“Collected” Funds

Originally Published: 4/25/2012

You might have noticed that more and more closing agents are requiring wire transfers from buyers to fund closings. Berlin Patten was forced to recently adopt this practice. Please note that no closing agent who has adopted this practice is doing so because they want to. Due to changes in banking regulations, Cashier’s Checks or Official Checks, which were once considered “collected funds” or “good funds” under state and federal law, are no longer considered as such. The reason is that it is now much easier to stop payment on, forge, or otherwise reverse payment on a Cashier’s Check or an Official Check.  In fact, Collected Funds are now required under the Florida Realtors/Florida Bar Contract forms as defined under Standard S of the Contract.

Closing agents were always obligated to fund transactions using only “good funds” or “collected funds.”  Historically, that permitted closing agents to accept Cashier’s Checks or Official Checks from buyers (but never personal checks) without waiting for such checks to clear. However, due to the ease in which such payments can now be reversed, neither a Cashier’s Check nor an Official Check is considered “collected” funds any longer for purposes of funding real estate transactions.

The result is that all title underwriters have mandated that their closing agents fund transactions through wire transfers from the purchaser, unless of course the purchaser wishes to fund the transaction through the use of a check 7-10 days in advance of the closing date to allow it to become deposited and collected in the closing agent’s trust/escrow account. Any closing agent who ignores this requirement places their license at risk, so this practice is not really optional, unfortunately.

For further explanation of the funds required from purchasers at closing (as well as the different requirements associated with law firm trust account checks and real estate brokerage escrow checks) please contact your real estate attorney.

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