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conditions and stipulations continued and concluded <br />(b) In the event,of-any litigation, includin on by the Company or <br />with the Company's consent, the Company shun imyc no liability for loss or <br />damage until there has been a final determination by a court of competent <br />jurisdiction, and disposition of all appeals therefrom, adverse to the title, or, if <br />applicable, to the lien of the insured mortgage, as insured. <br />(c) The Company shall not be liable for loss or damage to any insured for <br />liability voluntarily assumed by the insured in settling any claim or suit without <br />the prior written consent of the Company. <br />(d) The Company shall not be liable to an insured lender for: (i) any <br />indebtedness created subsequent to Date of Policy except for advances made to <br />protect the lien of the insured mortgage and secured thereby and reasonable <br />amounts expended to prevent deterioration of improvements; or (ii) construction <br />loan advances made subsequent to Date of Policy, except construction loan <br />advances made subsequent to Date of Policy for the purpose of financing in <br />whole or in part the construction of an improvement to the land which at Dote of <br />Policy were secured by the insured mortgage and which the insured was and <br />continued to be obligated to advance at and after Date of Policy. <br />9. REDUCTION OF INSURANCE; REDUCTION OR TERMINATION OF <br />LIABILITY. <br />(a) All payments under this policy, except payments made for costs, attor- <br />neys' fees and expenses, shall reduce the amount of insurance pro tanto. How- <br />ever, as to an insured lender, any payments made prior to the acquisition of <br />title to the estate or interest as provided in Section 2 a) of these Conditions and <br />Stipulations shall not reduce pro tanto the amount o insurance afforded under <br />this policy as to any such insured, except to the extent that the payments reduce <br />the amount of the indebtedness secured by the insured mortgage. <br />(b) Payment in part by any person of the principal of the indebtedness, or <br />any other obligation secured by the insured mortgage, or any voluntary partial <br />satisfaction or release of the insured mortgage, to the extent of the payment, <br />satisfaction or release, shall reduce the amount of insurance pro tanto. The <br />amount of insurance may thereafter be increased by accruing interest and <br />advances made to protect the lien of the insured mortgage and secured there- <br />by, with interest thereon, provided in no event shall the amount of insurance <br />be greater than the Amount of Insurance stated in Schedule A. <br />(c) Payment in full by any person or the voluntary satisfaction or release of <br />the insured mortgage shall terminate all liability of the Company to an insured <br />lender except as provided in Section 2(a) of these Conditions and Stipulations. <br />10. LIABILITY NONCUMULATIVE. <br />It is expressly understood that the amount of insurance under this policy <br />shall be reduced by any amount the Company may pay under any policy insur- <br />ing a mortgage to which exception is taken in Schedule B or to which the insured <br />has agreed, assumed, or taken subject, or which is hereafter executed by an <br />insured and which is a charge or lien on the estate or interest described or <br />referred to in Schedule A, and the amount so paid shall be deemed a payment <br />under this policy to the insured owner. <br />The provisions of this Section shall not apply to an insured lender, unless <br />such insured acquires title to said estate or interest in satisfaction of the <br />indebtedness secured by an insured mortgage. <br />11. PAYMENT OF LOSS. <br />(a) No payment shall be made without producing this policy for endorse- <br />ment of the payment unless the policy has been lost or destroyed, in which case <br />proof of loss or destruction shall be furnished to the satisfaction of the <br />Company. <br />(b) When liability and the extent of loss or damage has been definitely <br />fixed in accordance with these Conditions and Stipulations, the loss or damage <br />shall be payable within 30 days thereafter. <br />12. SUBROGATION UPON PAYMENT OR SETTLEMENT. <br />(a) The Company's Right of Subrogation <br />Whenever the Company shall have settled and paid a claim under this <br />policy, all right of subrogation shall vest in the Company unaffected by any act <br />of the insured claimant. <br />The Company shall be subrogated to and be entitled to all rights and <br />remedies which the insured claimant would have had against any person or <br />property in respect to the claim had this policy not been issued. If requested by <br />the Company, the insured claimant shall transfer to the Company all rights and <br />remedies against any person or property necessary in order to perfect this right <br />of subrogation. The insured claimant shall Permit the Company to sue, com- <br />promise or settle in the name of the insured claimant and to use the name of the <br />insured claimant in any transaction or litigation involving these rights or <br />remedies. <br />If a payment on account of a claim does not fully cover the loss of the <br />insured claimant, the Company shall be subrogated (i) as to an insured owner, <br />to all rights and remedies in the proportion which the Company's payment bears <br />to the whole amount of the loss; and (ii) as to an insured lender, to all rights <br />and remedies of the insured claimant after the insured claimant