Part of SB 185 requires title agents in Ohio to offer Closing Protection Coverage to buyers and sellers, in addition to the lenders.  This was in response to losses suffered by individuals do to defalcations by a few title agents.  Not a bad idea in theory, but in practice it doesn't work so well.

The old Closing Protection Letter was offered to lenders free of charge and protected the lenders from dishonest agents by making the underwriter's liable.  The new Closing Protection Coverage is now an insured product and there is a premium associated with it ($35 for the lender, $15 for the buyer, and $50 for the seller).  There is a new form that needs signed at closing notifying the buyer and seller that the coverage is available.

The problem is that the agent now needs to tell the parties that "title insurance does not protect losses due to the mishandling of funds" by the agent.  And, for an additional premium, they can get coverage against "theft, misappropriation, fraud...," etc.  by the agent.

How do you do a closing and explain to the buyer and seller, already overwhelmed by the process, that they may need to pay extra in case you steal their money?  The Closing Protection Letter was a valuable tool that the underwriters offered to make the large lending institutions feel comfortable doing business with their independent agents.  Now, the opposite seems to be the case - by offering the coverage, we are actually making the parties feel that the independent agents cannot be trusted.

Anyone else in Ohio have any thoughts on this new Closing Protection Coverage?

Best,
Robert A. Franco
SOURCE OF TITLE