When title insurance is purchased, Ohio law requires the title agent to offer to issue a closing protection letter (CPL) to the Buyer, the Seller, and/or the Lender. These letters offer powerful legal protection to these entities shielding them from losses caused by fraud or honest mistakes. Applicable State regulated fees will apply for the purchase of Closing Protection for Buyer, Seller and/or Lender..
A Brief Introduction to Closing Protection Letters
What Is a CPL?
If purchased by and for the home buyer, CPLs indemnify home buyers against financial losses caused by a title agency’s fraud or failure to distribute funds properly. They also protect buyers if the agent fails to fulfill the instructions contained in the contract. Without this protection, individuals may be exposed to considerable risk, even if they’ve done everything right. The same holds true for the disbursement of funds relative to the Seller or to the Lender if purchased by or for one of them.
How Do CPLs Differ From Title Insurance?
When title insurance is purchased, if an issue on the title arises after closing, title insurance will, in most cases correct, the defect at no additional cost to the homeowner. CPLs, however, shield homebuyers from the actions of individual agents, who may be responsible for incorrectly or fraudulently disbursing funds held in escrow.
If the title insurance agency fails to fulfill their responsibilities, or the agent steals the escrow funds, CPLs ensure that the purchasing entity won’t be held legally or financially responsible. While title agents are typically trustworthy, these letters provide an additional layer of protection for individual buyers, sellers and/or financial institutions, who may have hundreds of thousands of dollars on the line.
Are CPLs Required?
In Ohio, all title agencies are required to offer to issue a CPL before closing when it is indicated that a title insurance product is being purchased. This ensures that the purchasing entity has this protection before closing and disbursement of funds occurs. Many lenders require borrowers to purchase Closing Protection on behalf of the Lender before disbursement of mortgage funds.
Since 1986, lenders throughout Ohio and Northern Kentucky have relied on All Points Title & Closing, one of the region’s most established and trustworthy title agencies. Their title professionals have an in-depth understanding of the process and the expertise to ensure every transaction goes as smoothly as possible. To speak with an agent today, visit their website or call (513) 863-7600.