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: If the buyer needs to bring $1,200 to close, is it acceptable if they bring a $1,000 cashier’s check and $200 in cash?
A: No. Cash, personal checks, business checks (other than those drawn on a real estate broker’s trust account), certified checks, cashier’s checks, official checks, or money orders must be in an aggregate amount not exceeding $1,000. Any checks or money orders must also be drawn on a federally insured bank, savings bank, savings and loan, or credit union.
Q: If the buyer has given the real estate broker $2,000 in earnest money, and the broker brings these funds to closing, can they be used?
A: Yes. As long as the broker brings these funds in the form of a business check drawn on the broker’s special or trust bank account (as defined under ORC §4735.18(A)(26)) these funds can be presented at closing. There is no limit on the amount of a check from the broker’s account.
Q: Is it permissible to use cash over $1,000 if it is deposited in the escrow account of the closing agent in advance of closing?
A: No. The law only permits cash if it is in the amount of $1,000 or less AND it is physically received by the escrow agent prior to disbursement AND intended to be deposited no later than the next banking day after the date of disbursement.
Q: If the buyer needs to bring $1,500 to closing and has given the real estate broker $1,000 in earnest money, can the buyer use the earnest money and bring the difference in the form of a personal check?
A: Yes. As long as the broker draws the $1,000 on the broker’s special or trust account, the consumer can bring the difference in the form of a personal check. The broker’s trust account check does not count toward the aggregate limitation of $1,000 for cash, personal checks, business checks, certified checks, cashier’s checks, official checks or money orders.
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