Understanding House Bill 463 or the
"Good Funds Statute"
Effective April 6, 2017, ORC §1349.21 of Ohio's so-called "good funds statutes" (ORC §§1349.20 - 1349.22) has been amended to change the definition of good funds (i.e. the funds necessary for disbursement from an escrow account on residential transactions).
First, the back story: Ohio's existing good funds statutes (effective since 1/1/1996) defined the types of funds or negotiable instruments on which an escrow or closing agent could disburse. Due to changes in the settlement service business, as well as an increase in fraud, it was determined that the good funds statutes needed to be updated. In response, House Bill 463, which amends ORC §1349.21, prohibiting an escrow or closing agent from disbursing from an escrow account unless certain conditions are met, becomes effective April 6, 2017.
What this means: Any transaction closing on or after April 6, 2017, which requires funds over $1,000, must be in the form of a wire transfer (no ACH*), business check cut from a real estate brokers trust account, or be an ACH initiated by or check issued by the US government or State of Ohio government agency. We cannot accept an ACH from a private party.
Funds less than or equal to $1000 can be in the form of cash, personal check, business check, cashier's check, official bank check or money order if drawn on an existing account at a federally insured bank, savings and loan association, credit union, or savings bank; no convenient store or similar location money orders are acceptable.
Please discuss this latest change to our industry with your clients, so they are prepared that their bank or credit union can initiate a wire transfer for closing. For further details, visit: http://c.ymcdn.com/sites/www.olta.org/resource/resmgr/pdf/OhioGoodFundsLawFAQ.pdfhttp://codes.ohio.gov/orc/1349.21*Automated Clearing House (also referred to as ACH) is the network that processes electronic financial transactions in the United States. This contains large volumes of credit and debit transactions in batches from a variety of different types of organizations and businesses.
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