Legally speaking: Changes to Ohio’s Goods Fund law
On February 13, 2017
By Lorie Garland, OAR Assistant Vice President of Legal Services
The OAR Legal Assistance Hotline receives an array of real estate-related legal questions — including license law issues, disclosure, contract law, ethics and commission problems, among others. In an effort to help you work within the law, “Legally Speaking” spotlights some of the timely questions that are being asked by REALTORS. This week involves changes to Ohio’s Good Funds law…
Q: A local title agent told me that there has been a change in an Ohio law that will impact residential closings. He said that, for closings, title companies will no longer be able to accept money orders or cashier’s checks over $1,000. That buyers will be required to wire any funds over $1,000 to the title company. Is this correct, and if so, what brought about this change?
A: There has been a change in Ohio’s Good Funds law. The Good Funds law applies to escrow/title agents and prescribes what funds can be accepted for disbursement at a closing. The revisions go into effect on April 6, 2017.
Currently the law permits title companies to accept closing funds in the following manner:
- Electronically transferred funds;
- Certified checks, cashier’s checks, official checks, or money orders that are drawn on an existing account at a federally insured bank, savings and loan association, credit union, or savings bank;
- A check drawn on the escrow account of a title insurance company or title insurance agent; or
- A personal check in an amount not exceeding $1,000.
The change in the law that is effective on April 6, 2017 permits a title company to accept cash, personal or business checks, certified checks, cashier’s checks, or money orders but only in an aggregate amount not exceeding $1,000. A title company continues to be able to accept electronically transferred funds. Therefore, the revision in the law will require buyer’s funds in excess of $1,000 to be electronically transferred to the title company.
The main change in the Good Funds law is the $1,000 limitation on cash, checks, and money orders. What precipitated this change was an increase in fraudulent checks and money orders presented to title companies. The limitation on cash was due to concerns with money laundering.
The revised provisions specifically address checks drawn on a brokerage trust account. Title agents are permitted to accept checks drawn on a broker’s trust account with no dollar limitation. So for example, if a broker is holding a $10,000 earnest money deposit, a $10,000 check drawn on the trust account can be accepted by the title company.
For a more detailed discussion of the revisions to Ohio’s Good Funds law, see the next Ohio REALTOR magazine available in mid-March.
Legal articles provided in the OAR Daily Buzz are intended to provide broad, general information about the law and is not intended to be legal advice. Before applying this information to a specific legal problem, readers are urged to seek advice from an attorney.
Tags: legal, Legally Speaking