Dear Readers,
States are concerned about making sure that consumers are protected at the closing table. This can take many forms, including allowing title insurers to offer closing protection in addition to the title insurance policies they issue.
For instance, the Rhode Island General Assembly is considering amendments to the state’s law permitting title insurers to issue closing protection.
The bill, SB 2447, was introduced by Sen. Erin Lynch, D-Warwick.
Under current law, title insurers are authorized to issue closing or settlement protection to a proposed insured upon request if the title insurer, or its title insurance agent, issues a preliminary report, binder or title insurance policy.
The bill would require that closing or settlement protection be provided in connection with the issuance of a loan policy insuring a lender’s interest in residential property intended for residential occupancy containing four or less units. Nothing in the law’s provisions would prohibit the title insurer from providing closing or settlement protection in connection with the issuance of any loan policy insuring a lender’s interest in any other type of residential or commercial policy.
The bill also states, “The fee charged by a title insurer for each party receiving closing protection coverage shall be filed with and approved by the commissioner pursuant to section 27-2.6-16. The fee shall not be subject to any agreement requiring a division of fees or premiums collected on behalf of the title insurer. The fee shall be not less than $50 for the protection of all parties receiving the benefit of closing protection, to wit: the buyers or borrowers and the lenders in connection with the real property transaction giving rise to the issuance of the closing or settlement protection.”
At least one other state, Arizona, has introduced legislation to address closing protection, and numerous others have addressed the issue in the past several years. Look to The Legal Description for updated information as these bills move through the legislative process.
Until next time, stay legal.
Andrea Golby
editor, The Legal Description
[email protected]