Which policy type is specifically designed for construction loans?

Which policy type is specifically designed for construction loans?

• A. ALTA Lender Policy
• B. ALTA Owner Policy
• C. ALTA Construction Loan Policy
• D. ALTA Mortgage Policy

Answer: (C)

Construction projects bring title risks that are unique while funds are being disbursed and work is in progress. The ALTA Construction Loan Policy is crafted specifically to address those risks for lenders financing construction, such as protection against mechanics’ liens and other encumbrances that could affect the lender’s security during the build. It helps ensure the lender’s lien priority remains intact if title issues arise while construction is underway, which a standard lender policy may not fully cover. The ALTA Lender Policy covers general lender risks on a closed loan, the ALTA Owner Policy protects the owner’s title after purchase, and the ALTA Mortgage Policy is not the standard form used for construction loans. So the policy designed for construction loans is the Construction Loan Policy.

Construction projects bring title risks that are unique while funds are being disbursed and work is in progress. The ALTA Construction Loan Policy is crafted specifically to address those risks for lenders financing construction, such as protection against mechanics’ liens and other encumbrances that could affect the lender’s security during the build. It helps ensure the lender’s lien priority remains intact if title issues arise while construction is underway, which a standard lender policy may not fully cover. The ALTA Lender Policy covers general lender risks on a closed loan, the ALTA Owner Policy protects the owner’s title after purchase, and the ALTA Mortgage Policy is not the standard form used for construction loans. So the policy designed for construction loans is the Construction Loan Policy.