TITLE
13 INSURANCE
CHAPTER
14 TITLE
INSURANCE
PART 5 COMMITMENTS OR BINDERS
13.14.5.1 ISSUING AGENCY:
Office of Superintendent of Insurance, Title Insurance Bureau.
[4/1/1996;
13.14.5.1 NMAC - Rn & A, 13 NMAC 14.5.1, 5/15/2000; A, 7/31/2014]
13.14.5.2 SCOPE:
This rule applies to all title insurers and title insurance agents
conducting title insurance business in New Mexico.
[4/1/1996,
11/1/1996; 13.14.5.2 NMAC - Rn, 13 NMAC 14.5.2, 5/15/2000]
13.14.5.3 STATUTORY AUTHORITY: Section 59A-30-4 NMSA 1978.
[6/16/1986,
4/1/1996; 13.14.5.3 NMAC - Rn, 13 NMAC 14.5.3, 5/15/2000]
13.14.5.4 DURATION:
Permanent.
[4/1/1996;
13.14.5.4 NMAC - Rn, 13 NMAC 14.5.4, 5/15/2000]
13.14.5.5 EFFECTIVE DATE:
June 16, 1986, unless a later date is cited at the end of a section.
[6/16/1986...11/1/1996;
13.14.5.5 NMAC - Rn & A, 13 NMAC 14.5.5, 5/15/2000]
13.14.5.6 OBJECTIVE:
The purpose of this rule is to establish requirements for commitments
and binders issued for title insurance.
[11/1/1996;
13.14.5.6 NMAC - Rn & A, 13 NMAC 14.5.6, 5/15/2000]
13.14.5.7 DEFINITIONS:
See 13.14.1 NMAC.
[11/1/1996; 13.14.5.7 NMAC - Rn, 13 NMAC
14.5.7, 5/15/2000]
13.14.5.8 ISSUANCE UPON REQUEST AND RECEIPT OF BONA FIDE ORDER:
A. Upon receipt of a bona fide order
for any type of title insurance policy or policies to be issued pursuant to
13.14.6 NMAC, an insurer or title insurance agent must deliver to the proposed
insured, its authorized agent, other person in a fiduciary relationship with
the proposed insured, or the proposed insured’s attorney, and if none of the
aforementioned persons are available after using the insurer’s or title
insurance agent’s best efforts, then to the person designated by the person
opening the order for insurance, a commitment showing the exceptions which will
appear in the proposed policy as of the date of the commitment and requirements
to be met to insure the title in accordance with the order for insurance. Such commitment shall be delivered as soon as
practicable, using the insurer’s or title insurance agent’s best efforts,
allowing reasonably sufficient time for review prior to the completion of
closing of the transaction. No
commitment may be issued except upon receipt by the insurer or title insurance
agent of a bona fide order for title insurance as set out above.
B. The term “binder” is defined in
Subsection B of 13.14.1.8 NMAC as “a commitment for title insurance” and the
use of the terms “binder” and “commitment” shall refer to the same thing.
C. When a commitment or binder for one
to four family residential property is required to be
produced and delivered in accordance with this regulation it shall be delivered
with a notice to purchaser/insured NM form 35, 13.14.18.48 NMAC, as the cover
page. However, the purchaser(s) need not
be identified nor sign the notice until closing. The notice, when required, shall be signed by
purchaser(s) at or before the time of closing and retained in the closing
file. The notice to purchaser/insured is
not required if, prior to the delivery of the commitment or binder, the
proposed insured(s) sign a contract for sale of the insured land that includes
substantially identical language to that included in NM form 35 and that is
completed by checking all appropriate blanks.
D. When requested by a proposed insured lender the following language may
be added to a title commitment “note:
according to the public records, there have been no deeds conveying the
property in this commitment within a period of (six to 24) months prior to the
date of this commitment, except as follows:”
E. When a
to-be-determined title commitment is issued, an additional requirement to the
commitment must be added as follows: “This title commitment is not effective until schedule A is completed
and the company reserves the right to amend and supplement this commitment with
additional information, requirements and exceptions based upon the provision of
additional information.”
