Closing protection letter; fee

Sec. 22. (a) In a residential real estate transaction described in subsection (f) in which: (1) a title policy is issued by a company or title insurance producer on behalf of a company; and (2) the company or title insurance producer will also act as a settlement or closing agent; the company or title insurance producer shall issue a closing protection letter to the lender, borrower, buyer, and seller of the property. A company authorized to do business under section 3 of this chapter shall charge a fee approved under subsection (e) to each party receiving the benefit of a closing protection letter. (b) In a nonresidential real estate transaction in which: (1) a title policy is issued by a company or title insurance producer on behalf of a company; and (2) the company or title insurance producer will also act as a settlement or closing agent; the company or title insurance producer may issue a closing protection letter to the lender, borrower, buyer, and seller of the property on request. (c) A closing protection letter issued under this section must indemnify the party to which the closing protection letter is issued against any loss of settlement funds (under the terms and conditions of the closing protection letter) that results from the following acts of the company or title insurance producer that issues the closing protection letter: (1) Theft or misappropriation of settlement funds in connection with a transaction in which the title policy is issued, only to the extent that the theft or misappropriation relates to the: (A) status of title to; or (B) validity, enforceability, and priority of the lien of the mortgage on; the party's interest in land. (2) Failure to comply with the written closing instructions agreed to by the company or title insurance producer acting as the settlement agent, only to the extent that the failure relates to the: (A) status of title to; or (B) validity, enforceability, and priority of the lien of the mortgage on; the party's interest in land. (d) The issuance of a closing protection letter under this section in contemplation of or in conjunction with the issuance of a title insurance policy is part of the business of title insurance for purposes of section 3 of this chapter. (e) The amount of the fee that a company authorized to do business under section 3 of this chapter charges to each party receiving the benefits of a closing protection letter: (1) must be submitted to and approved by the commissioner under IC 27-1-22-28; and (2) is not subject to an agreement requiring a division of fees or premiums collected on behalf of the company. (f) Subsection (a) applies to the following transactions: (1) A mortgage transaction (as defined in IC 37-5-3-7(a)) that: (A) is: (i) a first lien purchase money mortgage transaction; or (ii) a refinancing transaction; and (B) is closed by a closing agent after December 31, 2009. (2) A real estate transaction (as defined in IC 37-5-3-7(b)) that: (A) does not involve a mortgage transaction described in subdivision (1); and (B) is closed by a closing agent (as defined in IC 6-1.1-12-43(a)(2)) after December 31, 2011.