|
<br />_. "'ww'",,,u...
<br />(a) After AcquiSItion of TItle. Tl1e coverage 01 1l1is policy shall
<br />continue in force as of Date of Policy in lavor of (i) an insured wtlo aCQ uires
<br />all or any part of the estate or interest in the land byloreclosure, t rustee's
<br />sale, conveyance in lieu of foreclosure or other legal manner whlcl1
<br />discharges the lien of the insured mortgalJe; (Uj a translereeol tt1e estate
<br />or interest so acquired frDman insured corporation, provided the Ira nsferee
<br />is the parent orwholly-oV1lled,subsidiary of the insured corporation, and
<br />their corporate successors by operation of law and not by purchase,
<br />subiect to any riQhts or defenses the Company may have against any
<br />predecessor Insureds; and (iii) any governmental agency or governmental
<br />instrurnentaill): whicnacQuires all or any part of the estate or interest
<br />pu(suantlo 3 Cr.ntracl 01 insurance or guaranty insuring or guaran feeing
<br />lhe indebtwJ,16SSSecured by the insured mortgage.
<br />(b) After Conveyance of TItle. The coverage of lhis pOliCY shall
<br />continue in lorce as 01 Date of Policy In favor of an insured only so long
<br />as the insured retains an estate or interest in \he land, or hOlds an
<br />indebtedness secured by a purChase money rnortgage given by a
<br />purchaser from Ihe insured, or only so long as the insured shal!have
<br />hability by reason 01 covenants 01 warranty made by the insured In any
<br />transler or conveyance 01 the estate or interest. This policy s~all n?t
<br />continue In force in favor of any purchaser from the insured ofeJlher (i)
<br />anes\ateorinterestintheland,or (ii)an indebtedness secured by a
<br />purchase money morlgage given to the insured,
<br />(c) Amount of Insurance. The amount 01 insurance after the
<br />acquisilion or after the conveyance shall in neither event exceed the least
<br />of:
<br />(il The affiOUflt ol illsulance slated in ScheDule A;
<br />(U) theamolJntoltt1e principal 01 the indebtetlness secured by
<br />the insured mortgage as 01 Date 01 Policy, Interest thereon, expenses of
<br />foreclosure,amountsadvancedpursuanttotheinsuredmortgagetoass~re
<br />compliance with laws or to protecl the lien 01 the insureD mortgage prior
<br />to the t(meolacq\Jisitionottl'leeSIa\eorinterestil1thelal1danDsecure~
<br />thereby and reasonable amounts expended to prevent Deterioration 01
<br />improvements, but reduced by the amounl of all payments made; or
<br />(iii) the amount paid by any governmental agency orgovem-
<br />mental inSlnJmentality, if the agency or instrumentality IS the insured
<br />claimant, in the aCQuisilion ollhe estale or interest in satisfaction of its
<br />\nSUlance comract or guaranty,
<br />
<br />3. NOnCE OF CLAIM TO BE GIVEN BY INSURED
<br />CLAIMANT.
<br />The insured shall notify the Company promptly in writing (i) in case
<br />01 any \iti9atlon as setlorth in Section 4{a) below, (ii) in case knowledge
<br />shall come to an insured hereunder 01 any claim of title or interesl whi ch
<br />is adverse to the title to the estate or interest or the lien 01 the insu red
<br />mortgage, as insured, and which might cause loss or damage for which
<br />the Company may be liable by v!rtue oftl1is policy, o~ (iii) il ~itle .to the
<br />eslateorinlerestorlhelienofthelnsuredmortgage,aslllsured,lSrelected
<br />asunmarkeIaOle.lfpromptnoticeshaUnotbegiventotheCompany,then
<br />as to tl1e insured ~lIliability 01 the Company shall terminate with regard
<br />to the matter or mailers for which promptnolice is required: provided,
<br />however, that failure to notify the Company shall in no case prejudice the
<br />righls of any insured under t~is pOlicy unless the Company ,s~~1I be
<br />preiudiced by the failure and 1\Yen OIilyto tne extent 01 the preludlce.
