New Mexico Register / Volume XXXV, Issue 3 / February 13, 2024

This is an Emergency Amendment to 13.14.5 NMAC, Sections 10 and 12, effective 1/24/2024.

13.14.5.10 STANDARD EXCEPTIONS IN SCHEDULE B:

A. All commitments shall contain each of the following exceptions in the 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 issued to commit for both an owner’s policy and a loan policy or a loan policy only: “Exceptions __________ will not appear in the loan policy but will appear in the owner’s policy, if any.”

C. If the commitment is for a loan policy containing a two-year claims made limitation, the following statement must be added: “The loan policy containing a two-year claims made limitation will contain an exception limiting its coverage to two years duration.”

D. Each commitment shall contain the following statement: “Standard exceptions 1, 2, 3, and or 4, may be deleted from a 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.

E. 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.”

[F. Except for the issuance of a U.S. policy form (NM form 34), a 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 G of 13.14.18.9 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.”]

[13.14.5.10 NMAC – Rp, 13.14.5.9 NMAC, 1/1/2021; A/E, 1/24/2024]

13.14.5.12 STANDARD EXCEPTIONS: A policy shall contain in schedule B the standard exceptions 1 through 7, except as otherwise provided by these rules. Said standard exceptions may be preprinted in schedule B and, when specifically authorized, may be deleted by stating, “exceptions _____________ are hereby deleted in their entirety”. Standard exception 5 shall refer to “spouse of the vestee” in all owner’s policies and in all situations where the vestee and insured are not the same.

A. Parties in possession - Standard exception 1: Standard exception 1 may be deleted upon satisfactory proof that there are no parties in possession of the property being insured other than those claiming rights or possession in the property through matters of public record.

B. Unrecorded easements - Standard exception 2: Standard exception 2 may be deleted if a survey of the property being insured satisfactorily shows that there are no easements or claims of easements affecting the insured property other than those shown by the public records.

C. Survey coverage – Standard exception 3:

[(1)] Standard exception 3 may be deleted in its entirety if [in only one of two circumstances:

(a) If] the insurer considers the [additional] risk acceptable. [, the entire language of this standard exception may be deleted from the policy; or

(b) If the insurer does not consider the shortage-in-area risk acceptable but considers the remaining additional hazard insurable, the exception may be modified to read “shortages in area.”

(2) In either circumstance, a] Any additional premium required by these rules must be paid and the title insurer or its title insurance agency must be furnished with a survey of the insured property meeting the insurer's underwriting standards prior to the deletion.

D. Mechanics’ and Materialmen’s Lien Coverage – Standard Exception 4:

(1) In an owner’s policy, standard exception 4 may be deleted in only one of two circumstances:

(a) the statutory period for filing mechanics’ or materialmen’s liens expires prior to the date of the policy;

(b) some or all of the improvements will be “new construction” (or recently completed), and the statutory period for the filing of said liens will not have expired; or

(c) in either circumstance the construction of all improvements on the insured property must have been fully completed and accepted by the insured owner and the appropriate additional premiums required by these rules must be paid.

(2) In a loan policy, standard exception 4 may be deleted in only one of two circumstances:

(a) if the insurer’s underwriting requirements for evidence of priority have been met; or

(b) if the insurer’s underwriting requirements for evidence of priority have not been met but the insurer’s underwriting requirements of the risk incurred by reason of the lack of priority have been met.

(c) In either circumstance, the appropriate additional premiums as established in a title rate case shall be paid.

E. Spousal rights – Standard exception 5: Standard exception 5 may be deleted from a policy if the vestee named in such policy is not an individual.

F. Water rights – Standard exception 6: Standard exception 6 shall not be modified or deleted.

G. Taxes – Standard exception 7: Standard exception 7 may be modified as follows:

(1) To read: “Taxes for the second half of the year ______, and thereafter.” Such modification 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 title insurance agency or title insurer in an escrow account.

(2) To read: “Taxes for the year _______, and thereafter, not yet due or payable.”

(3) 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 modified, by adding the phrase: “not yet delinquent.”

H. Gap period – Standard exception 8: Standard exception 8 shall not be included in a policy.

[13.14.5.12 NMAC – N, 1/1/2021; A/E, 1/24/2024]

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:

13.14.5 NMAC, Commitments or Binders, filed 5/15/2000, was repealed and replaced by 13.14.5 NMAC, Commitments, effective 1/1/2021.