New CPL Procedures for Indiana July 1, 2013

EDITOR'S NOTE: CPL Rates Updated 6-26-13 (see below)

As of July 1, 2013, title insurers in Indiana will be required to issue Closing Protection Letters (CPLs) not just to lenders, but also to buyers, sellers, and owners in a refinance, on all residential transactions. A CPL is a form of insurance issued by title insurance companies, insuring the actions of a particular attorney, agent, and/or closer in conducting a closing. This insurance has been offered primarily to lenders in the past. The CPL coverage is separate from the coverage of the title insurance policy.

ATG REsource Instructions (7-10-2013)  |  CPL FAQs  |  IDOI Bulletin 199

New Indiana SEA 370, which adds a new section to The Indiana Abstract and Title Insurance Law, requires that, starting July 1, 2013, CPLs be issued not just to lenders, but also to buyers, sellers, and owners in a refinance, on all residential transactions. IC 27-7-3-22. CPLs must be issued when either the title insurance agent or the title underwriter conducts the closing. Thus, whenever there is an ATG title insurance commitment on a transaction and an ATG agent, or an ATG independent closer conducts the closing, ATG must issue CPLs to all parties to the transaction. Both the commitment and the closing must be ATG's for ATG to issue CPLs.

The intent of this Act is to make sure all parties to closings have a remedy against a financially-solvent entity for loss of the closing funds or documents, as specified in the CPL. It covers ATG agents' actions as well as those of your staff, and covers not just fraud but also negligence, should your office unwittingly get caught up in others' fraud. Because the coverage is for the title insurance agents' actions, the Act prohibits the conflict of interest that would result from the agent issuing the CPL, or receiving a premium for it.

UPDATE! As of June 26, 2013, we have changed our Indiana CPL rates, as follows:

As directed by the new statute and because ATG has hired staff, updated software, and taken on new liability on many more closings, we now charge $25 for each CPL issued in the transaction.

Thus on a buy/sell transaction with financing where Owner's and Loan Policies will issue, the seller will pay $25, the lender $25, and the buyer $25. On a refinance, the lender pays $25 and the borrower pays $25. The Act requires agents to collect and remit the premium to the underwriter promptly.

ATG Closing Protection Letter Charges for Common Scenarios
Applies Only to Indiana CPLs
Transaction Type Seller CPL Buyer CPL Lender CPL Borrower CPL
Buy/Sell $25 $25 $25 NA
Refinance NA NA $25 $25
Cash $25 $25 NA NA

ATG REsource and Paperless Closer allow ATG agents to order CPLs. Because CPLs must be issued to all parties on all closings conducted either by the agent or by ATG, when you find out that you or ATG will be conducting the closing, then you know that CPL charges must be placed on the Invoice for Title Charges. It is important for the CPL charges to appear on the invoice so that the charges will be included in the lender's Good Faith Estimate (GFE). ATG REsource contains a CPL Order screen to allow you to order your CPLs using the data from the ATG REsource file (see ATG REsource Instructions, above). Then, when the CPLs are ready, ATG will attach the CPLs to your ATG REsource file, and you or your closer can find them in the File Attachment Utility. For those not using ATG REsource, use our CPL Request form. 

Someone in your office or the ATG independent closer will print the CPLs for the buyer and seller and deliver them to those parties at closing. If there are multiple sellers or multiple buyers/borrowers, they will all be named on one seller letter and/or on one lender/buyer/borrower letter. You can print extra copies if necessary to make sure all sellers or all buyers/borrowers have their own copies. 

Bifurcated Transactions: If you are involved in a transaction where you are not the only title agent (e.g., one title insurance agent issues the commitment and policy and another title insurance agent conducts the closing), read CPLs and Bifurcated Transactions for an explanation and tips on how to handle the CPLs for a few common scenarios. 

If you have questions on this new procedure, please Contact an Underwriter. Watch your e-mail and for further information. Thank you.

Posted on: Mon, 06/17/2013 - 11:05am