<br />4. DEFENSE AND PRoSECunON OF ACnONS; DUlY OF
<br />INSURED CLAIMANT TO COOPERATE.
<br />(a) Upon written request by the insured and subjecllO the options
<br />contained in Section 6 of these Condlllons and Stipulatians,tlle Company,
<br />at its own cost and withoot unreasonable delay, shall provide for the
<br />delense of an insured in litigation in which any third parly asserts a claim
<br />adversetothetitleorinlerestaslnsured,butoniyastolhosestatedcauses
<br />01 action alleging a defect, lien or encumbrance or other mailer insured
<br />againsl by this policy, Tl1eCompanyshallhavetherightloselectcounsel
<br />111 its choice {subiectto the ri9lit of the insrned to objec\ lor reasonable
<br />cause) to represenlthe insured as to those stated causes of action and
<br />shall not he liable lor and will not pay the lees 01 any other counse\. The
<br />Company will nol pay any fees, cosls or expenses incurred by the irlsured
<br />in the delense 01 those causes of action which allege matters not insured
<br />against by this policy.
<br />(b) The Company shall have the right, at its own cosl, to institule
<br />and prosecule any action or proceeding or to do any other act which in
<br />itsopinionmaybenecessaryordeslrabletoestablishlhetilletotheestate
<br />or interest or lhe lien 01 the insured mortgage, as IfIsured, or to prevent
<br />or reduce loss or damage 10 the insured. The Company may take any
<br />Cl\lpropllate actlon UIlder tire terms 01 this policy, whether or not it shall
<br />be liable hereunder, and shall not thereby concede llabillty or waive any
<br />provision ofthJs policy. Ifll1e Company shall exercise its rlgl1ls undert his
<br />paragraph,itshalldosodiligenlly.
<br />(c) Whenever the Company shall have brolJght an action or
<br />interposed a delense as required or permitted by the provisions 01 this
<br />pOlicy, the Company may pursue any litigation to linal determination by
<br />acourtofcompelentjurisdictionandexpresslyreservestheright,inits
<br />sole discretion, to appeal Irom any adverse Judgment or order.
<br />(d) In all cases where this pOlicy permits or requires the Company
<br />to prosecute or provide far the defense 01 any action or proceeding, the
<br />lnsureo shall secure 10 the Company the right to so prosecute or provide
<br />defense In theaclion or proceedlflg, and aU appeals lherein, and pe rmit
<br />tne Company 10 use, at its option. the name or the insured for this plJrp ose.
<br />Whenever requested by lhe Company, the insur~d, .at.lhe CompanY's
<br />exPense, shall give the Company all ~a.sonab~e ,lid (I) In any action or
<br />roceeding, securing evidenc~, obtalnmg. Witnesses, prosecuting or
<br />~elending theactionorproceedl~~, oreffectmg seltlemenl.and (ii) in any
<br />olher lawful act which in the oplrllon 01 the Company may be neces~ry
<br />
<br />(il) To Payor Tender Payment 01 the Amount 01 Insurance or 10
<br />Purchase the Indebledness,
<br />(i) to pay or lender payment 01 the amount of insurance under this
<br />policy together with any costs, attorneys'lees and expenses incurred bY
<br />the insured claimant, which were authorized by the Company, up to the
<br />time 01 payment or ternJel Dl payment and which the Company is Obligated
<br />to pay; or
<br />(ii}to purchase the indebtedness secured by the insured
<br />mortgagelorlheamountowingthereontogetherwithanycosts,altorneys'
<br />lees aml expenses incurred by the Insured claimant which were authorized
<br />by the Company up 10 the time 01 purchase amj which the Company is
<br />obligated to pay.
