Indiana § 27-7-3-22 - Closing protection letter; fee

§ 27-7-3-22. 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.

As added by P.L.80-2013, SEC.4. Amended by P.L.236-2025, SEC.10; P.L.115-2026, SEC.52.

IC 27-7-3.6Chapter 3.6. Title Insurance Enforcement Fund

27-7-3.6-1Title insurance enforcement fund established; uses of fund 27-7-3.6-2Administration of title insurance enforcement fund 27-7-3.6-3Investments 27-7-3.6-4Reversions to state general fund prohibited 27-7-3.6-5Augmentation authorized 27-7-3.6-6Deposits 27-7-3.6-7Fees

IC 27-7-3.6-1Title insurance enforcement fund established; uses of fund Sec. 1. The title insurance enforcement fund is established for the following purposes:

(1) To provide supplemental funding for department operations that are related to title insurance, including any of the following:

(A) The investigation of any matter concerning title insurance transactions in Indiana, to the extent necessary to determine compliance with this title.

(B) Appropriate administrative and civil actions to redress instances of noncompliance with this title.

(C) Cooperative efforts with federal, state, and local law enforcement agencies in investigating the following:

(i) Deceptive acts in connection with title insurance transactions.

(ii) Criminal violations involving deceptive acts in connection with title insurance transactions.

(iii) Violations of the Real Estate Settlement Procedures Act (12 U.S.C. 2601 et seq.) and any other federal laws or regulations concerning title insurance transactions. To the extent authorized by federal law, the department may enforce compliance with the federal statutes or regulations described in this item or refer suspected violations of the statutes or regulations to the appropriate federal regulatory agencies.

(D) Actions to enjoin violations of 12 U.S.C. 2607, as permitted under 12 U.S.C. 2607(d) and 12 U.S.C. 2614.

(2) To pay the costs of hiring and employing staff in the area of enforcement of title insurance law.

(3) To provide funding for educational materials or services designed to provide information to consumers about residential title insurance transactions.

As added by P.L.171-2006, SEC.5. Amended by P.L.145-2008, SEC.32.

IC 27-7-3.6-2Administration of title insurance enforcement fund Sec. 2. The title insurance enforcement fund shall be administered by the commissioner. The expenses of administering the title insurance enforcement fund shall be paid from money in the fund.

As added by P.L.171-2006, SEC.5.

IC 27-7-3.6-3Investments Sec. 3. The treasurer of state shall invest the money in the fund not currently needed to meet the obligations of the fund in the same manner as other public money may be invested.

As added by P.L.171-2006, SEC.5.

IC 27-7-3.6-4Reversions to state general fund prohibited Sec. 4. Money in the fund at the end of a state fiscal year does not revert to the state general fund.

As added by P.L.171-2006, SEC.5.

IC 27-7-3.6-5Augmentation authorized Sec. 5. The budget agency may augment the appropriation for the department of insurance from balances in the fund.

As added by P.L.171-2006, SEC.5.

IC 27-7-3.6-6Deposits Sec. 6. The following shall be deposited in the title insurance enforcement fund:

(1) Policy reporting fees remitted by title insurers to the commissioner under section 7 of this chapter.

(2) Other amounts remitted to the commissioner or the department that are required by law to be deposited into the title insurance enforcement fund.

As added by P.L.171-2006, SEC.5. Amended by P.L.1-2007, SEC.185.

IC 27-7-3.6-7Fees Sec. 7. (a) A person that purchases a title insurance policy shall pay to the title insurer that issues the title insurance policy a fee of five dollars ($5) as a fee for the title insurance enforcement fund at the time of payment for the title insurance policy.

(b) A title insurer shall:

(1) retain two dollars ($2) of the fee collected under subsection (a) as an administrative fee; and

(2) pay to the department three dollars ($3) of the fee collected under subsection (a) for deposit in the title insurance enforcement fund.

As added by P.L.171-2006, SEC.5.

IC 27-7-3.7Chapter 3.7. Escrow Transactions in Real Estate Transactions

27-7-3.7-1"Closing agent" 27-7-3.7-2"Escrow account" 27-7-3.7-3"Escrow transaction" 27-7-3.7-4"Good funds" 27-7-3.7-5"Real estate transaction" 27-7-3.7-6Funds received in escrow transaction to be deposited in escrow account; exception 27-7-3.7-7Disbursements; requirements for funds of at least $10,000 received from single party 27-7-3.7-8Disbursements; requirements for funds less than $10,000 received from single party 27-7-3.7-9Mortgage holder's right to receive proceeds from real estate transaction through funds electronically transferred to specified account 27-7-3.7-10Advance of fees from escrow account to pay incidental fees

IC 27-7-3.7-1"Closing agent" Sec. 1. (a) As used in this chapter, "closing agent" means a person that:

(1) closes an escrow transaction in connection with the purchase, sale, or financing of an interest in real estate; and

(2) is required to be licensed as an insurance producer under IC 27-1-15.6.

(b) The term does not include a lender or an employee of a lender that conducts a settlement or closing of a real estate secured loan provided by the lender in the office of the lender.

As added by P.L.92-2009, SEC.1.

IC 27-7-3.7-2"Escrow account" Sec. 2. As used in this chapter, "escrow account" means a checking account established by a closing agent with a:

(1) bank;

(2) savings and loan association;

(3) credit union; or

(4) savings bank;

that is chartered under the laws of a state or the United States and used exclusively for the deposit and disbursement of funds for an escrow transaction.

As added by P.L.92-2009, SEC.1.

