16.93 - CLOSING PROTECTION LETTERS.
16.93 CLOSING PROTECTION LETTERS.
1. The authority through the title guaranty division may issue a
closing protection letter to a person to whom a proposed title
guaranty is to be issued, upon the request of the person, if the
division issues a commitment for title guaranty or title guaranty
certificate. The closing protection letter shall conform to the
terms of coverage and form of the instrument as approved by the
division board and may indemnify a person to whom a proposed title
guaranty is to be issued against loss of settlement funds due to only
the following acts of the division's named participating attorney,
participating abstractor, or closer:
a. Theft of settlement funds.
b. Failure by the participating attorney, participating
abstractor, or closer to comply with written closing instructions of
the person to whom a proposed title guaranty is to be issued relating
to title certificate coverage when agreed to by the participating
attorney, participating abstractor, or closer.
2. A closing protection letter shall only be issued to a person
to whom a proposed title guaranty is to be issued for real property
transactions in which the division has committed to issue an owner or
lender certificate and for which the division receives a premium and
other payments or fees for a title guaranty certificate or other
coverage.
3. The division board shall establish the amount of coverage to
be provided and may distinguish between classes of property
including, but not limited to, residential, agricultural, or
commercial, provided that the total amount of coverage provided by
the closing protection letter shall not exceed the amount of the
commitment or title guaranty to be issued. Liability under the
closing protection letter shall be coextensive with liability under
the certificate to be issued in connection with a transaction such
that payments under the terms of the closing protection letter shall
reduce by the same amount the liability under the title guaranty
certificate and payment under the title guaranty certificate shall
reduce the liability under the terms of the closing protection
letter.
4. The division may adopt a required fee for providing closing
protection letter coverage.
5. The division shall not provide any other coverage which
purports to indemnify against improper acts or omissions of a person
with regard to escrow, settlement, or closing services.
6. The authority shall adopt rules pursuant to chapter 17A as
necessary to administer this section. Section History: Recent Form
2000 Acts, ch 1166, §6; 2008 Acts, ch 1055, §1, 2