When you're navigating the home buying or selling process, there are many terms and documents that can feel overwhelming. One important but often overlooked concept is Closing Protection Coverage (CPC). At Great Move Realty, we want to ensure that you’re fully informed about every aspect of your real estate transaction. In this blog post, we’ll break down what Closing Protection Coverage is, why it’s necessary, and how it protects you during your real estate transaction.

What is Closing Protection Coverage?

Closing Protection Coverage is a form of insurance that protects you in the event that something goes wrong during the closing process of a real estate transaction. It specifically protects buyers and lenders from losses that might occur due to fraudulent or dishonest acts by a title company or closing agent, such as mishandling of funds or failure to meet the terms of the transaction.

This coverage is typically issued by a title insurance company and is intended to protect you in situations where the title company or closing agent fails to perform their duties correctly.

Why is Closing Protection Coverage Important?

In real estate transactions, especially when large sums of money are involved, ensuring that all parties are properly protected is essential. Closing Protection Coverage helps to:

• Ensure Proper Handling of Funds: It provides protection if funds are mishandled during the closing process, such as if a title agent or closing agent fails to properly account for or distribute funds.

• Prevent Fraud and Dishonesty: CPC helps protect against fraudulent or dishonest acts by the closing agent or title company, such as misappropriating funds or failing to follow the correct procedures.

• Add an Extra Layer of Security: While title insurance protects against issues related to the ownership of the property itself, Closing Protection Coverage offers additional peace of mind, specifically related to the closing process.

When is Closing Protection Coverage Needed?

Closing Protection Coverage is typically required by lenders for transactions involving a mortgage. However, it’s not automatically included in a standard title insurance policy, and you’ll need to request it separately. For homebuyers, it's important to ask your title company or closing agent about obtaining this protection as part of your closing package.

How Does Closing Protection Coverage Work?

Closing Protection Coverage comes into play when something goes wrong during the closing process. For example, if the closing agent or title company misappropriates your funds or fails to meet the terms of the closing agreement, the coverage can help compensate you for losses or damages. It helps ensure that you're not left holding the bag if an error or fraud occurs.

In the unfortunate event of a claim, the coverage will typically help pay for the loss up to a certain amount, depending on the terms of the coverage.

Is Closing Protection Coverage Worth It?

Absolutely! While Closing Protection Coverage is an additional cost, it offers an extra layer of security that is well worth the investment. The small additional premium paid for this coverage provides protection against potentially large losses that could occur if something goes wrong during the closing process.

How to Get Closing Protection Coverage

To obtain Closing Protection Coverage, you’ll need to work with your title company. In many cases, the lender will require it, but it’s always a good idea to ask your title company to make sure you’re covered. This can typically be added to your closing costs, and it’s a relatively affordable way to ensure that you're fully protected.

In Conclusion

At Great Move Realty, we understand that closing a real estate transaction is a big deal, and we want you to feel confident throughout the process. While Closing Protection Coverage may not be the first thing on your mind when buying or selling a home, it’s an important safeguard that provides peace of mind. By working with trusted professionals, including a reliable title company, and ensuring that you have the right coverage in place, you can rest easy knowing that you’re protected.

If you have any questions about Closing Protection Coverage or want to learn more about how we can help you with your real estate transaction, don’t hesitate to reach out to us at Great Move Realty. Your home, our priority!