The Colorado Division of Insurance reports that over the last 10 years, title companies have misappropriated $9.4 million dollars in funds related to real estate transactions. $340,000 of that was not covered by insurance, but could have been with a Closing Protection Letter (“CPL”). To better protect consumers, the Division now requires that title companies inform consumers of the availability of CPLs in their title commitments, but that disclosure is buried within the lengthy title commitment and does not explain why the client would want a CPL.'
Lenders have always demanded and received CPL’s to protect themselves, and that coverage protects the parties to the transaction, but some buyers and/or sellers want the added peace of mind of having their own CPLs, which range in cost from free to $25. A cash buyer definitely should request a CPL for their transaction.
At Golden Real Estate, we recently devoted one of our office meetings to the topic of title insurance and learned the importance of obtaining CPLs to protect our clients.
Published March 23, 2017, in the Denver Post's YourHub section and in four Jefferson County weekly newspapers.