Chicago Title Insurance Company, NCS

- 204 - ALTA ENDORSEMENTS SAMPLES AND DESCRIPTIONS CONSTRUCTION LOAN – INSURED’S DIRECT PAYMENT ALTA 32.2 The ALTA 32.1 and 32.2 are almost indistinguishable, but the ALTA 32.1 is suitable if the title company disburses, and the 32.2 only applies when the Insured disburses. Section 3(c) of the ALTA 32.2 provides: The lack of priority of the lien of the Insured Mortgage, as security for each. Construction Loan Advance made on or before the Date of Coverage over any Mechanic’s Lien, if notice of the Mechanic’s Lien is not filed or recorded in the Public Records, but only to the extent that direct payment to the Mechanic’s Lien claimant for the charges for the services, labor, materials or equipment for which the Mechanic’s Lien is claimed has been made by the Insured or on the Insured’s behalf on or before Date of Coverage. Unlike the ALTA 32.1, the ALTA 32.2 does not require the title insurer’s written approval for each disbursement. For that reason, it is the better choice between the two for a construction lender that is disbursing the funds. However, like the ALTA 32.1, the ALTA 32.2 only covers payments made directly to the party entitled to a lien, so disbursement of all of the draw to a general contractor, allowing the general contractor to pay its materialmen, subcontractors and employees will not be adequate for insurance against mechanic’s lien claims by those materialmen, subcontractors, employees or laborers. Section 4 of each of these endorsements contains exceptions from the coverage of Section 3. In each case, Section 4 begins: 4. This policy does not insure against loss or damage (and the Company will not pay costs, attorneys’ fees or expenses) by reason of any Mechanic’s Lien arising from services, labor, material or equipment: a. furnished after Date of Coverage; or ALTA Endorsement — Form 32.2 (Construction Loan – Insured’s Direct Payment – 07/01/21) Form 32.2 Construction Loan – Insured’s Direct Payment