The following questions are based on the attached American Land Title Association (A.L.T.A.) Extended Coverage Commitment to Insure. This form has completed for this problem and is used with permission. Title forms vary by jurisdiction and by type of transaction and interest to be insured. This form has been modified to present a 'general' introductory form to illustrate a number of basic concept and terms associated with title insurance. Review the document and consider how you would answer each of the questions; first, from the point of view of the attorney for the proposed insured and second, from the point of view of the attorney for the insurance company. 1. You are the attorney for John and Sandra Olson. Two weeks before the scheduled closing, you received this Commitment. When did the Commitment become effective and how long will it last? Did the Olsons pay anything for the Commitment? If not, does the insurance company have the right to revoke the Commitment? 2. According to the Commitment, who presently owns the property? Does this prove that Tanya Orlando does not presently own the entire fee simple? What risk does this information pose concerning the Residential Contract for Sale entered into between Orlando and the Olsons? As attorney for the Olsons, how do you respond to the new information concerning ownership? 3. Suppose that in October Tanya Orlando had the house painted and she failed to pay the contractor. On December 10, the insurance company finds that the contractor filed a mechanic's lien against the Property on November 26, four days before issuance of the Commitment. May the company revise the Commitment to add this lien as an exception listed in Schedule B, or is the company obligated to cover and insure this item? 4. Suppose that on December 9, Tanya's brother Royston records a quit-claim deed, signed and delivered by Tanya two years ago, that conveys him an undivided in all oil, gas, and other minerals in and under the Property. At the closing, the representative of the title company announces that a new search has disclosed the quit-claim deed, and this deed will be made an exception to the Owner's Policy of Title Insurance unless Royston can be persuaded to re-convey to Tanya. The Olsons complain that because the title company didn't list the quit-claim deed on the Commitment, they cannot now add this as a new exception. Who is right and why? 5. As the Olsons' attorney, you should carefully read all the proposed general exceptions set forth in Schedule B, Section II of the Commitment. Are these acceptable to you? If any are not, how would you convince the title insurance company to eliminate or modify these exceptions from coverage? Carefully study the proposed special exceptions set forth in Schedule B, Section II, of the Commitment. As attorney for the Olsons, do you need to personally review any of the documents listed there as special exceptions? Do any of these items relate to the preparation of a good survey? 7. Look at the description of the land in Schedule A of the Commitment. Is this a metes and bounds description, a reference to a subdivision plat, or a reference using the government survey system? How does it compare to the land description used by the parties in their contract of sale? As attorney for the Olsons, does the Commitment's land description suggest any further action you should presently take? 8. Suppose the insurance company negligently failed to include a recorded drainage easement as a proposed special exception in Schedule B. This easement reduces the market value of the property by $50,000 due to the location of the easement crossing much of the side yard and back yard, coupled with drainage problems--persistent standing water after heavy rains--that the easement holder has so far refused to correct. What liability if any does the insurance company have for negligence? What liability under the terms of the Commitment? May the Olsons rescind their contract with Orlando on the basis that the easement renders title unmarketable? If the Olsons do rescind their contract with Orlando, are they still able to pursue a claim in tort or contract against the insurance company?

AGREEMENT TO ISSUE POLICY We agree to issue a policy to you according to the terms of the Commitment. When we show the policy amount and your name as the proposed insured in Schedule A, this Commitment becomes effective as of the Commitment Date shown in Schedule A. If the Requirements shown in this Commitment have not been met within three (3) months after the Commitment Date, our obligation under this Commitment will end. Also, our obligation under this Commitment will end when the Policy is issued and then our obligation to you will be under the Policy. Our obligation under this Commitment is limited by the following: The Provisions in Schedule A. The Requirements in Schedule B-I. The Exceptions in Schedule B-II. The Conditions on Page 4. This Commitment is not valid without SCHEDULE A and Sections I and II of SCHEDULE B. (The countersignature clause is optional.) SCHEDULE A 1. Commitment Date: November 30, 2007 2. Policy (or Policies) to be issued: Homeowner's Policy of Title Insurance for a One to four Family Residence (revised 10/22/03) (a) Proposed Insured: John Olson and Sandra Olson, husband and wife (b) Policy Amount: $280,000 