EXCLUSIONS FROM COVERAGE
<br />The following matters are expressly excluded from the coverage of
<br />this policy and the Company will not pay loss or damage, costs,
<br />attorneys' fees or expenses which arise by reason of:
<br />1. (a) Any law, ordinance or governmental regulation (including
<br />but not limited to building and zoning laws, ordinances, or reg-
<br />ulations) restricting, regulating, prohibiting or relating to (i) the
<br />occupancy, use, or enjoyment of the land; (ii) the character,
<br />dimensions or location of any improvement now or hereafter
<br />erected on the land; (iii) a separation in ownership or a change
<br />in the dimensions or area of the land or any parcel of which the
<br />land is or was a part; or (iv) environmental protection, or the
<br />effect of any violation of these laws, ordinances or governmental
<br />regulations, except to the extent that a notice of the enforcement
<br />thereof or a notice of a defect, lien or encumbrance resulting
<br />from a violation or alleged violation affecting the land has been
<br />recorded in the public records at Date of Policy.
<br />(b) Any governmental police power not excluded by (a) above,
<br />except to the extent that a notice of the exercise thereof or a
<br />notice of a defect, lien or encumbrance resulting from a viola-
<br />tion or alleged violation affecting the land has been recorded in
<br />the public records at Date of Policy.
<br />2. Rights of eminent domain unless notice of the exercise thereof
<br />has been recorded in the public records at Date of Policy, but
<br />not excluding from coverage any taking which has occurred
<br />prior to Date of Policy which would be binding on the rights of
<br />a purchaser for value without knowledge.
<br />1. Definition of Terms
<br />3. Defects, liens, encumbrances, adverse claims, or other matters:
<br />(a) whether or not recorded in the public records at Date of
<br />Policy, but created, suffered, assumed or agreed to by the in-
<br />sured claimant;
<br />(b) not known to the Company, not recorded in the public
<br />records at Date of Policy, but known 'to the insured claimant
<br />and not disclosed in writing to the Company by the insured
<br />claimant prior to the date the insured claimant became an in-
<br />sured under this policy;
<br />(c) resulting in no loss or damage to the insured claimant;
<br />(d) attaching or created subsequent to Date of Policy; or
<br />(e) resulting in loss or damage which would not have been
<br />sustained if the insured claimant had paid value for the insured
<br />mortgage or for the estate or interest insured by this policy.
<br />4. Unenforceability of the lien of the insured mortgage because of
<br />the inability or failure of the insured at Date of Policy, or the
<br />inability or failure of any subsequent owner of the indebtedness,
<br />to comply with the applicable doing business laws of the state
<br />in which the land is situated.
<br />Invalidity or unenforceability of the lien of the insured
<br />mortgage, or claim thereof, which arises out of the transaction
<br />evidenced by the insured mortgage and is based upon usury or
<br />any consumer credit protection or truth in lending law.
<br />CONDITIONS AND STIPULATIONS
<br />The following terms when used in this policy mean:
<br />(a) "insured": the insured named in Schedule A, and, subjectto any
<br />rights or defenses the Company would have had against the named
<br />insured, those who succeed to the interest of the named insured by
<br />operation of law as distinguished from purchase including, but not
<br />limited to, heirs, distributees, devisees, survivors, personal represen-
<br />tatives, next of kin, or corporate orfiduciary successors. The term "in-
<br />sured" also includes
<br />(i) the owner of the indebtedness secured by the insured
<br />mortgage and each successor in ownership of the indebtedness ex-
<br />cept a successor who is an obligor under the provisions of Section
<br />12(c) of these Conditions and Stipulations (reserving, however, all
<br />rights and defenses as to any successor that the Company would have
<br />had against any predecessor insured, unless the successor acquired
<br />the indebtedness as a purchaser for value without knowledge of the
<br />asserted defect, lien, encumbrance, adverse claim or other matter in-
<br />sured against by this policy as affecting title to the estate or interest in
<br />the land);
<br />(ii) any governmental agency or governmental instrumental-
<br />ity which is an insurer or guarantor under an insurance contract or
<br />guaranty insuring or guaranteeing the indebtedness secured by the in-
<br />sured mortgage, or any part thereof, whether named as an insured
<br />herein or not;
<br />(iii) the parties designated in Section 2(a) of these Conditions
<br />and Stipulations.
