On January 4, 2017, Ohio Governor Kasich signed H.B. 463, a bill which included revisions to the 1996 Ohio Good Funds law. This law regulates how funds are collected by an escrow or closing agent in connection with a residential real estate transaction. These changes are set to take effect on April 6, 2017.
As part of the updates to Ohio Revised Code 1349.21, aggregate funds in excess of $1,000 that are supplied as part of a residential real estate transaction must be electronically wired directly to the closing agent’s escrow account.
What does this mean for buyers, sellers, and real estate professionals?
Prior to April 6, 2017, funds that were required as part of a closing were commonly supplied using a cashier’s check or bank certified check. While this method is still acceptable for amounts under $1,000, per the updated Ohio Good Funds Law, amounts over $1,000 will now have to be electronically wired directly to the closing agent. This includes down payments, closing costs, and funds that a seller may be required to bring as part of the closing.
If your required funds to close exceed $1,000, you will be required to wire those funds directly from your bank to the closing agent. Most banks charge a fee to wire funds, and wires may take up to 24 hours. Wired funds must be received by the closing agent PRIOR to the scheduled closing.
This law applies to “aggregate” funds, meaning it applies to the total amount that you are bringing to closing. If your required funds to close are $1,200, you cannot bring a cashier’s check for $800 and a cashier’s check for $400 as a work around – since the aggregate (total) amount is above $1,000, a wire is required.
The only exception in the Ohio Good Funds Law to the wire requirement is funds that are brought by the real estate broker, such as the buyer’s earnest money deposit. Funds in excess of $1,000 are permitted to be supplied by a real estate broker as a check as long as it is a business check drawn on the broker’s special or trust bank account.
Tips for a successful closing
- If you are purchasing a home in Ohio, you need to check with your bank to ensure that they will do wire transfers. Some smaller banks and credit unions will NOT wire funds, and you may need to switch banks.
- >>>If you find that your bank does not offer wire transfers, contact your Loan Officer or mortgage professional BEFORE switching banks. They will provide advice on how to move your funds in a way that doesn’t jeopardize your loan application.
- These requirements do increase the risk for cyber fraud. You will need to work with your Loan Officer or Loan Processor to identify exactly how the wire instructions will be provided to you.
- >>>Be very cautious of any last-minute changes to your wire instructions. If you receive an email or voicemail letting you know that the instructions have changed, it is recommended that you call your Loan Officer or Loan Processor directly to confirm that the change is legitimate.