ATG Member Guide to New Closing Information and Procedures:
Good Funds: Common Situations and How ATG Will Handle Them
An amendment to the Title Insurance Act was approved and will take effect on January 1, 2010. This legislation will impact disbursem*nts made by title insurance companies and title insurance agents out of fiduciary trust accounts in connection with escrows, settlements, and closings in Illinois. This new legislation defines good funds and collected funds and prohibits disbursem*nt unless the funds received are good funds or collected funds as defined in the amendment. There is a good possibility that disbursem*nts will be delayed beyond the closing date because of the requirement of certain types of funds before disbursem*nt depending on the dollar amounts.
We will consider the buyers collectively, the sellers collectively, and the lender, each to be a "single party to the transaction."
Funds in the aggregate amount of $50,000 or greater, received from a single party to the transaction, must be one of the following:
- Wired funds unconditionally held by and credited to the fiduciary trust account from which disbursem*nts are to be made.
- A check issued by the State of Illinois.
- A check issued by the United States of America.
- A check issued by a political subdivision of the State of Illinois or the United States of America.
- A check drawn on the fiduciary trust account of a title insurance company or title insurance agent, provided the recipient has reasonable grounds to believe that sufficient funds are available for withdrawal in the account upon which the check is drawn at the time of disbursem*nt.
- Collected funds as defined in the amendment as being funds deposited, finally settled, and credited to the title insurance company, title insurance agent, or independent escrowee's fiduciary trust account.
Funds in the aggregate amount of less than $50,000, received from a single party to the transaction, must be one of the following:
- Wired funds unconditionally held by and credited to the fiduciary trust account from which disbursem*nts are to be made.
- A check issued by the State of Illinois.
- A check issued by the United States of America.
- A check issued by a political subdivision of the State of Illinois or the United States of America.
- A check drawn on the fiduciary trust account of a title insurance company or title insurance agent, provided the recipient has reasonable grounds to believe that sufficient funds are available for withdrawal in the account upon which the check is drawn at the time of disbursem*nt.
- Collected funds as defined in the amendment as being funds deposited, finally settled, and credited to the title insurance company, title insurance agent, or independent escrowee's fiduciary trust account.
- Lawful money of the United States.
- Cashier's checks, certified checks, bank money orders, official bank checks, or teller's checks drawn on or issued by a financial institution chartered under the laws of any state or the United States and unconditionally held by the title insurance company, title insurance agent, or independent escrowee.
- A personal check or checks in an aggregate amount not exceeding $5,000 per closing, provided that the title insurance company, title insurance agent, or independent escrowee has reasonable grounds to believe that sufficient funds are available for withdrawal in the account upon which the check is drawn at the time of disbursem*nt.
- A check drawn on the trust account of any lawyer or real estate broker licensed under the laws of any state, provided that the title insurance company, title insurance agent, or independent escrowee has reasonable grounds to believe that sufficient funds are available for withdrawal in the account upon which the check is drawn at the time of disbursem*nt.
Cash, cashier's checks, certified checks, bank money orders, official bank checks, teller's checks, and checks drawn on the trust accounts of any lawyer or real estate broker are not considered good funds when they are part of amounts of $50,000 or more received from a single party to the transaction, until they are deposited, finally settled, and credited to the fiduciary trust account.
In order to ensure that another title company will accept checks that a lawyer writes out of his/her title account when a single party to the transaction is bringing in $50,000 or more, those checks must indicate the title agent's name with the words "Title Insurance Agent Fiduciary Trust Account" after it.
EXAMPLE
1. Purchase price is $300,000. Mortgage is $200,000. Lender's incoming must be wired. Buyers sell their house in the morning and the proceeds from that sale are $60,000 which is in the form of a title company check. That check is acceptable, but the remaining $40,000 from the buyer must also be wired or be a state or federal government check to allow disbursem*nt that day. That is because the amount to be brought in by the buyer is $50,000 or greater, so all of the funds they bring in must fall within the first category of good funds.
[Last update: 12-10-09]