IC 27-7-3.7-3"Escrow transaction" Sec. 3. (a) As used in this chapter, "escrow transaction" means a transaction in which a person deposits with a closing agent funds that are to be held until:

(1) a specified event occurs; or

(2) the performance of a prescribed condition;

in connection with the purchase, sale, or financing of an interest in real estate.

(b) The term does not include a loan financing if:

(1) the only parties to the loan transaction are the lender and the borrower; and

(2) the lender is responsible for disbursing all of the funds to the borrower or to a third party in order to pay fees and charges associated with the loan transaction.

As added by P.L.92-2009, SEC.1.

IC 27-7-3.7-4"Good funds" Sec. 4. As used in this chapter, "good funds" means funds in any of the following forms:

(1) United States currency.

(2) Wired funds unconditionally held by and irrevocably credited to the escrow account of the closing agent.

(3) Certified or cashier's checks that are drawn on an existing account at a:

(A) bank;

(B) savings and loan association;

(C) credit union; or

(D) savings bank;

chartered under the laws of a state or the United States.

(4) A check drawn on the trust account of a real estate broker licensed under IC 25-34.1, if the closing agent has reasonable and prudent grounds to believe that sufficient funds will be available for withdrawal from the account on which the check is drawn at the time of disbursement of funds from the closing agent's escrow account.

(5) A personal check not to exceed five hundred dollars ($500) per closing.

(6) A check issued by the state, the United States, or a political subdivision of the state or the United States.

(7) A check drawn on the escrow account of another closing agent, if the closing agent in the escrow transaction has reasonable and prudent grounds to believe that sufficient funds will be available for withdrawal from the account upon which the check is drawn at the time of disbursement of funds from the escrow account of the closing agent in the escrow transaction.

(8) A check issued by a farm credit service authorized under the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.).

(9) A check that is deposited and held in the escrow account of the closing agent for at least fourteen (14) days before the date of closing.

As added by P.L.92-2009, SEC.1. Amended by P.L.72-2016, SEC.18.

IC 27-7-3.7-5"Real estate transaction" Sec. 5. (a) As used in this section, "real estate transaction" refers to any:

(1) escrow transaction;

(2) settlement; or

(3) closing;

conducted in connection with the purchase, sale, or financing of an interest in real estate.

(b) The term does not include a real estate secured loan financing if:

(1) the only parties to the loan transaction are the lender and the borrower; and

(2) the lender is responsible for disbursing all of the funds to the borrower or to a third party in order to pay fees and charges associated with the loan transaction.

As added by P.L.92-2009, SEC.1.

IC 27-7-3.7-6Funds received in escrow transaction to be deposited in escrow account; exception Sec. 6. Funds received in connection with an escrow transaction must be deposited in an escrow account unless the parties to the escrow transaction agree in writing to another arrangement.

As added by P.L.92-2009, SEC.1.

IC 27-7-3.7-7Disbursements; requirements for funds of at least $10,000 received from single party Sec. 7. (a) This section applies to an escrow account that contains funds that:

(1) are received from any single party to a real estate transaction; and

(2) in the aggregate are at least ten thousand dollars ($10,000).

(b) A closing agent may make disbursements from an escrow account described in subsection (a) in connection with a real estate transaction only if both of the following apply:

(1) All the funds described in subsection (a) are good funds.

(2) Any funds described in subsection (a) in excess of ten thousand dollars ($10,000) are good funds described in section 4(2) of this chapter.

As added by P.L.92-2009, SEC.1. Amended by P.L.72-2016, SEC.19.

IC 27-7-3.7-8Disbursements; requirements for funds less than $10,000 received from single party Sec. 8. A closing agent may not make disbursements from an escrow account in connection with a real estate transaction unless any funds that:

(1) are received from any single party to the real estate transaction; and

(2) in the aggregate are less than ten thousand dollars ($10,000);

are good funds.

As added by P.L.92-2009, SEC.1.

IC 27-7-3.7-9Mortgage holder's right to receive proceeds from real estate transaction through funds electronically transferred to specified account Sec. 9. If:

(1) the closing agent in a real estate transaction receives wired funds unconditionally held and irrevocably credited to the escrow account of the closing agent; and

(2) a holder of a mortgage lien encumbering real estate so requests, as part of written closing instructions or a written payoff statement in advance of closing;

the holder of the mortgage lien is entitled to receive its proceeds from the real estate transaction through funds electronically transferred to an account specified by the holder of the mortgage lien.

As added by P.L.92-2009, SEC.1.

IC 27-7-3.7-10Advance of fees from escrow account to pay incidental fees Sec. 10. A closing agent may advance an amount not to exceed five hundred dollars ($500) from an escrow account on behalf of a party to an escrow transaction for the purpose of paying incidental fees, including conveyance and recording fees. Incidental fees may be paid in order to:

(1) effect and close the sale of;

(2) purchase;

(3) exchange;

(4) transfer;

(5) encumber; or

(6) lease;

real property that is the subject of the escrow transaction.

As added by P.L.92-2009, SEC.1.

IC 27-7-4Chapter 4. RepealedRepealed by Acts 1974, P.L.142, SEC.3.

IC 27-7-5Chapter 5. Uninsured Motorist Coverage and Underinsured Motorist Coverage

27-7-5-0.1Application of certain amendments to chapter 27-7-5-1Repealed 27-7-5-1.5Repealed 27-7-5-2Uninsured and underinsured motorist coverage; required coverage; rejection; exemptions; umbrella policies 27-7-5-3Property damage coverage; authorization 27-7-5-4"Uninsured motor vehicle" and "underinsured motor vehicle" defined; insurer's insolvency protection 27-7-5-5Limitations on coverage 27-7-5-6Subrogation