It has always been our goal at Alison Moss & Associates to stay up to date on the latest news, trends, and rules/regulations in the real estate market to better service our clients. That being said, we feel it is important to share with you the changes regarding the Ohio Good Funds legislation, effective today, April 6, 2017.
WHAT IS THE OHIO GOOD FUNDS LEGISLATION?
If you are not familiar with this legislation, it is a consumer protection statute to protect against fraud and preserve the integrity of the consumer’s funds that are held and disbursed in a real estate transaction. The statute was originally effective January 1, 1996 and was recently amended with changes becoming effective today. Below we have provided an overview of both changes and what will be staying the same in the new law.
WHAT HAS CHANGED WITH THE OHIO GOOD FUNDS LAW?
- The main change to the law is that when proceeds from the sale are more than $1,000 the buyer must wire the funds to the title company and will no longer be able to bring a cashiers check to closing.
WHAT HAS STAYED THE SAME WITH THE OHIO GOOD FUNDS LAW?
- The law still only applies to residential property transactions which are defined as any condo, townhouse, single-family home, or 2-4 unit apartment building, duplex, or quadruplex. The law does not apply to commercial deals.
- The law still applies to refinances and cash deals.
- The law will still regulate any and all funds collected from both the buyer/borrower/seller as well as the lender.
- The law will still permit the title company to accept cash, personal or business checks, certified checks, cashier’s checks, or money orders but only if the amount due is $1,000 or less and the money is physically received by the escrow agent before the pay out and will be deposited the next banking day.
- The title agency is not able to alter the types of acceptable funds in a transaction, even if all parties agree that other forms of funds are acceptable.
- Earnest money funds given to the real estate broker from the buyer can be used at closing for funds as long as the broker brings these funds in the form of a business check. There is no limit on the amount of a check from the broker. For example, if a broker is holding a $5,000 earnest money deposit, the tile company can accept a $5,000 check from the broker.
- Checks from other title companies for greater than $1,000 are not exempt from the rule and the rule also applies to lenders sending funding into a bank account.
- For “back-to-back” closings, all title companies will require that the funds from the first closing be wired for the second closing (unless the proceeds are $1,000 or less).
The closing process in real estate transactions can seem complex but as a trusted advisor who has had experience with many different financial situations, I am prepared and dedicated to helping my clients easily navigate the process. If you or someone you know is looking to sell or purchase a home, please feel free to share this post or contact me if you like would more information.