A CPL, or Closing Protection Letter, also called an insured closing letter in some parts of the country, is a contract between a title insurance underwriter and the parties to the transaction. In this agreement, the underwriter agrees to indemnify the parties for actual losses caused by misconduct on the part of the closing/settlement agent. Essentially, the insurance company is agreeing to hold the ultimate risk and insure the closing, including that the funds are handled correctly. If the title agent used for the closing is guilty of fraud or dishonestly handles the money or documents, the insurance underwriter will stand by this agreement to reimburse as necessary.
Each state allows different language and each underwriter’s terms will vary slightly but on a typical CPL, the underwriter agrees to reimburse the insured party when…
- The closing agent fails to follow the written closing instructions provided by the parties.
- The closing agent fails to disburse the transaction funds in accordance with the parties’ written.
CPL’s do add an additional cost – here are some things to remember:
- The charge for the CPL is determined by the underwriter or by state statutes. Typically the don’t cost more than $100 and the cost is passed onto the borrower.
- CPLs are transaction-specific.
- There is no additional charge for amending/updating a CPL.
- If the transaction is cancelled, there is no charge for the CPL.
We hope this short FAQ on CPLs makes your life e-a-s-y!
Title Term of the Week: Fee Simple
| A person named in a will to administer an estate. The court will appoint an administrator if no executor is named. “Executrix” is the feminine form. An estate under which the owner is entitled to unrestricted powers to dispose of the property, and which can be left by will or inherited. Commonly, a synonym for ownership. |
Faster Closings with Faster Turntimes
At Advocus Title, we know that you want to provide your borrower with the fastest closing experience in the market. That’s why we are committed to continuously reducing our turntimes to provide you with lightning fast speed to close. To provide transparency and allow you to best manage your closing process, we publish our state-by-state turntimes to an initial title commitment on the GR intranet. Check out the latest to see how Advocus Title can help improve your speed to close.
