N.M. Admin. Code § 13.14.7.16 - POLICY INSURING A CONSTRUCTION LOAN - PENDING DISBURSEMENT CLAUSE
A. When a title
insurer or agency issues a loan policy insuring a construction loan mortgage,
the title insurer may require a specific pending disbursement clause. Such
clause may be in the form directed by the title insurer, or it may be in the
following form: "Pending disbursement of the full proceeds of the loan secured
by the mortgage or deed of trust set forth under schedule A hereof, this policy
insures only to the extent of the amount actually disbursed but increases as
each disbursement is made, in good faith, and without knowledge of any defect
in, or objections to, the title, up to the face amount of the policy." Prior to
each disbursement of the loan proceeds, the title shall be down dated for
possible liens or objections intervening between the date hereof and the date
of such disbursement.
B. At the
time of each disbursement, NM form 22 may be issued showing any changes in
title to the insured property and stating the total amount of the proceeds of
the construction loan advanced by the lender at the date the endorsement is
issued.
Notes
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