Missouri Legislative Alert

Closing Protection Coverage

January 24, 2008

Missouri has passed Revised Statute Section 381.058, which requires title insurers to offer closing or settlement

protection letters in all transactions where they are issuing title insurance policies and performing settlement

services. These letters are to be issued in favor of and at the request of the buyer, lender or seller in such a

transaction. This legislation is effective January 1, 2008.

The rate for issuing a closing protection letter must be filed with the state and can not be excessive or inadequate.

The closing protection letter protects a buyer, lender or seller against losses because of the following acts of the

title insurer’s named issuing title agency or agent:

a) Acts of theft of settlement funds or fraud with regard to settlement funds; and,

b) Failure to comply with written closing instructions by the proposed insured when agreed to by the title

agency or title agent relating to title insurance coverage.

A title insurer has the authority to issue closing protection letters ONLY for transactions in which it is issuing a title

insurance policy and its issuing agent or agency is performing closing or settlement services.

Should the buyer, lender or seller not wish to purchase the closing protection coverage, the title insurer, agency or

agent will require the party to sign a waiver as evidence that closing protection coverage has been offered and

declined. This will be required on each transaction at this time, however, closing offices may accept a master

waiver, should you wish to utilize that option.

Customers may want to consider purchasing the closing protection coverage if the buyer’s closing or settlement

office will be disbursing the proceeds and payoff the mortgages.

As this legislation only applies to title insuring offices, lenders that conduct their own settlement services are not

subject to this law.