<br />II Ihe Company ofters to purChase the indebtedness as herein
<br />proYided,the owner 01 the indebtedness shall lransfer, assign, and convey
<br />the indebtedness and the insured mortgage, together with any collateral
<br />security, to the Company upon paymenltherelor.
<br />Upon tlleexercise by lhe Company of either of the options provided
<br />lor in paragraphsa{i) or (ii),all liabiJjtyandobligationstolhe insure dunder
<br />this policy, otherlhantomakethepaymenlreQuiredlnthoseparalJraphs,
<br />shall terminate, including any liability or obligalion 10 delend, prosecute,
<br />or conlinue any litigation, and the policy shall be surrendered to the
<br />Company tm cancellation,
<br />(b) To Pay or Otherwise Settle With Parties Olher than the Insured
<br />or With the Insured Claimant.
<br />(i) to payor otherwise settle with other parties lor or in the name
<br />of an insured claimanlany claim insured against under this policy, 10 gether
<br />with any costs, attorneys' fees and expenses InCUfmd ty; the insured
<br />claimant which were authorized by the Company up to the time 01 paymenl
<br />ana which the Company is obligated to pay; or
<br />(ii) to payor otherwise settle wilh the insured claimant the ioss
<br />or damage provided for under this pOliCY, together will1 any costs,
<br />attorneys' fees and eX(lenses incurred by the insured claimant which 'frertl
<br />authorized by the Company up to the time of payment and which the
<br />Company Is obligated to pay.
<br />Upon lhe exercise by the Company 01 either oflhe options provided
<br />for in paragraphs b(i} or (Ii), tl1e CompMY's obligations to the insured
<br />under this policy for the claimed loss or damage, other than the payme nlS
<br />reqUiTed to be made, shan terminate, including any liability or obligation
<br />todefend,prosecuteorcontlnueanyliligation,
<br />
<br />7. OrnRMINAnON AND EXTENT OF LIABILITY.
<br />This policy is a contract of indemnity againsl actual monetary loss
<br />or damage sustained or incurred by the il'lsured claimant wlm has suffered
<br />loss or damage by reason 01 mailers insured againsltlythis policy and
<br />only to the extent herein described.
<br />(a) The liability of the Company under this policy shall not exceed
<br />the least of:
<br />(i) the amOllnt 01 1l1SUTance st~ed .in Sc~ed.u\e A, or, it
<br />applicable, the amount of insurance as defmed m Section 2{c) of these
<br />Conditions and Stipulations;
<br />(H) the amount 01 unpaid principal Indebtedness secured by the
<br />insured mortgage as limited or provided under Section 8 01 these
<br />Conditions and Stipulations or as reduced under Section 9 of these
<br />Condltions and Stipulations, at the time the loss or damage insured against
<br />by this poliCY occurs, togetl1erwith irlteresttl1ereon;or
<br />(Hi) the difference between the value 01 the insured estate or
<br />interest as insured and the value of the insured estate or inlerests ubiect
<br />to tile defect, lien or encumbrance insured against by this policy.
<br />(b) In the event the insured hasacquireO the estate CI interest in
<br />the manner described in Secflon 2(a) of these Condilions and Stipula tions
<br />or has conveyed the tille, ll1enthe liability of the Company shall continue
<br />as set forth in Section 7(a) of these Conditions and Stipulations.
<br />(c) The Company will pay only lho,se costs, attorneys'. ~ees ana
<br />expenses incurred in accordance with Secllon 4 of these Conditions and
<br />StiptJlalions.
<br />B. L1MIlAnON OF LIABlLITf.
