ALTA® Proposed Changes To Closing Protection Letter
|October 25, 2006|
The ALTA Forms Committee has modified the Closing Protection Letter (CPL) forms in several respects and would like industry comment on the changes by December 10.
The committee has limited the number of available forms to three: the "ALTA Closing Protection Letter," the "Closing Protection Letter-Limitations," and the "Closing Protection Letter-Single Transaction Limited Liability." The substantive changes are the same in all three of these revised forms. The changes have expanded the parties that are benefitted by the protections of the CPL. These new forms now include not only the addressee who is a lessee, purchaser or lender of an interest in land but also the lender's assignees and warehouse lender. Also these new forms now provide protection if the loss arises out of negligence of the issuing agent or approved attorney in handling funds or documents in addition to fraud or dishonesty. The protection for loss arising out of fraud, dishonesty or negligence of the issuing agent or approved attorney in handling funds or documents in connection with the closing is limited to situations where the fraud, dishonesty or negligence relates to the status of title or the validity, enforceability, and priority of the lien of the mortgage. Also three sub-paragraphs to the Conditions and Exclusions have been added. These result in eliminating liability for loss arising out of (i) fraud, dishonesty or negligence of your employee, agent, attorney or broker, (ii) your settlement or release of any claim without the written consent of the Company, and (iii) any matters created, suffered assumed or agreed to by you or know to you.
Please review and comment on the forms by December 10.