What is a closing protection letter? | Freilich Law | Michael Freilich | freilichlaw.com | (410) 321-0040
A closing protection letter’s come into vogue for the buyer and seller in recent years. The title companies have been issuing them to lenders for years. Basically, it says if the title company absconds with the money, or something happens to the money, that the underwriter for the title company will reimburse the title company. What happens to the buyer and the seller at the settlement table if the money isn’t there, or somebody absconds with it, or they don’t pay off a mortgage that they should have paid off? So, representing a seller, I insist on this type of a letter, and representing the buyer, I make changes to the title insurance policy at the title closing table, to make sure that the buyer is protected. Sometimes, there’s a nominal cost. Rarely have I found that cost imposed on a seller.
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