The “Good Funds” Rule – Paying the title company

The “Good Funds” Rule – Paying the title company

So, last week we spoke about what form of payment a title company would accept and why according to the FR/FB Contract. Now, just so you do not think I just want to talk and tell you everything I know about this, the Florida Administrative Code has set this ruling out!

Basically, for licensed title agencies, these rules prohibit agents from disbursing funds from escrow accounts unless funds are “collected funds.” The rule defines collected funds as funds that are “deposited, finally settled and credited” to the title insurance agent’s account.  This would mean that many purchase transactions would never disburse on the same day if any of the funds are being delivered other than by a wire transfer.

FAC  69O-186.008 Escrow Requirements (excerpts)

good funds property guiding(1) A title insurance agent or title insurer may not use, endanger, or encumber money held in trust without the permission of the owner of such money, given after full disclosure of the circumstances. Accordingly, except as hereinafter provided, a title insurance agent or title insurer may not disburse funds unless the funds are collected funds. For purposes of this provision, “collected funds” means funds deposited, finally settled and credited to the title insurance agent’s or title insurer’s trust account. Notwithstanding that a deposit made by a title insurance agent or title insurer to the trust account has not been finally settled and credited to the account, the title insurance agent or title insurer may disburse funds from the trust account in reliance on such deposits under any of the following circumstances:

(c) The deposit is made by a bank check, cashier’s check, official check, treasurer’s check, or other such official instrument issued by a bank, savings and loan association, or credit union when the instrument is drawn by the bank on itself, or on another bank whether or not the check is “payable through” or “payable at” a bank and the title insurance agent or title insurer has reasonable and prudent grounds to believe the instrument will clear and constitute collected funds in the title insurance agent’s or title insurer’s trust account within a reasonable period of time. Such instruments are considered by the Federal Reserve Board, under Federal Regulation CC, otherwise cited as 12 C.F.R. 229, to be “next day” payable items. A check drawn by a corporation on a bank or a draft drawn by a corporation on itself whether or not the check or draft is “payable at” or “payable through” a bank and is not a “next day” payable item under Regulation CC unless the depository bank chooses to treat it as such, and may not be disbursed on until collected.

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Still have questions on how you should pay the title company your funds, call and ask!

Title Junction is a full service real estate title company serving the area of Fort Myers, Cape Coral and the entire state of Florida since 2005. The company handles a number of real estate title services for both commercial and residential properties. Employees of Title Junction can also act as a witness in courtesy closings as well as an escrow agent or a notary public.

Please contact Jennifer Ferri of Title Junction, LLC for further information @ 239-415-6574 or www.title-junction.com

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Posted on June 7, 2013, in Title and tagged , , , , , , , , , , , , , , , , , . Bookmark the permalink. 1 Comment.

  1. Are Florida title companies required to disburse funds after a closing immediately … or are they allowed to take a week ?

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