Title insurance endorsements for a Texas solar project: the T-55 series and T-19.4

Under Insurance Code § 2703.001(b), a corporation to which that section applies operates in Texas under the control and supervision of the commissioner and under uniform rules adopted by the commissioner on forms of policies and underwriting contracts, on premiums, and on underwriting standards and practices. A title insurance company or agent may not use a form the title requires to be prescribed or approved until the commissioner has prescribed or approved it (§ 2703.002).

TDI collects the forms and rules in its Title Insurance Basic Manual. Section II lists the insuring forms and endorsements. The procedural rules cited below are in Section IV (P-1, which defines Residential Real Property; P-50.1 and P-50.2; P-72).

Forms T-19.2, T-19.3, T-19.4 and T-55 through T-55.5 are shown as effective November 1, 2024. T-54, the Severable Improvements Endorsement, shows an effective date of January 3, 2014 on the form. Rules P-50.2 and P-72 carry the note “Effective November 1, 2024 (Order 2024-8851).” The premium rules for these endorsements are R-29.1 (T-19.2 and T-19.3), R-29.2 (T-19.4) and R-37 (T-54 and the T-55 series), in Section III. This page does not go into premiums.

• The land is not Residential Real Property. P-1 defines the term as real property with improvements designed primarily for the occupancy of one to four families (existing at the date of policy, or immediately contemplated and included in the amount of insurance) that at the date of policy is a lot or lots in a platted residential subdivision, individual residential condominium or cooperative units, 10 acres or less, or more than 10 and not more than 200 acres when the insured owner or borrower is a natural person. Whether a given tract fits is for the title company.
• Severable improvements that would constitute an electricity facility are affixed to the land, or are to be affixed in the locations according to the plans, as the endorsement uses those terms.
• The estate or interest the policy insures includes the estate the form names, as the table shows.
• The company's underwriting requirements are met.

P-72 also says:

• When one of these endorsements is issued, the policy amount must include the value of the severable improvements.
• Where an electricity facility is completed and existing, the company may delete the definition of Plans and the references to it.
• The company may add any exception it considers appropriate, in its sole discretion, and shall delete an insuring provision, in whole or in part, if it does not consider that risk acceptable.
• Any matter an Energy Project or Severable Improvements endorsement covers may be insured only by that endorsement.

The same rule lists T-54, the Severable Improvements Endorsement. Its text does not mention energy projects. It adds the diminution in value of a severable improvement, and the cost of removing or relocating it, to the calculation of a loss by reason of a defect, lien, encumbrance or other matter the policy covers.

Four definitions

• Eviction. The lawful deprivation, in whole or in part, of the right of possession or use the policy insures, contrary to the terms of a lease or easement; or the lawful prevention of the use of the land, an electricity facility or a severable improvement for the purposes the lease or easement permits. Either way, it has to result from a matter the policy covers (§ 2(f)).
• Electricity facility. An electricity generating facility that may include, among other things, a substation, a collector line, an inverter, a transformer, an array, a solar panel or module, a road, and other structures and equipment associated with generating, storing, transmitting or conveying electricity. It is on the land at the date of policy or is to be built in the locations shown on the plans, and only what by law constitutes real property counts (§ 2(e)).
• Severable improvement. Property affixed to the land, or to be affixed in the locations on the plans, that would be an electricity facility except that it is personal property. By law it is not real property because of its character and manner of attachment, and because it can be severed without material damage to it or to the land (§ 2(l)).
• Constituent parcel. One of the parcels described in Schedule A that together make up one integrated project (§ 2(a)).

The fee estate forms, T-55.4 and T-55.5, use “Ejection” instead: the lawful divestment, in whole or in part, of the title to the land, or the lawful prevention of the use of the land, an electricity facility or a severable improvement, as a result of a covered matter. They insure only the parcels of the land as to which the title is fee simple (§ 1).

The section 5 items apply “if applicable to that portion of the Land” the insured was evicted from. They are included without duplication and not to the extent already counted in sections 3 and 4 or in the policy's Conditions. Section 5 also lists items about subleases and easements the insured granted; they are not repeated here.

The loan versions (T-55.1, T-55.3 and T-55.5) follow the same outline. In them, the section 5 items apply if the insured acquires all or part of the title under Section 2 of the policy's Conditions and is then evicted or ejected.

None of the T-55 forms mentions minerals. The manual handles a mineral owner's use of the surface with separate endorsements. The Insurance Code says a title insurance company is not required to offer or provide an endorsement insuring loss from damage resulting from use of the surface for the extraction or development of coal, lignite, oil, gas or another mineral if the policy includes a general exception or exclusion for that loss (§ 2703.0515(a)).

Where a policy has a minerals exception or exclusion, the manual lets a company issue one of three endorsements on request. Rule P-50.1 covers T-19.2 and T-19.3, and the company may issue them if the request meets its underwriting standards. Rule P-50.2 covers T-19.4.

All three exclude loss from contamination, explosion, fire, fracturing, vibration, earthquake, flood or subsidence, and from negligence by the person exercising the mineral right. T-19.4 adds a third exclusion, paragraph c, for the exercise of the rights it describes. The form is completed with “None” or with the excepted interest that is intended to be excluded from coverage (P-50.2).

The insuring clause of T-19.4 names severable improvements only. P-50.2 also says coverage regarding minerals may be insured by the T-19, T-19.1, T-19.2 or T-19.3 endorsements. P-50.1 names real property of one acre or less for one-to-four family residential use and real property improved or intended to be improved for office, industrial, retail, mixed-use retail/residential or multifamily purposes, does not name solar or energy use, and has a third paragraph for “other real property.” The rules do not say which endorsement a company will issue on a given solar tract.

• It does not clear the record. Coverage under the T-55 is subject to the Exceptions from Coverage in Schedule B.
• It does not insure who owns a severable improvement. Section 4(b) excludes ownership, security interests, liens and the real-versus-personal question for severable improvements.
• It does not cover environmental damage or contamination. See section 6 of the form.
• It does not oblige a company to issue anything. P-72 says a company “may” issue these endorsements, may add any exception it considers appropriate in its sole discretion, and shall delete an insuring provision it does not consider an acceptable risk. The Insurance Code also says a company is not required to offer a minerals surface-damage endorsement where the policy has a general exception or exclusion for that loss.