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CONDITIONS AND STIPULATIONS The term "mortgage", when used herein, shall include deed of trust, (rust deed, or outer security instrument 2. If the proposed Insured has acquired actual knowledge of any defect, lien, encumbrance, adverse claim or other matter af(ectiitg the estate or interest ur morgage thereon covered by this Conuniuueut other than those shown in ScheJule U hereof, and shall fail to disclose such knowledge to the Company in writing, the Company shall be relieved from liability for any loss or damage resulting from any act of reliance hereon to the extent the Company is prejudiced by failure to so disclose such knowledge. If the proposed Insured shall disclose such knowledge to the Company, or if the Company otherwise acquires actual knowledge of any such defect, lien, encumbrance, adverse claim or other matter, the Company a[ its option may amend Schedule B of this Commitment accordingly, but such amendment shall not relieve the Company from liability previously incurced pursuant to paragraph 3 of these Conditions and Stipulations. 3. Liability o(lhe Company under this Commitment shall 6e only to the named proposed Insured end such parties included under the definition o(Insured in the form o(policy or policies contmitled forand only fur actual loss incurted in reliance hereon in undertaking in good faith (a) to comply with the requirements hereof, or (b) to eliminated exceptions shown in Schedule D, or (c) In acquire or create the estate or interest or mortgage thereon covered by this Commitment. In no event shall such liability exceed the amount slated in Schedule A for the policy or policies committed for and such liability is subject to the insuring provisions, the Conditions and Stipulations and the Exclusions from Coverage of the forth of policy or policies committed for in favor of the proposed Insured which are hereby incorporated by reference and are made a part of this Commitment except as expressly modified herein. 4. Any action or actions or rights of action that the proposed Insured may have or may bring against the Company arising out of the status of llte title to the estate or interest or the status of the mortgage thereon covered by this Commitment must be based on and are subject to the provisions of this Commitment. STANDARD EXCEPTIONS The policy or policies to be issued will contain exceptions to the following matters unless the same are disposed of to the satisfaction oC the Curnpany. I. Defects, liens, encumbrances, adverse claims or other matters, if any, created, firs[ appearing itt the public records or attaching subsequent to the effective date hereof but prior to the date the proposed fissured acquires for value of record the estate or interest or mortgage thereon covered by this Commiunenl. 2. Any lien,orrightloalien,forservices.laborormaterialhere[o(oreorhereafterfumished,imposedbylawandno[sltownbylhepublic records. 3. AnyJiscrepancies,con(liclsinbnundarylines,encroachntenls,easentents,measurements,varialionsinareaorconteitt.pariywallsand/ or other facts which a correct survey and/or a physical inspection of the premises would disclose. 4. Rights or claims of parties in possession not shown in the public records. S. In the eve n t this Commitment is issued with respect to a conswction loan to be disbursed in future periodic i nstal lments, then the policy shall contain an additional exception which shall read as follow: Pending disbursement of the full proceeds of the loan secured by the mortgage insured, this policy only insures the amount actually disbursed but increases as proceeds are disbursed in good faith and without knowledge of any intervening lien or interest to or Cor the account o(the mortgagor up to the amou nt of the pot icy. Such disbursement shall not extend the date of the pot icy orchange any part thereof unless such change is specifically made by written endorsement duly issued on behalf of the Company. Upon request by the Insured (and payment of the proper charges therefore), the Company's agent or approved attbrney will search the public records subsequent to the date of the policy and furnish the insured a continuation report showing such matters affecting title to the land as they have appeazed in the public records subsequent to the date of the policy or date of the last preceding continuation report, and if such continuation report shows intervening lien, or liens, or interest to or for the account of the mortgagor, then in such event this policy does not increase in liability unless such matters as actually shown on such continuation report are removed from the public records by the insured.