Spotlight on the Ohio Good Funds Law
Changes go into effect April 6, 2017
Revisions have been made to Ohio’s Good Funds Law that go into effect on April 6, 2017. The Good Funds Law applies to escrow/title agents and prescribes what funds can be accepted for disbursement at a real estate closing. The changes to the law can affect the way you do business and how you prepare your clients for closing.
The Ohio Land Title Association has prepared a series of FAQs to help in the understanding of how the changes to the law will affect real estate transactions. With their permission, CABR will present a series of Q&A’s in the CABR News to help you prepare for the changes.
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Q: Can an escrow or closing agent accept a cashier’s or certified check over $1,000 if it is deposited in time to “clear” the bank before disbursement?
A: No. The law only permits cashier’s or certified checks in an aggregate amount of $1,000 or less.
Q: How does this affect “back-to-back” closings in round-table areas?
A: Back-to-back closings currently come with many challenges and the change to the Good Funds Law will not meaningfully change the structure. For many reasons (title defects, underwriting issues with new loan, slow delivery of documents, delay in delivery of remotely-signed documents, delay in receipt of lender’s funds on day of close, etc.), it can be difficult to synchronize two closings to happen within a few hours on the same day. Such a structure is discouraged because it can lead to additional complications for a seller (soon to be buyer) when a variable on the first transaction causes delay in closing and/or disbursement and impacts their ability to close on the second transaction. For various reasons, many title companies already require that the funds from the first closing be wired for the second closing. For all residential transactions, this will now be required (unless such proceeds are $1,000 or less). Title professionals have already been discussing ways to efficiently verify and securely wire funds from one company to another and closings should be scheduled to allow reasonable time for the funds to be wired from one company to the next.
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