- August 07, 2012
- All Georgia Issuing Offices
- S.B. 331; Closing Protection Letters
On May 2, 2012, the Governor signed into law S.B. 331, which amends Title 33 of the Official Code of Georgia Annotated (Georgia Code Sections 33-3-4 and 33-7-8.1), related to insurance, so as to provide for closing protection letters (CPL). Title insurers may provide closing indemnity to buyers, sellers and lenders. A title insurer may issue closing protection letters only for real estate transactions where its title insurance policies are issued and where its issuing agent or agency is also responsible for the disbursement of settlement funds. Further, the new law indicates that charges for such closing protection letters are to be filed and approved with the insurance Commissioner, and shall not be subject to any agreement requiring a division of the premium collected on behalf of the title insurer, and that Companies issuing closing protection letters must maintain adequate reserves for the letters. Lenders, buyers and sellers may now purchase a CPL where Stewart’s title insurance policies are to be issued and where a Stewart issuing agent or agency is also responsible for the disbursement of settlement funds.
Commencing with transactions that close on September 1, 2012, there will be three forms of closing protection letters approved by the insurance Commissioner. The approved CPL's are designed to be issued for specific real estate transactions. Each party to a transaction requesting such CPL coverage will require a separate letter to be issued to each party requesting the coverage. A closing protection letter generated by or on behalf of Stewart Title Guaranty Company may only be issued to a party to a real estate transaction in which a title insurance policy is to be issued by or on behalf of Stewart Title Guaranty Company. Closing Protection Letters (Insured Closing Letters) may be issued ONLY by use of the Stewart ICL Website: http://www.stewarticl.com. The approved CPL forms are as follows:
- GA1 – Single Transaction CPL is approved for issuance on single transactions which may be issued to a Lender, Buyer or Lessee upon request.
- GA2 – Multiple Transactions CPL is approved for issuance to a requesting Lender in connection with the closings of multiple transactions and shall be issued by the ICL Administrator upon request.
- GA3 – Seller CPL is only approved for issuance to the Seller or Lessor of an interest in land upon request.
NEW CPL PREMIUM CHARGE AND REPORTING/REMITTANCE
The Georgia Commissioner of Insurance has approved a fee of $40.00 for each CPL issued in a transaction where a title insurance policy is issued by or on behalf of Stewart Title Guaranty Company. This fee is to be charged for and collected on each CPL issued in a transaction to each party receiving the benefit of closing protection coverage, therefore, if a lender, buyer and seller to a transaction each request a CPL, the total fee collected shall be $120.00. Effective September 1, 2012, the entire amount of the CPL fees collected in a transaction must be remitted to Stewart Title Guaranty Company. The new CPL statute does not permit a split of the premiums collected for the closing protection on behalf of Company.
Issuing Agents may remit the entire CPL fee at the same time as policy premium. Please report premium and fees on a monthly basis. CPL fees may be remitted with policy premium as one check along with an itemized breakdown of the premium and CPL fees and/or copies of all policies and CPLs. This will assist our policy department with promptly processing of all premiums. Click here for more detailed guidelines on CPL reporting and remittance. Please contact your Stewart Agency Services Representative if you have any questions on how to remit fees to the Company.
EXCEPTIONS AND EXEMPTIONS
We are required by the new law to charge a fee for each closing protection letter issued to a party in a transaction. There are no fee exemptions or exceptions for letters issued on or after September 1, 2012. However, there is no fee for letters where a transaction does not close or where a letter is issued by mistake.
DISCLOSURE OF AVAILABILITY OF CLOSING PROTECTION LETTER
A “disclosure of availability of closing protection letter” is not required under the new law. The Company does recommend that you handle disclosure in the same way that you handle the disclosure of the availability of title insurance.
MULTIPLE TRANSACTION LETTERS AND MODIFICATIONS TO CPL FORMS
Please contact the Agency Contracts/ICL Administration Department on all requests made to (1) modify the CPL, (2) issue the multiple transactions CPL (GA2) (3) issue a CPL to another party that is not the lender, buyer/lessee, or seller/lessor, or (4) reflect a different amount for a transaction that exceeds $5 million. Please note that all requests made for CPLs on transactions over $5 million must be accompanied by a completed “overlimits approval” form approved and executed by the local underwriter.
CPL CHARGES, THE GFE AND THE HUD SETTLEMENT STATEMENT
The new CPL fee will affect Good Faith Estimate calculations. We recommend that you contact your lender clients and begin making those adjustments. As to the placement of the CPL fees on the HUD-1, it is our opinion that the CPL fee(s) will go in the 1100 series on the HUD-1. The fee for the lender’s CPL can be shown on a blank line in the 1100 series “out of column” labeled “Lender CPL to Stewart Title Guaranty”. Whether or not the Lender’s CPL is reflected on a blank line, the charge for the Lender’s CPL must be included in the total charges in line 1101. For the fee for issuance of a CPL to the buyer or the seller, the fee will be shown on a blank line in the 1100 series and placed in the column for either the buyer or seller, as the case may be depending upon to whom the CPL is issued. The total charges for all CPLs issued for the transaction are to be included in the amount shown on line 1108 as “Underwriter’s portion of the title insurance premium”.
Softpro and Landtech have been provided with the new CPL fee information. Please contact your software company to request an update for your system with the CPL fee as follows: Softpro – 1-800-848-0143 and Landtech – 1-800-835-1523. If you are currently utilizing StewartDocs or AIM, please contact a Stewart technology representative to update your system with the new CPL fee at
If you have any questions relating to this or other bulletins, please contact a Stewart Title Guaranty Company underwriter.
For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.
THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.