Needed Change to Ohio’s Good Funds Law
July 13, 2017 |
In 2016, for the first time in 20 years, the Ohio legislature updated Ohio’s Good Funds Law. The changes were intended to address fraud as it relates to certified checks, money orders, and other financial instruments. In April of 2017, the changes became effective and almost immediately raised compliance issues in the real estate industry. To address those unintended consequences, a much needed fix was included in Ohio’s budget bill, signed by Governor Kasich on June 30, 2017.
To understand the fix, let’s take a look at the former law as it pertains to real estate professionals. Starting in April, you may have noticed that your clients were required to wire any closing funds exceeding an aggregate amount of $1,000.00. The impact was that buyers were prohibited from bringing cashier’s checks, money orders, or other checks if the amount exceeded $1,000.00.
The budget bill includes an amendment to R.C. 1349.21, raising the aggregate amount from $1,000.00 to $10,000.00. This means that buyer clients may bring up to $10,000.00 in funds to closing, via cashier’s check, money order, or other check. Any fund exceeding $10,000.00 will have to be wired to the title company. As with the former law, any checks must be drawn on an existing account at a federally insured bank, savings and loan association, credit union, or savings bank.
If you believe your client may have an issue with the requirements of the Good Funds Law, it is recommended to discuss concerns with the title company in advance of closing. Such will avoid any unpleasant surprises the day of closing.