ALTA Board Approves New Policy Endorsement
July 14, 2015
The ALTA Board of Governors approved a recommendation to adopt a new policy endorsement during a meeting on June 19.
ALTA Endorsement 46-06 (Option) Form is currently in an industry comment period until Friday, July 24, and is subject to change.
A real estate option is a written agreement or contract giving the holder of the option the right, but not the obligation, to acquire an interest in real property for an agreed upon price and within a certain time frame. Unlike a more standard contract to purchase or lease real estate, an option is unilateral in the sense that it obligates the optionor granting the option to convey the real property interest. In exchange, the optionor receives consideration in the form of the option price, usually some fraction of the agreed upon acquisition price.
In some states the right arising from the option is considered a real property interest. In other states, however, the option creates a contract right; and in some cases an unexercised option may be considered a mere expectancy. While the legal status given to options varies widely among different jurisdictions, there is nevertheless a desire in the marketplace for a standard Option Endorsement.
There is a market need for an endorsement that provides basic coverage to the insured for loss resulting from certain risks associated with an option. The endorsement can be used in situations where the insured named in a policy is also the holder of a specific option identified in the endorsement.
If you have comments or concerns, forward them to Kelly Romeo, the staff liaison for the Forms Committee.
Contact ALTA at 202-296-3671 or [email protected].