Greater than 10 acres & no street right-of-way dedication is involved (exempt from subdivision regulation under N.C.G.S. 153A-335, Counties, and N.C.G.S. 160A-376, Cities and Towns); or

2. Separate parcel for many years through multiple conveyances.

Require: Attorney's or surveyor's opinion that the propertyis in compliance with applicable ordinances, unless:

ALTA Endorsement Forms28-06: Easement - Damage or Enforced Removal (Rev. 2/3/10)

Coverage assurances for• insured lender or owner • for damage to or enforced removal or alteration of an existing

building on the Land • which encroaches into or over an easement identified by

exception number in Schedule B – Exceptions of the policy solely • as a result of the exercise of the right of use or maintenance of the

specified easement according to its terms.

Title insurer will want to review survey and the particular

easement instrument.

• “All purpose” basic format for affirmative coverage, conforming to Alliance case

• Requirement draft:• For issuance of ALTA® Endorsement Form 34-06 Identified Risk

Coverage (Adopted 8/1/11): Verification of the particular "Identified Risk" for which affirmative coverage is requested, and determination on appropriate coverage based on applicable Company underwriting procedures, including but not limited to review and approval by Company counsel.

Best New Endorsement:ALTA 34 - IDENTIFIED RISK COVERAGE

Affirmative Coverages

• Company insures that the easement will not interfere with the intended use of the land or the improvements located thereon for an easement.

• Company insures that the easement will not adversely affect the land and that the improvements are not located within the easement.

• Company insures that the exercise, maintenance or attempted enforcement of the easement will not cause loss or damage.

• Company insures against forced removal of improvements constructed or to be constructed on the property as a result of the enforcement of the easement.

Mergers, Name Changes, Conversions N.C.G.S. 55D-26

Vested Title Actual Legal Entity Name

Zippy DevelopmentLimited Partnership

a GeorgiaLimited Partnership

Zippy Development LLCa Georgia

Limited Partnership

• Conform to filings with the NC Secretary of State

• Review Operating Agreement • Titles

– Manager– Member-Manager– Officers (of corporation, NOT LLC or

partnership)• Appropriate consents and resolutions since

typically not “ordinary course of business”

PLANAHEAD !!

Powers of AttorneyFiduciaries & Delegating Power

An entity can appoint an attorney in fact to act on its behalf with regard to a certain matter or certain types of matters if authorized by:

• corporation through its board of directors• limited liability company through its members,• partnership by resolution signed by the partners

required under the partnership agreement