Senate Bill 833 was signed by Governor Nixon and takes effect August 28, 2016. The bill requires that a CPL must be issued on all residential transactions where a policy of title insurance is issued and a title agent, agency, or underwriter is handling any funds or documents on behalf of a consumer or lender. The notice of unprotected closing can only be used when the agent, agency, or underwriter is performing escrow functions and a policy of title insurance is not being issued. In many cases, the seller has been signing a notice of unprotected closing at the closing table and waiving a CPL, this is no longer permitted in Missouri.
The new language is as follows:
It is unlawful for any title insurer, title agency, or title agent to engage in the handling of an escrow, settlement or closing of a residential real estate transaction unless the escrow handling, settlement or closing is conducted or performed in contemplation of and in conjunction with the issuance of a title insurance policy and a closing protection letter, or if a title insurance policy is not being issued by the title insurer, title agency, or title agent, prior to the receipt of any funds, the title insurer, title agency, or title agent clearly discloses to the seller, buyer or lender involved in such escrow, settlement or closing, that no title insurer is providing any protection for closing or settlement funds received by the title agency or agent.
“Escrow”, written instruments, money or other items deposited by one party with a depository, escrow agent, or escrowee for delivery to another party upon the performance of a specified condition or the happening of a certain event;
Any time a title agent accepts funds, documents, or any other item from a consumer or lender, a CPL is required to be issued if a policy of title insurance is also being issued.
Here are some examples:
1. A is buying B’s home with a loan from the Bank. The buyer is purchasing a title insurance policy and the lender is receiving a loan policy. CPL’s must be issued to A, B and the Bank. No waiver of the CPL is allowed on any party.
2. A is buying B’s home and is paying cash. A declines an owner’s policy. No CPL may be issued and a Notice of Unprotected Closing must be provided to all parties.
3. A is refinancing their home with the Bank. The Bank is performing all disbursing, recording and only orders a loan policy from the title agent. No CPL will be issued and no Notice of Unprotected Closing is required.
4. A is refinancing their home with the Bank. The Bank orders a loan policy from the title agent. The Bank has the title agent record the documents and gives them funds to pay for the recording. A CPL must be issued to the bank.
5. A is buying B’s home with a loan from the Bank. A is closing with ABC Title who is issuing both the owner and lender policy. B is closing with XYZ Title. They do not share a common underwriter. A and the Bank would get a CPL from A’s underwriter. B would receive a Notice of Unprotected Closing since XYZ title company would be unable to issue a CPL on the transaction, since they are not issuing a policy. If the seller wants a CPL, then the insuring title company will have to disburse all funds and record all documents so that a CPL can be issued. See link below for Dual CPL procedure.
Dual Agent CPL
If they shared a common underwriter and the transaction was issued on that underwriter, then all parties would get a CPL from ABC Title, with XYZ title listed as an additional covered company. We have included our procedures for issuing CPLs for split closings such as the above with this bulletin.
6. A is buying B’s home with a loan from the Bank. A is closing with ABC Title who is issuing the lender policy. B is closing with XYZ Title who is issuing the owners policy. A and the Bank would receive a CPL from ABC Title and B would receive a CPL from XYZ title.
This law affects all Missouri closings beginning August 28th, 2016. If you have any questions, please do not hesitate to contact us.
Source: Agents National Title Insurance Company