Generally, a standard real estate option endorsement does not insure against loss or damage caused by:
1. Disaffirmance of the real estate option, under the provisions of the U.S. Bankruptcy Code. The interest of a real estate optionee is subject to being rejected as an executory contract under the U.S. Bankruptcy Code in the event the optionor files a bankruptcy petition.
2. The effect of any condemnation proceeding, including the failure of the optionee to receive all or part of an award entered in a condemnation proceeding, unless failure to share in the award stems solely from a court order or judgment, constituting a final determination that the option is invalid.
3. Any lien or right to a lien for services, labor, or material imposed by law.
4. Expenses required to enforce a real estate option and to obtain a transfer of title from the optionor and any other party holding title to any interest in the property at the time the option is exercised.
5. Expense of obtaining valid conveyances or release of any rights, interests, or liens related to the property that appear in the public records or are known to the insured at the time of exercising the real estate option.
Was this article helpful?