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Legislation Issues Legislation Issues This one is called the “Good Funds Bill” and has requirements
regarding closing and disbursement of funds. In this act any funds coming
from a single source, normally the new lender that exceeds $50,000 must be in
the form of a wire transfer “Irrevocably credited” to the escrow account of
the title company. All lenders in a transaction, purchase and sale or
re-finance, must wire funds to the closing agent if they are lending in
excess of $50,000. Funds from a single source, normally the borrowers funds, if
less than $50,000 must be in the form of a cashiers check, certified funds,
bank money orders, official bank checks, or tellers checks, unconditionally
held by the Title company responsible for the disbursement at the closing. If
in excess of $50,000, funds must in the form of a wire transfer. This act also defines “Good Funds” as Checks from an lawyers
trust account, or real estate brokers trust account, provided that the title
company has “reasonable and prudent grounds to believe that sufficient funds
are available for withdrawal in the account from which the check is drawn at
the time of closing”. The act also allows for acceptance of another title
company’s check, drawn from their escrow account, under the same “reasonable
and prudent” provisions as noted above. Why the change you may ask? Many title companies, as well as
buyers have had some major issues recently with lenders, small and large,
that have filed bankruptcy, or just plain gone away. If a title company had
disbursed on any of there funds, assuming that they were good funds at the
time when in reality they were not, they would have disbursed at the closing
and be responsible for the funds. The money in our escrow account belongs to
those trusting us to care for it and disburse it according to instructions,
if we disburse on funds that are not “Good Funds” then we have not followed
our responsibility and are in a position of risk.
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