Homebuying 101: should you get Closing Protection Coverage?

My spouse is more apt to get coverage that protects you beyond the normal warranty period, whether it is an extended warranty for a phone or car, or extra protection with an insurance policy.  Perhaps as an attorney I feel ready to assert my rights under express or implied coverage, and related laws.  Sometimes his way is more appropriate and prudent, other times such “extra” is unnecessary overkill.  Closing Protective Coverage (CPC)?  Get it.

In a nutshell, CPC protects you against mistakes or fraud from your title agent.  “Doesn’t my title insurance cover that?”  No, and many people make the mistake of thinking it does.  Your title agent is an independent person from the title company, i.e., they are licensed to work with the title company to get title insurance to you.  Often the title agent holds funds from buyer, seller or both in escrow until a certain time during the real estate transaction.  So, the independent title agent, might or might not be holding funds…. If a mistake, or–worse–fraud occurs, the title insurance company is not responsible for the acts of independent title agents.

Ohio law requires that the CPC letter offering the option for coverage must be given to the parties at the time the order for title insurance is placed.  The Closing Protection Coverage indemnifies the purchaser from:

(1) Theft, misappropriation, fraud, or any other failure to properly disburse settlement, closing, or escrow funds;

(2) Failure to comply with any applicable written closing instructions, when agreed to by the title insurance agent.

The cost for CPC is relatively low: for buyers it is $20, for sellers it costs $55.  You likely won’t experience fraud or mistake, but if you do, research showed that the range of costs from claims arising out of closing agent fraud start in the five figures.  CPC is worth it.

Contact me at julie@juliemillslaw.com, (216) 438-1298 (northeast Ohio) or (614) 519-8661 (central Ohio) for any help with real estate matters.

 

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