Section 215 ILCS 155/17.1 - Closing or settlement protection; independent escrowees(a) Notwithstanding the provisions of item (iii) of paragraph (B) of subsection (1) and subsection (9) of Section 3 of this Act, an independent escrowee is not authorized to act pursuant to subsection (9) of Section 3 of this Act in a nonresidential real property transaction where the amount of settlement funds on deposit with the escrow agent is less than $2,000,000 or in a residential real property transaction unless, as part of the same transaction, closing protection letters protecting the buyer's or borrower's, lender's, and seller's interests have been issued by the independent escrowee.(b) Unless otherwise agreed to between an independent escrowee and a protected person or entity, a closing protection letter under this Section shall indemnify all parties to a real property transaction against actual loss, not to exceed the amount of the settlement funds deposited with the independent escrowee. The closing protection letter shall in any event indemnify all parties to a real property transaction when such losses arise out of: (1) failure of the independent escrowee to comply with written closing instructions to the extent that they relate to (A) the status of the title to an interest in land or the validity, enforceability, and priority of the lien of a mortgage on an interest in land, including the obtaining of documents and the disbursement of funds necessary to establish the status of title or lien or (B) the obtaining of any other document specifically required by a party to the real property transaction, but only to the extent that the failure to obtain such other document affects the status of the title to an interest in land or the validity, enforceability, and priority of the lien of a mortgage on an interest in land; or(2) fraud, dishonesty, or negligence of the independent escrowee in handling funds or documents in connection with closings to the extent that the fraud, dishonesty, or negligence relates to the status of the title to the interest in land or to the validity, enforceability, and priority of the lien of a mortgage on an interest in land or, in the case of a seller, to the extent that the fraud, dishonesty, or negligence relates to funds paid to or on behalf of, or which should have been paid to or on behalf of, the seller.(c) The indemnification under a closing protection letter may include limitations on the liability of the independent escrowee for any of the following:(1) Failure of the independent escrowee to comply with closing instructions that require title insurance protection inconsistent with that set forth in the title insurance commitment for the real property transaction. Instructions that require the removal of specific exceptions to title or compliance with the requirements contained in the title insurance commitment shall not be deemed to be inconsistent.(2) Loss or impairment of funds in the course of collection or while on deposit with a bank due to bank failure, insolvency, or suspension, except such as shall result from failure of the independent escrowee closer to comply with written closing instructions to deposit the funds in a bank that is designated by name by a party to the real property transaction.(3) Mechanics' and materialmen's liens in connection with sale, purchase, lease, or construction loan transactions, except to the extent that protection against such liens is afforded by a title insurance commitment or policy issued by the title insurance agent or title insurance company.(4) Failure of the independent escrowee to comply with written closing instructions to the extent that such instructions require a determination by the independent escrowee of the validity, enforceability, or effectiveness of any document described in item (B) of paragraph (1) of subsection (b) of this Section.(5) Fraud, dishonesty, or negligence of an employee, agent, attorney, or broker, who is not also the independent escrowee or an independent contract closer of the independent escrowee, of the indemnified party to the real property transaction.(6) The settlement or release of any claim by the indemnified party to the real property transaction without the written consent of the independent escrowee.(7) Any matters created, suffered, assumed, or agreed to by, or known to, the indemnified party to the real property transaction without the written consent of the independent escrowee. The closing protection letter may also include reasonable additional provisions concerning the dollar amount of protection, provided the limit is no less than the amount deposited with the independent escrowee, arbitration, subrogation, claim notices, and other conditions and limitations that do not materially impair the protection required by this Section.
(d) The Secretary shall adopt and amend rules as may be required for the proper administration and enforcement of this Section consistent with the federal Real Estate Settlement Procedures Act and Section 24 of this Act.Added by P.A. 100-0485,§ 5, eff. 9/8/2017.