Funding Requirements and Issues in Real Estate Closings

Ohio’s “Good Funds” Law Effective January 1, 1996 requires all funds used in the acquisition or financing of real estate to be in the following forms:

• Cashier’s, Certified or Official Bank Checks
  
  
• Money Order • Government Check
  
  
• Real Estate Brokerage, Title Agency or Law Firm Escrow/Trust Acct. Check Wired Transfer funds
  
  
• Personal or Company checks under $1,000.00
  
  
• Cash

Some Examples of funds which are NOT ACCEPTABLE

• Money Market or Investment Account Checks
  
  
• Drafts
  
  
• Out of State Checks from a Real Estate Brokerage Firm, Title Agency, or Law Firm
  
  
• Personal Checks OVER $1,000.00
  
  
• Company Checks
  
  
• Credit Cards, Debit Cards, or Credit Card Access Checks
  
  
• Line of Credit or Home Equity Line Checks
  
  
• Cash OVER $9,999.00

NOTE: The above requirements are also true of the SELLER if they owe money to sell their property.

The “Un-funded” or “Dry” Closing:

You will likely encounter a closing that can not be completed at the closing table because the Title Company is saying they have not been “funded” by the Lender. These transactions are more common when a Mortgage Broker is being used. Mortgage Brokers do not have direct access or authority over the Investor’s funding of the loan and are then subject to the Investor’s funding habits.

If you are involved in a deal where the buyer’s lender is a Mortgage Broker, be prepared for delays in funding. Likewise if the deal involves non-conforming loan products you are more apt to experience delays in funding. Make sure you know the Companies, both financing and closing, and have prepared your clients to weather this potential storm.

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