NM Form 81.1 Closing Protection Letter - Multiple Transactions (ALTA 4-2-14)
Closing Protection Letter – Multiple Transactions
STEWART TITLE GUARANTY COMPANY
Name of Issuing Agent or Approved Attorney (the “Issuing Agent” or “Approved Attorney,” as the case may require):
[Name of Issuing Agent or Approved Attorney appears here.]
Re: Closing Protection Letter
In consideration of Your acceptance of this letter, Stewart Title Guaranty Company (the “Company”), agrees to indemnify You for actual loss of Funds incurred by You in connection with the closing of any real estate transaction (the “Real Estate Transaction”) conducted by the Issuing Agent or Approved Attorney on or after the date of this letter, subject to the Conditions and Exclusions set forth below and provided:
(A) the Company issues or is contractually obligated to issue a Policy for Your protection in connection with the closing of the Real Estate Transaction;
(B) You are to be the lender secured by the Insured Mortgage;
(C) the aggregate of all Funds You transmit to the Issuing Agent or Approved Attorney for the Real Estate Transaction does not exceed $_____________; and
(D) Your loss is solely caused by:
1. failure of the Issuing Agent or Approved Attorney to comply with Your written closing instructions that relate to:
(a) the disbursement of Funds necessary to establish the status of the Title or the validity, enforceability, or priority of the lien of the Insured Mortgage; or
(b) the obtaining of any document, specifically required by You, but only to the extent that the failure to obtain the document affects the status of the Title or the validity, enforceability, or priority of the lien of the Insured Mortgage;
2. fraud, theft, dishonesty, or misappropriation of the Issuing Agent or Approved Attorney in handling Your Funds or documents in connection with the closing, but only to the extent that the fraud, theft, dishonesty, or misappropriation relates to the status of the Title or to the validity, enforceability, or priority of the lien of the Insured Mortgage.
Conditions and Exclusions
1. Your transmittal of Funds or documents to the Issuing Agent or Approved Attorney for the Real Estate Transaction constitutes Your acceptance of this letter.
2. For purposes of this letter:
a. “Commitment” means the Company’s written contractual agreement to issue the Policy.
b. “Funds” means the money received by the Issuing Agent or Approved Attorney for the Real Estate Transaction.
c. “Policy” or “Policies” means the contract or contracts of title insurance, each in a form adopted by the American Land Title Association, issued or to be issued by the Company in connection with the closing of the Real Estate Transaction.
d. “You” or “Your” means the Addressee of this letter, the borrower if the Land is solely improved by a one-to-four family residence, and subject to all rights and defenses relating to a claim under this letter that the Company would have against the Addressee,
(i) the assignee of the Insured Mortgage; and
(ii) the warehouse lender in connection with the Insured Mortgage.
e. “Indebtedness,” “Insured Mortgage,” “Land,” and “Title” have the same meaning given them in the American Land Title Association Loan Policy (06-17-06).
3. The Company shall have no liability under this closing protection letter for loss arising out of:
a. failure of the Issuing Agent or Approved Attorney to comply with Your closing instructions that require title insurance protection in connection with the Real Estate Transaction inconsistent with that set forth in the Commitment. Your written closing instructions received and accepted by the Issuing Agent or Approved Attorney after issuing the Commitment that require the removal, where allowed by state law, rule, or regulation, of specific Schedule B Exceptions from Coverage or compliance with the requirements contained in the Commitment shall not be deemed to require inconsistent title insurance protection;
b. loss or impairment of Your Funds in the course of collection or while on deposit with a bank due to bank failure, insolvency, or suspension, except loss or impairment resulting from failure of the Issuing Agent or Approved Attorney to comply with Your written closing instructions to deposit the Funds in a bank that You designated by name;
c. any constitutional or statutory lien or claim of lien that arises from services, labor, materials, or equipment, if any Funds are to be used for the purpose of construction, alteration, or renovation. This subsection does not affect the coverage, if any, as to any lien for services, labor, materials, or equipment afforded in the Policy;
d. fraud, theft, misappropriation, dishonesty, or negligence of Your employee, agent, attorney, or broker;
e. Your settlement or release of any claim without the Company’s written consent;
f. any matters created, suffered, assumed, or agreed to or actually known by You;
g. Federal consumer financial law, as defined in 12 U.S.C. § 5481(14), or other federal or state laws relating to truth-in-lending, a borrower’s ability to repay a loan, qualified mortgages, consumer protection, or predatory lending;
h. federal or state laws establishing standards or requirements for asset-backed securitization including, but not limited to, exemption from credit risk retention;
i. the periodic disbursement of Funds to pay for construction, alteration, or renovation on the Land relating to the Real Estate Transaction; or
j. the Issuing Agent or Approved Attorney acting in the capacity of a qualified intermediary or facilitator for tax deferred exchange transactions as provided in Section 1031 of the Internal Revenue Code.