[6/16/1986...4/3/1995; 13.14.5.8
NMAC - Rn, 13 NMAC 14.5.8, 5/15/2000; A, 9/1/2007; A, 8/17/2009; A, 3/1/2016;
A, 7/1/2018]
13.14.5.9 STANDARD EXCEPTIONS IN SCHEDULE
B:
A. All
commitments issued on New Mexico property will contain each of the following
numbered exceptions verbatim and in the same order stated herein.
(1) Rights
or claims of parties in possession not shown by the public records.
(2) Easements, or claims of easements,
not shown by the public records.
(3) Encroachments,
overlaps, conflicts in boundary lines, shortages in area, or other matter which
would be disclosed by an accurate survey and inspection of the premises.
(4) Any
lien, claim or right to a lien, for services, labor or materiel heretofore or
hereafter furnished, imposed by law and not shown by the public records.
(5) Community
property, survivorship, or homestead rights, if any, of any spouse of the
insured (or vestee in a leasehold or loan policy).
(6) Water
rights, claims or title to water.
(7) Taxes
for the year _____, and thereafter. (See
13.14.5.12 NMAC)
(8) Defects,
liens, encumbrances, adverse claims or other matters, if any, created first
appearing in the public records or attaching subsequent to the effective date
hereof but prior to the date the proposed insured acquires for value of record
the estate or interest or mortgage thereon covered by this commitment.
B. Additionally,
each commitment may contain the following statement when said commitment is
used to commit for both an owner’s policy and a loan policy or a loan policy
only: “Exceptions numbered __________
will not appear in the loan policy but will appear in the owner’s policy, if
any.” If the commitment is for a
construction policy or a loan policy containing a two-year claims made
limitation, the following statement must be added: “The construction loan policy or a loan
policy containing a two-year claims made limitation will contain an exception
limiting its coverage to two years duration pursuant to 13.14.7.18 NMAC.”
C. Each
commitment shall contain the following statement: Standard exceptions 1, 2, 3, and or 4, may be
deleted from any policy upon compliance with all provisions of the applicable
rules, upon payment of all additional premiums required by the applicable
rules, upon receipt of the required documents and upon compliance with the
company’s underwriting standards for each such deletion. Standard exception 5 may be deleted from the
policy if the named insured in the case of an owner’s policy, or the vestee, in the case of a leasehold or loan policy, is a
corporation, a partnership, or other artificial entity, or a person holding
title as trustee. Except for the
issuance of a U.S. policy form (NM form 7 or NM form 34), any policy to be
issued pursuant to this commitment will be endorsed or modified in schedule B
by the company to waive its right to demand arbitration pursuant to the
conditions and stipulations of the policy at no cost or charge to the
insured. The endorsement or the language
added to schedule B of the policy shall read: “In compliance with Subsection D
of 13.14.18.10 NMAC, the company hereby waives its right to demand arbitration
pursuant to the title insurance arbitration rules of the American land title
association. Nothing herein prohibits
the arbitration of all arbitrable matters when agreed
to by both the company and the insured.”
[6/16/1986,
3/1/1990, 6/1/1997, 6/1/1998; 13.14.5.9 NMAC - Rn, 13 NMAC 14.5.9, 5/15/2000;
A, 8/29/2003; A, 7/1/2005; A, 8/17/2009; A, 9/15/2009; A, 09/15/2010; A, 10/1/2012;
A, 7/31/2014; A, 3/1/2016]
13.14.5.10 ADDITIONAL TAX EXCEPTION:
In those areas of New Mexico where there are taxes or assessments which
may be a lien by law but are not filed for record with the county clerk's office
by local custom or practice, and upon approval of the insurer, the following
additional tax exception may be added to policies, binders or commitments: “Any possible taxes or assessments which may
be a lien by law but have not been filed for record in the office of the county
clerk of _____________ county.”
