Policy of Title Insurance by Stewart Title Guaranty Company

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conditions and stipulations continued and concluded (b) In the event of any litigation, including litigation by the Company or If loss should result from any act of the insured claimant,as stated above, with the Company's consent, the Company shall have no liability for loss or that act shall not void this policy, but the Company, in that event, shall be damage until there has been o final determination by o court of competent required to pay only that part of any losses insured against by this policy which . 'diction, and disposition of all appeals therefrom, adverse to the title, or, if shall exceed the amount, if any,lost to the Company by reason of the impair- cable,to the lien of the insured mortgage, as insured. ment by the insured claimant of the Company's right of subrogation. (c) The Company shall not be liable for loss or damage to any insured for (b) The Insured's Rights and Limitations. liability.voluntarily assumed by the insured in settling any claim or suit without Notwithstanding the foregoing,the owner of the indebtedness secured by the prior written consent of the Company. j - an insured mortgage, provided the priority of the lien of the insured mortgage (d) The Company shall not be liable to on insured lender for: (i) any or its enforceability is not affected, may release or substitute the personal lio- indebtedness created subsequent to Date of Policy except for advances made to bility of any debtor or guarantor, or extend or otherwise modify the terms of protect the lien of the insured mortgage and secured thereby and reasonable payment, or release a portion of the estate or interest from the lien of the amounts expended to prevent deterioration of improvements;or(ii)construction insured mortgage, or release any collateral security for the indebtedness. loan advances mode subsequent to Dote of Policy, except construction loan When the permitted acts of the insured claimant occur and the insured has advances made subsequent to Dote of Policy for the purpose of financing in knowledge of any claim of title or interest adverse to the title to the estate or whole or in part the construction of an improvement to the land which at Dote of interest or the priority or enforceability of the lien of an insured mortgage, as Policy were secured by the insured mortgage and which the insured was and insured, the Company shall be required to pay only that port of any losses continued to be obligated to advance at and after Date of Policy. insured against by this policy which shall exceed the amount, if any, lost to the 9• REDUCTION OF INSURANCE; REDUCTION OR TERMINATION OF Company by reason of the impairment by the insured claimant of the Company's LIABILITY. right of subrogation. (o) All payments under this policy, except payments made for costs,attar (c) The Company's Rights Against Non-insured Obligors. neys' fees and expenses,shall reduce the amount of insurance pro tanto. How- The Company s right of subrogation against non-insured obligors shall exist ever, as to an insured lender, any payments made prior to the acquisition of and shall include, without limitation, the rights of the insured to indemnities, title to the estate or interest as provided in Section 2(a)of these Conditions and guaranties, other policies of insurance or bonds, notwithstanding any terms or Stipulations shall not reduce pro tanto the amount of insurance afforded under conditions contained in those instruments which provide for subrogation rights by this policy as to any such insured,except to the extent that the payments reduce reason of this policy. the amount of the indebtedness secured by the insured mortgage. The Company's right Of subrogation shall not be avoided by acquisition of (b) Payment in port by any person of the principal of the indebtedness,or an insured mortgage by an obligor (except an obligor described in Section any other obligation secured by the insured mortgage,or any voluntary partial 1(a)(ii)of these Conditions and Stipulations)who acquires the insured mortgage satisfaction or release of the insured mortgage, to the extent of the payment, as a result of On indemnity, guarantee, other policy of insurance,or bond and satisfaction or release, shall reduce the amount of insurance pro tanto. The the obligor will not be on insured under this policy, notwithstanding Section amount of insurance may thereafter be increased by accruing interest and 1(a)(i)of these Conditions and Stipulations. advances made to protect the lien of the insured mortgage and secured there- 13. ARBITRATION. by, with interest thereon, provided in no event shall the amount of insurance Unless prohibited by applicable law, either the Company or the insured be greater than the Amount of Insurance stated in Schedule A. may demand arbitration pursuant to the Title Insurance Arbitration Rules of the (c) Payment in full by any person or the voluntary satisfaction or release of American Arbitration Association. Arbitrable matters may include, but are not the insured mortgage shall terminate all liability of the Company to an insured . limited to,any