shall have re- <br />covered its principal, interest, and costs of collection. <br />If loss should am any act of the insured claimant, as stated above, <br />that act shall not . ,, . ,,.is policy, but the Company, in that event, shall be <br />required to oy only that part of any losses insured against by this policy which <br />shall exceed the amount, if any, lost to the Company by reason of the impair- <br />ment by the insured claimant of the Company's right of subrogation. <br />(b) The Insured's Rights and Limitations. <br />Notwithstanding the foregoing, the owner of the indebtedness secured by <br />an insured mortgage, provided the priority of the lien of the insured mortgage <br />or its enforceability is not affected, may release or substitute the personal lia- <br />bility of any debtor or guarantor, or extend or otherwise modify the terms of <br />payment, or release a portion of the estate or interest from the lien of the <br />insured mortgage, or release any collateral security for the indebtedness. <br />When the permitted acts of the insured claimant occur and the insured has <br />knowledge of any claim of title or interest adverse to the title to the estate or <br />interest or the priority or enforceability of the lien of an insured mortgage, as <br />insured, the Company shall be required to pay only that part of any losses <br />insured against by this Policy which shall exceed the amount, if any, lost to the <br />Company by reason of the impairment by the insured claimant of the Company's <br />right of subrogation. <br />(c) The Company's Rights Against Non-insured Obligors. <br />The Company's right of subrogation against non-insured obligors shall exist <br />and shall include, without limitation, the rights of the insured to indemnities, <br />guaranties, other policies of insurance or bonds, notwithstanding any terms or <br />conditions contained in those instruments which provide for subrogation rights by <br />reason of this policy. <br />The Company's right of subrogation shall not be avoided by acquisition of <br />an insured mortgage by an obligor (except an obligor described in Section <br />I (a)(ii) of these Conditions and Stipulations) who acquires the insured mortgage <br />as a result of an indemnity, guarantee, other policy of insurance, or bond and <br />the obligor will not be an insured under this policy, notwithstanding Section <br />1(a)(i) of these Conditions and Stipulations. <br />13. ARBITRATION. <br />Unless prohibited by applicable low, either the Company or the insured <br />may demand arbitration pursuant to the Title Insurance Arbitration Rules of the <br />American Arbitration Association. Arbitrable matters may include, but are not <br />limited to, any controversy or claim between the Company and the insured aris- <br />ing out of or relating to this policy, any service of the Company in connection <br />with its issuance or the breach of a policy provision or other obligation. All <br />arbitrable matters when the Amount of Insurance is $1,000,000 or less shall be <br />arbitrated at the option of either the Company or the insured. All arbitrable <br />matters when the Amount of Insurance is in excess of $1,000,000 shall be arbi- <br />trated only when agreed to by both the Company and the insured. Arbitration <br />pursuant to this policy and under the Rules in effect on the date the demand for <br />arbitration is made or, at the option of the insured, the Rules in effect at Date of <br />Policy shall be binding upon the parties. The award may include attorneys' fees <br />only if the laws of the state in which the land is located permit a court to award <br />attorneys' fees to a prevailing party. Judgment upon the award rendered by <br />the Arbitrator(s) may be entered in any court having jurisdiction thereof. <br />The law of the situs of the land shall apply to an arbitration under the Title <br />Insurance Arbitration Rules. <br />A copy of the Rules may be obtained from the Company upon request. <br />14. LIABILITY LIMITED TO THIS POLICY; POLICY ENTIRE CONTRACT. <br />(c) This policy together with all endorsements, if any, attached hereto by <br />the Company is the entire policy and contract between the insured and the <br />Company. In interpreting any provision of this policy, this policy shall be <br />construed as a whole. <br />(b) Any claim of loss or damage, whether or not based on negligence, and <br />which arises out of the status of the lien of the insured mortgage or of the title <br />to the estate or interest covered hereby or by any action asserting such claim, <br />shall be restricted to this policy. <br />(c) No amendment of or endorsement to this policy can be made except by <br />a writing endorsed hereon or attached hereto signed by either the President, a <br />Vice President, the Secretary, an Assistant Secretary, or validating officer or <br />authorized signatory of the Company. <br />15. SEVERABILITY. <br />In the event any provision of the policy is held invalid or unenforceable <br />under applicable law, the policy shall be deemed not to include that provision <br />and all other provisions shall remain in full force and effect. <br />16. NOTICES, WHERE SENT. <br />All notices required to be given the Company and any statement in writing <br />required to be furnished the Company shall include the number of this policy <br />and shall be addressed to the Company at P.O. Box 2029, Houston, Texas <br />77252.2029, and identify this policy by its printed policy serial number which <br />appears on the bottom of the front of the first page of this policy. <br />