THE CLOSING PROTECTION LETTER

A Closing Protection Letter (CPL) is a form of insurance in which ATG allows its member to act as a closing agent for a lender and insures the lender and buyer against any loss caused by the negligence or improper actions of the ATG member closer. ATG only issues CPLs for ATG members when they are also writing the title insurance policy for the transaction. ATG uses the American Land Title Association (ALTA) form CPL. Depending on the area in which you practice, CPLs may also be referred to as "Insured Closing Letters," "Indemnification Agreements," "Insured Closing Service Agreements," or, "Statements of Settlement Service Responsibilities."

The Land Title Institute, Inc., in its Course I, describes the Lender's need for a closing protection letter as follows:

Institutional lenders have influenced the involvement of the title industry in closing services. Many lenders require that their funds be disbursed through the escrow accounts of financially responsible title companies. In cases where the closing is handled by a title insurance agent, or approved attorney, and the funds are disbursed through its escrow accounts, such lenders may require a written statement from the insurer to protect against errors, mistakes, or defalcations by the law firm or agency personnel. These undertakings are commonly called "Closing Protection Letters" or "Insured Closing Letters," and essentially subject the insurer to the same risks that it would have if closing funds had been sent by the lender directly to the insurer and the insurer was responsible for properly conducting the closing.

The member will need a closing protection letter for each lender that requests one. These "general" letters are not transaction-specific, but they are "lender-specific." The member can use them over and over for the same lender. Transaction-specific letters are also available, but the member will have to place a request call for each such transaction.

Please use the enclosed form when requesting a closing protection letter. Please be sure to complete all necessary information so your request can be processed in a timely manner. The CPL will be faxed to the member and the lender.

You can also request a CPL through the ATG website. Go to www.atgf.com and click one of the ATG Member links. Enter your member ID number and password, then click "Submit." (To get your ID number and password, contact us at 217.403.0130, or e-mail [email protected].) Click the CPL link (either in the left column or in the dropdown menu under "Forms" (see instructions on web page) to bring up the on-line form. Fill in the form and click "Submit."

Depending on the number of requests received that day, you should receive your requested CPL 24 hours from the date of your request. If you have any questions, please feel free to contact Linda Robertson (ATG Champaign office) at 217.403.0104.

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