<br />(b) "insured claimant": an insured claiming loss or damage.
<br />(c) "insured lender": the owner of an insured mortgage.
<br />(d) "insured mortgage": a mortgage shown in Schedule B, the
<br />owner of which is named as an insured in Schedule A.
<br />(e) "knowledge" or "known": actual knowledge, not constructive
<br />knowledge or notice which may be imputed to an insured by reason
<br />of the public records as defined in this policy or any other records
<br />which impart constructive notice of matters affecting the land.
<br />(f) "land": the land described, or referred to in Schedule A, and im-
<br />provements affixed thereto which by law constitute real property. The
<br />term "land" does not include any property beyond the lines of the
<br />area described or referred to in Schedule A, nor any right, title, in-
<br />terest, estate or easement in abutting streets, roads, avenues, alleys,
<br />lanes, ways or waterways, but nothing herein shall modify or limit the
<br />extent to which a right of access to and from the land is insured by this
<br />policy.
<br />(g) "mortgage": mortgage, deed of trust, trust deed, or other secu-
<br />rity instrument.
<br />(h) "public records": records establishe( tate statutes at Date
<br />of Policy for the purpose of nmparting con: notice of matters re -
<br />to real property to purchasers for val ithout knowledge.
<br />(i) "unmarketability of the title": an alleged or apparent matter af-
<br />fecting the title to the land, not excluded or excepted from coverage,
<br />which would entitle a purchaser of the estate or interest described in
<br />Schedule A or the insured mortgage to be released from the obligation
<br />to purchase by virtue of a contractual condition requiring the delivery
<br />of marketable title.
<br />2. Continuation of Insurance
<br />(a) After Acquisition of Title by Insured Lender. If this policy in-
<br />sures the owner of the indebtedness secured by the insured mortgage,
<br />the coverage of this policy shall continue in force as of Date of Policy
<br />in favor of (i) such insured lender who acquires all or any part of the
<br />estate or interest in the land by foreclosure, trustee's sale, conveyance
<br />in lieu of foreclosure, or other legal manner which discharges the lien
<br />of the insured mortgage; (ii) a transferee of the estate or interest so
<br />acquired from an insured corporation, provided the transferee is the
<br />parent or wholly -owned subsidiary of the insured corporation, and
<br />their corporate successors by operation of law and not by purchase,
<br />subject to any rights or defenses the Company may have against any
<br />predecessor insureds; and (iii) any governmental agency or gov-
<br />ernmental instrumentality which acquires all or any part of the estate
<br />or interest pursuant to a contract of insurance or guaranty insuring or
<br />guaranteeing the indebtedness secured by the insured mortgage.
<br />(b) After Conveyance of Title by an Insured. The coverage of
<br />this policy shall continue in force as of Date of Policy in favor of an
<br />insured only so long as the insured retains an estate or interest in the
<br />land, or holds an indebtedness secured by a purchase money
<br />mortgage given by a purchaser from the insured, or only so long as
<br />the insured shall have liability by reason of covenants of warranty
<br />made by the insured in any transfer or conveyance of the estate or in-
<br />terest. This policy shall not continue in force in favor of any purchaser
<br />from an insured of either (i) an estate or interest in the land, or (ii) an
<br />indebtedness secured by a purchase money mortgage given to an
<br />insured.
<br />(c) Amount of Insurance: The amount of insurance after the acquisi-
<br />tion or after the conveyance by an insured lender shall in neither
<br />event exceed the least of:
<br />(i) the amount of insurance stated in Schedule A;
<br />(ii) the amount of the principal of the indebtedness secured
<br />by the insured mortgage as of Date of Policy, interest thereon, ex-
<br />penses of foreclosure, amounts advanced pursuant to the insured
<br />mortgage to assure compliance with laws or to protect the lien of the
<br />insured mortgage prior to the time of acquisition of the estate or in-
<br />terest in the land and secured thereby and reasonable amounts ex-
<br />pended to prevent deterioration of improvements, but reduced by the
<br />amount of al I payments made; or
<br />(iii) the amount paid by any governmental agency or gov-
<br />ernmental instrument- "' "ie agency or instrumentality is the in-
<br />sured claimant, in the ion of the estate or interest in satisfac-
<br />tion of its insurance cc • guaranty.
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