[6/16/1986;
13.14.5.10 NMAC - Rn, 13 NMAC 14.5.10, 5/15/2000]
13.14.5.11 DURATION OF COMMITMENT:
A commitment shall be valid for a period of six months but may be
extended or renewed by endorsement for up to three additional six month periods
when the pending order for title insurance remains bona fide and the additional
premiums specified in Subsection A of 13.14.9.19 NMAC are paid. Whenever a commitment is requested by an insured
under a mortgagee policy on property it has taken by foreclosure or deed in
lieu of foreclosure, or by a state or federal agency or insurer who has insured
or guaranteed a loan on said property, the commitment may be initially endorsed
to be valid for no more than two years upon payment of the required premiums
for both issuance and extensions.
[2/5/1987;
13.14.5.11 NMAC - Rn, 13 NMAC 14.5.11, 5/15/2000]
13.14.5.12 TAXES - STANDARD EXCEPTION 7:
Allowable modifications of standard exception 7. No change is required in the printed policy
forms. These amendments to standard
exception 7 may be made by substituting the authorized changes as
appropriate. Each insurer, in the
exercise of this option, shall provide its agent(s) written authority to so
amend standard exception 7.
A. Standard exception 7 in 13.14.5.9 NMAC may be modified in
commitments and policies so as to except to taxes for the second half of an ad
valorem tax year. Such amendment shall
not be made unless all taxes assessed or assessable through and including the
first half of the ad valorem tax year have been paid or are being paid out of
funds which are under the control of the issuing agent or underwriter in an
escrow account established for a closing occurring concurrently with such
issuance.
B. Standard exception 7 may also be amended in policies, at
the option of the insurer, to read:
“Taxes for the year _______, and thereafter, not yet due or payable.”
C. If the ad valorem taxes for the first half of a year have
been paid, and taxes for the second half are not yet delinquent, standard
exception 7 may be amended, at the option of the insurer, by changing the
period to a comma, and adding the phrase:
“not yet delinquent.”
[4/1/1996;
13.14.5.12 NMAC - Rn, 13 NMAC 14.5.12, 5/15/2000; A, 3/1/2016]
13.14.5.13 PRO FORMA POLICIES:
For purposes of this rule, a “pro forma policy” is a sample of an owner
or loan policy prepared prior to payment for issuance and delivery of the policy,
with completed schedules A and B and endorsements, showing the proposed
insured, the exceptions that are proposed to be placed in the final policy to
be issued, and the name of the title insurance company and title insurance
agent. A pro forma policy may be issued only if (a) the land is not one to four
family residential property; (b) the proposed amount of insurance is $500,000 or
more; (c) each page of the completed schedules A and B and all endorsements
conspicuously state “This is a pro forma policy furnished to or on behalf of
the party proposed to be insured for discussion only. It does not reflect the
present status of title and is not a commitment to insure the estate or
interest as shown herein, nor does it evidence the willingness of the company
to provide any coverage shown herein. Any such commitment must be an express
written undertaking issued on the appropriate forms of the company.” and (d)
the title agent receives a written request for the pro forma policy from a
proposed insured. A pro forma policy
shall not be issued or used in lieu of a title insurance commitment.
[13.14.5.13 NMAC - N, 3/1/2016]
HISTORY
OF 13.14.5 NMAC:
Pre-NMAC History.
ID 74-1,
Article 10, Chapter 58, Rule 2, Regulations for Filing Title Insurance Forms
and Rates, filed 3/7/1974.
SCC-85-6,
Insurance Department Regulation 30 - Title Insurance, filed 9/6/1985.
SCC-86-1,
Insurance Department Regulation 30 - Title Insurance, filed 5/9/1986.
History of Repealed Material. [RESERVED]
Other History.
Re-promulgated
a portion of SCC-86-1, Insurance Department Regulation 30 - Title Insurance and
renumbered, reformatted and replaced as 13 NMAC 14.5, Commitments or Binders, effective
11/1/1996.
13 NMAC
14.5, Commitments or Binders, (filed 10/2/1996) was renumbered, reformatted,
amended and replaced as 13.14.5 NMAC, Commitments or Binders, effective 5/15/2000,
amended effective 7/31/2014.
13.14.5 NMAC,
Commitments or Binders, effective 7/31/2014, amended effective 3/1/2016.
13.14.5
NMAC, Commitments or Binders, effective 3/1/2016, amended effective 7/1/2018.