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: Does the law only regulate funds collected from the consumer (buyer/borrower/seller)?
A: No. This aspect of the law has not changed, the law regulates any and all funds collected by an escrow or closing agent in connection with an escrow transaction involving residential real property. So, it also regulates the funds collected from a lender as well as from a consumer.
Q: Does an “internal transfer” of funds from one account to another at the same institution qualify as “electronically transferred funds” under the law?
A: No. All*electronically transferred funds must be sent via the real time gross settlement system provided by the federal reserve banks (i.e. wire transfer) and must be immediately available for withdrawal and disbursement. *Electronically transferred funds may also be sent via the automated clearing house (ACH) system only if they are initiated by the United States, State of Ohio, or by an agency, instrumentality or political subdivision of the United States or the State of Ohio.
Q: What about a bank funding into a bank account? A situation with a lender like Union Savings Bank that funds their refinances into the Escrow Account of the Title Agency that is an IOTA Account set up at the same bank.
A: The lender will not be able to do an ACH into your account. They will have to send the funding by wire via the real-time gross settlement system provided by the Federal Reserve banks, as outlined in the code.
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