3.20 Closing Protection Letters


In General

Closing protection letters, also referred to as indemnity letters, set forth the basis and extent of the responsibility the Company is willing to assume in regard to closings and escrow closings provided by its agents, approved attorneys, or any other person or entity designated by the Company to perform on its behalf.


Closing Protection Letters

Closing Protection Letters (Insured Closing Letters) may be issued ONLY by use of the Stewart ICL Website: https://www.stewarticl.com. Closing Protection Letters may not be (1) modified, (2) prepared by an Issuing Agent on its Letterhead or in any other format, or (3) typed, computer generated, or signed by an Issuing Agent.

The Stewart ICL Website has the most recent Closing Protection Letter forms approved by STG and maintains a record of the Closing Protection Letters issued. The Stewart ICL Website generates the Closing Protection Letter only for current authorized Issuing Agents (or Approved Attorneys, where allowed and customary). The CPL is generated in HTML format which is to be printed and then sent to the requesting lender. A CPL is not to be sent electronically in a Word format or other format which can be changed without our knowledge or consent.

If you are asked to modify the Closing Protection Letter, please contact the ICL Administrator at icladmin@stewart.com or 800-729-1902.


Closing Protection Letter Benefits

The closing protection letter does not create an agency agreement between the underwriter and the issuing office or settlement agent. Consistent with our underwriting agreements with closing offices or attorneys, the underwriter does not authorize the issuing office or approved attorney to act on its behalf in connection with escrow or closing functions. Consequently, the closing protection letter is essential for lenders and other parties that wish to have limited protection in connection with a closing. The purpose of the closing protection letter, subject to the various terms, is to provide protection against loss by reason of acts by the issuing office or approved attorney in connection with written closing instructions as they relate to the status of title, the obtaining of documents, and the collection and payment of funds.

The closing protection letter does not afford coverage as to various other matters (which you also should be wary of agreeing to verify), such as the following:

  • Whether the documents comply with all applicable laws. This may imply that the note is not usurious (which we do not insure), that the truth-in-lending disclosure complies with federal law, and that other applicable disclosures under state or federal law have been properly given.

  • Whether the transaction violates applicable law or regulation. This may extend to environmental laws or regulations, lender regulations and zoning requirements, none of which are insured by the title policy.

  • Facts regarding the closing, the real property, or party(ies) to the closing. You should only agree to collect or receive documents; you should not become a factfinder as to the validity or correctness of such documents or facts.