Ohio Good Funds – FAQ

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.

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.

No. All electronically transferred funds must be sent vi 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 of political subdivision of the United State or the State of Ohio.

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.

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.

No. The law only permits cashier’s or certified checks in an aggregate amount of $1,000 or less.

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.

Yes. This aspect of the law has not changed. The only applies to residential real property
transactions which are defined as any real property improved or to be improved with a one-to-four
family dwelling.

No. The terms of the law must be strictly followed and does not permit the consumer, lender, or escrow or closing agent to alter the types of acceptable funds in a residential real property transaction.

The answer was no, we came to the conclusion that the statute is clear that title company checks are not exempt from the rule.

Yes. It applies to all residential transactions.

Yes. It applies to all residential transactions.

The lender will not be able to do an ACH into a settlement agent’s 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.

If the proper procedures are put into place to make sure that any wire instructions are provided in person or verified by the parties prior to being sent, the risk of not having funds available for disbursement or being told they did not clear, post-closing, stop the consumer from being harmed. Fraudulent Certified Checks and Cashier’s Checks pose a greater risk to the consumer than a wire.

Bank branches set limits on the amounts that can be wired from a consumer account

It seems like mobile banking limits the amount that can be wired from an account but not an actual branch visit in order to initiate the wire, although this may vary by bank. Title agents have been instructed to let their customers know when the order is opened, that the money needed from all parties will need to be in the form of a wire for any amount over $1,000 so they need to check with their bank to see what that bank’s policy is on sending wires. If they will only be able to send increments of the total each day, they will need to start the process early in order to have the full amount of any funds needed on the day of disbursement.

Yes.

If the money for this transaction will be received and disbursed from the Ohio IOTA account, then it will have to follow this law. The only exception to the would be for a Commercial transaction, as this does not apply to commercial deals.

Unless the funds are for Earnest Money and those funds were sent from the Real estate Broker from the Real estate Brokers Trust account, all deposits will need to be in the form a a wire. The above scenario is most likely to happen in a commercial transaction though, which would not be covered by this rule.

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 deliver of documents, delay in delivery of remotely-signed documents, delay in receipt of lender’s funds on the day of closing, 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 $1000 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.