An Example of the Commercial Participation Interest Endorsement img

An Example of the Commercial Participation Interest Endorsement

calender icon 11/16/2022    poster icon  Mark Goodman

Below is an example of the ALTA Commercial Participation Interest Endorsement that may be used in commercial title insurance. 


  1. This endorsement is subject to the exclusions in Section 4 of this endorsement, the Exclusions from Coverage in the policy, the Exceptions from Coverage contained in Schedule B, and the Conditions.

  2. As used in this endorsement,

    • “Loan Documents” means those documents, as they exist at Date of Policy, creating the Indebtedness.

    • “Participation Interest” means those elements of interest, established and calculated pursuant to the formula provided in the Loan Documents, that are payable or allocated to the Insured based upon:

  3. the borrower’s equity in the Title;

  4. the increase in value of the Title; or

  5. cash flow.

  6. The policy insures as of Date of Policy against loss or damage sustained by the Insured by reason of:

    • The invalidity or unenforceability of the lien of the Insured Mortgage resulting from the provisions in the Insured Mortgage or in the Loan Documents which provide for Participation Interest.

    • Lack of priority of the lien of the Insured Mortgage at Date of Policy as security for (i) the unpaid principal balance of the loan and (ii) the interest on the loan, including the Participation Interest, if any, which lack of priority is caused by the provisions in the Loan Documents for payment or allocation to the Insured of any Participation Interest.

  7. The policy does not insure against loss or damage, and the Company will not pay costs, attorneys’ fees, or expenses that arise by reason of:

    • usury; unconscionability; or any consumer credit protection or truth-in-lending law;

    • disputes over the amount of Participation Interest;

    • failure to comply with applicable laws and regulations regarding Participation Interest;

    • the invalidity, unenforceability or lack of priority of the lien of the Insured Mortgage as security for the Participation Interest because all applicable mortgage recording or similar intangible taxes were not paid; or

    • any statutory lien for services provided, labor performed, or materials or equipment furnished arising after Date of Policy.

This endorsement is issued as part of the policy. Except as it expressly states, it does not (i) modify any of the terms and provisions of the policy, (ii) modify any prior endorsements, (iii) extend the Date of Policy, or (iv) increase the Amount of Insurance. To the extent a provision of the policy or a previous endorsement is inconsistent with an express provision of this endorsement, this endorsement controls. Otherwise, this endorsement is subject to all of the terms and provisions of the policy and of any prior endorsements.