<br />(a) If the Company establishes the lille, or removes the alleged
<br />defect lien or encumbrance, or cures tile lack of a right of access to or
<br />from the land, 0\" cmes the claim 01 unmarke\abil~\'j 01 t\tl~, OJ otherwise
<br />es/ablishesthe lien of the insured morlgage, all aSlnsured,lnareasonabl y
<br />diligenl manner by any method, including litigation and the completion 01
<br />any appeals ll1erelrom, II shall have lully performed its obligations with
<br />respect to that matter and shall not be liable for any loss or damage caused
<br />thereby,
<br />(b) In the evenlofany liligation, including Iitigalion by the Company
<br />or wilh the Company's consen!. the Company shall have no liability for loss
<br />or damage until lhere has been a, linal determination by a court 01
<br />competent juriSdiction and disposition of all appeals lherefrom, adverse
<br />to the fille orlo the IiEm 01 the insured mortgage, as insured
<br />(c) The Company shall not be liable ~or loss. or da:nage to a.ny
<br />insured lor liability voluntarily assumed by the Insured In settling any claim
<br />or suit without the prior written consent 01 tl1e Company.
<br />(d) The Company shall not be liable for:
<br />(i) any indebtedness crealed subsequent to Date of Policy excepl
<br />10r arjvances maGe to j)l'o\et\ ttw. \i~\'\ n\ t\\e i\\sule1 mor\\l"Zl.~ "ZI.'i\d ~ecmeQ
<br />thereby and reasonable amounts expended to prevent deterioralion of
<br />improvements; or
<br />(ii) construction loan advances made subsequent to Date 01
<br />Policy, except construction loan advances made subsequent to D~te of
<br />Policy lor the purpose 0' financing inwnole or In.partthe construction of
<br />an improvement to the land which at Date of Pollcy.were secured ~y the
<br />insured mortgage and which tl1e insured was and contmued to be obligated
<br />to advance al and after Date 01 Policy.
<br />
<br />Dyanyactottne insured Claimant.
<br />The Company shall be subrogated to and be entilied toa,i1 rigl1ts
<br />and remedies which the insured claimant would have had agal~st any
<br />person or properly in respect 10 the claim had this policy not been IS sued,
<br />IlreQuested by the Company, the insured clalmanlshaJl translertQ the
<br />Company all ri9hts an~ remedies agamst any pe~on or property
<br />necessary in order 10 perfect thiS right ot subrog~hon. The lfI.sured
<br />claimanl shall permit the Company to sue, compromls~ or settle 1,1'1 the
<br />name of the insured claimant and to use the name of the msuredclalmant
<br />in any transacfion or litigation involving theserighls or remedies
<br />If a paymenl on account 01 a ciaim does not lully cover. the loss
<br />of the insured claimant, the Company shall be subrogated to all nghtsand
<br />remedies of the insured claimant atterthe insured claimant shall have
<br />recovereditsprincipal,interest,andcostsofcollection.
<br />(b) The Inlured.. Rights and L1mltallonl.
<br />Notwithstanding lhe foregoing, the owner 01 the indebtedness
<br />secured by the insured mortgage, provided the priority of the lien otthe
<br />insured mortgage or its enforceability is notaffecled, may release or
<br />sUbstitutethepersonalliaOilityolanydebtororguarantor,orextend or
<br />otherwise modify the terms Dl payment, or reiease a portion 01 the estate
<br />or interest Irom lhe lien of the insured mortgage, or release any col lateral
<br />securitytm the looebtedfless,
<br />When the permitted acts of the insured claimant occur and ~he
<br />insured has knowledge 01 any claim 01 tilie or Interest adverse t.olhe tllle
<br />to the estate or inlerest orlhe priority or enforceability of lhe lien otll1e
<br />insured mDrtgage, as insured,the Company shall be required 10 payonl y
<br />that part of any, losses insured against by this poiicy which shall exceed
<br />the amounl, il any, lost 10 the Company by reason or the Impairment by
<br />the insured claimant 01 Ihe Company's right 01 subrogation.
<br />(c) The CompanV'1 Rights Agalnsl Non-Insured OblJgorl.
