A Closing Protection Letter, commonly called a CPL, is used when a title company, acting as an agent for an insurer/underwriter, provides closing services in addition to being responsible for issuing the Commitment and Policy on behalf of the insurer/underwriter. Here are additional specifics:
- The CPL is additional protection provided by the insurer/underwriter to the Insured Party against actual loss incurred within a specific transaction due to certain types of misconduct by the title company. The CPL explains qualifying losses as well as terms, conditions for coverage and exclusions from coverage.
- CPLs are offered by the insurer/underwriter as a way to address potential concerns over fraud or dishonesty by the title company related to the handling of funds and documents in the closing transaction.
- The standard ALTA (American Land Title Association) CPL indemnifies the Insured Party against actual loss solely caused by certain actions or inactions of the title company related to matters such as: the validity, enforceability or priority of a Deed of Trust; certain types of fraud by the title company; theft or negligence in handling of funds; or documents by the title company in connection with the closing.
- A buyer, borrower, lender and seller are able to obtain a CPL specific to the transaction they are closing with a title company, and they may contact their closing team to request a CPL.
- Some underwriters will charge a fee to produce a CPL, typically $25. Land Title’s primary underwriters, LTIC and Old Republic, currently do not charge a fee to issue a CPL.