controversy or claim between the Company and the insured aris- lender except as provided in Section 2(a)of these Conditions and Stipulations. ing out of or relating to this policy, any service of the Company in connection LIABILITY NONCUMULATIVE. with its issuance or the breach of o policy provision or other obligation. All is expressly understood that the amount of insurance under this policy j arbitrable matters when the Amount of Insurance is 51,000,000 or less shall be shun be reduced by any amount the Company may pay under any policy insur- arbitrated at the option of either the Company or the insured. All arbitrable ing a mortgage to which exception is taken in Schedule B or to which the insured matters when the Amount of Insurance is in excess of $1,000,000 shell be arbi- has agreed, assumed, or taken subject, or which is hereafter executed by an trated only when agreed to by both the Company and the insured. Arbitration insured and which is a charge or lien on the estate or interest described or pursuant to this policy and under the Rules in effect on the date the demand for referred to in Schedule A,and the amount so paid shall be deemed o payment arbitration is made or,at the option of the insured,the Rules in effect at Date of under this policy to the insured owner. Policy shall be binding upon the parties. The award may include attorneys'fees The provisions of this Section shall not apply to an insured lender,3mless only if the laws of the state in which the land is located permit a court to award such insured acquires title to said estate or interest in satisfaction of the attorneys' fees to o prevailing party. Judgment upon the award rendered by indebtedness secured by an insured mortgage. the Arbitrator(s) may be entered in any court having jurisdiction thereof. 11. PAYMENT OF LOSS. The low of the situs of the land shall apply to an arbitration under the Title (a) No payment shall be made without producing this policy for endorse- Insurance Arbitration Rules. ment of the payment unless the policy has been lost or destroyed,in which case A copy of the Rules may be obtained from the Company upon request. proof of loss or destruction shall be furnished to the satisfaction of the 14. UABIUTY LIMITED TO THIS POLICY; POUCY ENTIRE CONTRACT. Company. (a) This policy together with all endorsements, if any,attached hereto by (b) When liability and the extent of loss or damage has been definitely the Company is the entire policy and contract between the insured and the fixed in accordance with these Conditions and Stipulations,the loss or damage Company. In interpreting any provision of this policy, this policy shall be shall be payable within 30 days thereafter. construed as a whole. 12. SUBROGATION UPON PAYMENT OR SETTLEMENT. (b) Any claim of loss or damage,whether or not based on negligence,and (a) The Company's Right of Subrogation which arises out of the status of the lien of the insured mortgage or of the title Whenever the Company shall hove settled and paid o claim under this to the estate or interest covered hereby or by any action asserting such claim, policy,all right of subrogation shall vest in the Company unaffected by any act shall be restricted to this policy. of the insured claimant. (c) No amendment of or endorsement to this policy can be made except by a writing endorsed hereon or attached hereto signed by either the President,a The Company shall be subrogated to and be entitled to all rights and Vice President, the Secretory, an Assistant Secretary, or validating officer or remedies which the insured claimant would have had against any person or property in respect to the claim hod this policy not been issued.If requested by authorized signatory of the Company. the Company,the insured claimant shall transfer to the Company all rights and 15. InS event any. remedies against any person or property necessary in order to perfect this right r the ble provision ofsthe be deemedlicy is h not invalid or unenforceableo of subrogation. The insured claimant shall permit the Company to sue, cam- under applicable low,the polity shall to include that provision promise or settle in the name of the insured claimant and to use the name of the and all other provisions shall remain in full force and effect. 16. NOTICES,WHERE SENT. insured claimant in any transaction or litigation involving these rights or remedies, • All notices required to be given the Company and any statement in writing • required to be furnished the Company shall include the number of this policy if a payment on account of a claim does not fully cover the loss of the i I claimant,the Company shall be subrogated ti)as to on insured owner, and shall be addressed to the Company at P.O. Box 2029, Houston, Texas to . 77252-2029, and identify this policy by its printed policy serial number which..rights and remedies in the proportion which the Company's payment bears appears on the bottom of the front of the first page of this polity.to the whole amount of the loss; and (ii) as to do insured lender, to all rights - and remedies of the insured claimant after the insured claimant shall have re- .. covered its principal, interest, and costs of collection. :pf