<br />The Company's right of subrogation against non~insured o,bligors
<br />shall exist and shali inciude,wllhoutlimitation, therighlS ollhe Insured
<br />to indemnities, guaranties, other policies 01 insurance or .bonds,
<br />notwithstanding any terms or condilions contained in those instr umenls
<br />which provide for subrogation rights by reason of this policy. ,
<br />The CompanY's right of subrogation shall not be aVOided. by
<br />acquiSition 01 the Insured mortgage by an obligor (except an obligor
<br />described in Section 1 (a}{iil of these CDIldiliollS am! Slipuiations) who
<br />acquirestl\e InS\lred mortgage as 2. resultol an ifl<iemni\'J,ljuarantee, other
<br />policy 01 insurance, or bond and the obligor will nol be an insu~ed under
<br />this policy. notwithstanding Seclion l(a}(i) 01 lhese Conditions ana'
<br />Stipulations.
<br />13. ARBlTRAnoN.
<br />Unless prohibited by applicable law, eilher the Company or the
<br />insured may demand arbitration pursuant to theTilie Insurance Arbitratio n
<br />Rules of tl1e American Arbitration Association. Arbitrable matters may
<br />include,butarenotlimiledlo,anycontroversyorclaimbe~nthe
<br />Comnany am! \'fie insureO arising oul 01 or lelming 10 YnIS POliCY, any
<br />service 01 the Company in connection with its issuance or the breach 01
<br />a pOlicy provision or other obligation. All arbitrable matters when the
<br />Amounl of Insurance is$l ,000,000 or less shall be arbitrated at Ihe op tion
<br />of eilher the Company or the insured. All arbitrable matters when the
<br />Amount of Insurance is in excess 01 $1,000,000 shall be arbitraled only
<br />when agreed to by both the Company and the insured, Arbitration pursuanl
<br />to this policy and under the Rules in eftect on the date the demand f or
<br />arbitralionismadeor,attheoplionoftheinsured,theRulesineffectal
<br />Date of Policy shall be binding upon the parties. The award may include
<br />attomeys'lees only il the laws 01 the state in which the land Is located
<br />permit a court to award attorneys' fees to a pr8'la\linll party. Judgment
<br />upon the award rendered by the Arbitrator(s) may be entered in any court
<br />havingjurisdictionlhereol,
<br />The laws 01 the situs oflhe land shall apply to an arbitralion under
<br />the Tille !nsurance Arbitration Rules.
<br />A copy of the Rules may be obtained Irom Ihe Company upon
<br />request.
<br />14. LIABILITY LIMITED TO THIS POLICY;
<br />POLICY ENTIRE CONTRACT.
<br />(a) This policy together with all endorsements, if any, attacl1ed
<br />hereto by the CampBflY IS the entire policy and contract between the
<br />insured and tl1e Company. In interpreting any provision of this policy ,this
<br />policy shall be conslrued asa whoie.
<br />(b) Any claim of loss or damage, whether or not based on
<br />negligence, and which arises oul 01 the status of the lien of the insured
<br />mortgage or 01 the tille to theestale or interest co....ered hereby or by any
<br />action asserting such claim, shall berestricled to lhispollcy.
<br />(c) No amendmenl 01 or endorsement 10 thls policy can be made
<br />except by a writing endorsed hereon or attached hereto signed by either
<br />the President, a Vice President, the Secretary, an Assistant Secretary, or
<br />validaling officer or authorized signatory of the Company.
<br />
<br />15, SEVERABILITT.
<br />Inlhe evenl any provision of this policy is held invalid or
<br />unenforceable under applicable law, the pOlicyshail be deemed not to
<br />include lhat Provision and all other provisions shall remain in lull lorce
<br />andeftect.
<br />
<br />16. NOTICES, WHERE SENT.
<br />AU notices required to be given the Company and any statement
<br />in writing required to be furnished the Company shall include the
<br />number of this policy and shall be a:ldressed to the Co~an'{ at
<br />1 Firn\ArnericanWay, SanIaAna, California 92707, Of to the offlC8
<br />which issued Ihispoticy,
<br />
|