4. If the closing is to be conducted by an Approved Attorney, a Commitment in connection with the Real Estate Transaction must have been received by You prior to the transmittal of Your final closing instructions to the Approved Attorney.
5. When the Company shall have indemnified You pursuant to this letter, it shall be subrogated to all rights and remedies You have against any person or property had You not been indemnified. The Company’s liability for indemnification shall be reduced to the extent that You have impaired the value of this right of subrogation.
6. The Company’s liability for loss under this letter shall not exceed the least of:
a. the amount of Your Funds;
b. the Company’s liability under the Policy at the time written notice of a claim is made under this letter;
c. the value of the lien of the Insured Mortgage; or
d. the value of the Title insured or to be insured under the Policy at the time written notice of a claim is made under this letter.
7. If You are not a purchaser, borrower, or lessee, You must hold the Indebtedness both at the time that the Company is notified of a claim pursuant to this letter and at the time that payment is made to make a claim for indemnification under this letter.
8. Payment to You or to the owner of the Indebtedness under the Policy or Policies or from any other source shall reduce liability under this letter by the same amount. Payment in accordance with the terms of this letter shall constitute a payment pursuant to the Conditions of the Policy.
9. The Issuing Agent is the Company’s agent only for the limited purpose of issuing Policies. Neither the Issuing Agent, nor the Approved Attorney, is the Company’s agent for the purpose of providing closing or settlement services. The Company’s liability for Your loss arising from closing or settlement services is strictly limited to the contractual protection expressly provided in this letter. Other than as expressly provided in this letter, the Company shall have no liability for loss resulting from the fraud, theft, dishonesty, misappropriation, or negligence of any party to the Real Estate Transaction, the lack of creditworthiness of any borrower connected with the Real Estate Transaction, or the failure of any collateral to adequately secure a loan connected with the Real Estate Transaction.
10. In no event shall the Company be liable for a loss if the written notice of a claim is not received by the Company within one year from the date of the transmittal of Funds. The condition that the Company must be provided with written notice under this provision shall not be excused by lack of prejudice to the Company.
11. You must promptly send written notice of a claim under this letter to the Company at its principal office at _____________________________________________. If the Company is prejudiced by Your failure to provide prompt notice, the Company’s liability to You under this letter shall be reduced to the extent of the prejudice.
12. The Company shall have no liability under this letter if:
a. the Real Estate Transaction has not closed within one year from the date of this letter; or
b. at any time after the date of this letter, but before the Real Estate Transaction closes, the Company provides written notice of termination of this letter to the Addressee at the address set forth above.
13. The protection of this letter extends only to real estate in [State], and any court or arbitrator shall apply the law of the jurisdiction where the Land is located to interpret and enforce the terms of this letter. In neither case shall the court or arbitrator apply its conflicts of law principles to determine the applicable law. Any litigation or other proceeding under this letter must be filed only in a state or federal court within the United States of America or its territories having appropriate jurisdiction.
14. [INTENTIONALLY OMITTED]
This closing protection letter supersedes and cancels any previous letter or similar agreement for closing protection that applies to the Real Estate Transaction.
STEWART TITLE GUARANTY COMPANY
(The name of a particular issuing agent or approved attorney may be inserted in lieu of reference to Issuing Agent or Approved Attorney contained in this letter and the words "Underwritten Title Company" may be inserted in lieu of Issuing Agent.)
No guidelines are available for this form at this time.