3. The fee simple interest in the land described in this Commitment is owned, at the Commitment Date, by Henry and Tanya Orlando, husband and wife. 4. The land referred to in the Commitment is described as follows: Lot 12 of the Blue Heron subdivision as shown in subdivision plat by that name of record in Book 2376 Page 12574 of the public records of Coast County, LordaSCHEDULE B - SECTION I REQUIREMENTS The following requirements must be met: (a) Pay the agreed amounts for the interest in the land and/or the mortgage to be insured. (b) Pay us the premiums, fees and charges for the policy. (c) Execute documents satisfactory to us creating the interest in the land and/or the mortgage to be insured. These must be signed, delivered and recorded. These documents shall include but not be limited to: deed, mortgage, note, affidavits, mortgage satisfaction as to sellers mortgage, and any and all other documents that we deem appropriate to insure the interest covered by this commitment and the proposed policy. (d) You must tell us in writing the name of anyone not referred to in this Commitment who will get an interest in the land or who will make a loan on the land. We may then make additional requirements or exceptions. SCHEDULE B - SECTION II EXCEPTIONS Any policy we issue will have the following exceptions unless they are taken care of to our satisfaction. 1. Rights or claims of parties in possession not shown by the public records. 2. Encroachments, overlaps, boundary line disputes or other matters which would be disclosed by an accurate survey and inspection of the premises. 3. Easements or claims of easements not shown by the public records. 4. Any lien or right to a lien for services labor or material heretofore or hereafter furnished imposed by law and not shown by the public records. 5. Taxes or special assessments which are not shown as existing liens by the public records. 6. Easement in favor of Coast Power & Light Co. as recorded in Book 227 page 7549 of the public records of Coast County, Lorda. 7. Covenants and Restrictions for Blue Heron subdivision recorded in Book 2376 page 12530 of the public records of Coast County, Lorda.CONDITIONS 1 . DEFINITIONS (a) "Mortgage" means mortgage, deed of trust or other secun'ty instrument. (b) "Public Records" means title records that give constructive notice of matters affecting your title according to the state statutes where your land is located. 2. LATER DEFECTS The EXcePtions in Schedule B Section II may be amended to show any defects, liens or encumbrances that appear for the rst time in the public records or are created or attach between the Commitment Date and the date on which all of the Requirements {a} and {c} of Schedule B - Section I are met. We shall have no liability to you bemuse of this amendinent. 3. EXISTING DEFECTS If any defects, liens or encumbrances existing at Commitment Date are not shown in Schedule B, we may amend Schedule B to show them. If we do amend Schedule B to show these defects, liens or encumbrances. we shall be liable to you according to Paragraph 4 below unless you knew of this information and did not tell us about it in writing. 4. LIMITATION OF OUR UABILI'I'Y Our only obligation is to issue to you the Policy referred to in this Commitment, when you have met its Requirements. If we have any liability to you for any loss you incur because of an e1ror in this Commitment. our liability will be limited to your actual loss caused by you: relying on this Commitment when you acted in good faith to: Comply with the Requirements shown in Schedule B Section I or Eliminate with our written consent any Exceptions shown in Schedule B SEction II. We shall not be liable for more than the Policy Amount shown in Schedule A of this Commitment and our liability is subject to the terms of the Policy form to be issued to you. 5. CLAIMS MUST BE BASED ON THIS COMMITMENT Any claim, whether or not based on negligence. which you may have against us concerning the title to the land must be based on this Commitment and is subject to its tens. LORDA TITLE INSURANCE COWANY By: Harry Potter Piesident AMERICAN LAND TITLE ASSOCIATION Commitment Form - 1982 Form used with permission (www.alta.org) LORDA TITLE INSURANCE COMPANY INFORMATION The Title Insurance Commitment is a legal contract between you and the Company. It is issued to show the basis on which we will issue a Title Insurance Policy to you. The Policy will insure you against certain risks to the land title, subject to the limitations shown in the Policy. The Company will give you a sample of the Policy form, if you ask. The Commitment is based on the land title as of the Commitment Date. Any changes in the land title or the transaction may affect the Commitment and the Policy. The Commitment is subject to its Requirements, Exceptions and Conditions. THIS INFORMATION IS NOT PART OF THE TITLE INSURANCE COMMITMENT. YOU SHOULD READ THE COMMITMENT VERY CAREFULLY. If you have any questions about the Commitment, contact Sara Chen at Lorda Title Insurance Company, 1717 18" Street, Bigtown, Lorda. TABLE OF CONTENTS AGREEMENT TO ISSUE POLICY SCHEDULE A 1. Commitment Date 2. Policies to be Issued, Amounts and Proposed Insureds 3. Interest in the Land and Owner 4. Description of the Land SCHEDULE B-I -- REQUIREMENTS SCHEDULE B-II -- EXCEPTIONS CONDITIONS