The Good Funds Law went into effect on April 6, 2017 amending Section 1349.21 of the Ohio Revised Code to require stricter controls for all residential real estate transactions involving the sale, purchase, or refinance of such real estate. The law was passed as an attempt to combat and thwart fraudulent activities associated with the closings of such residential real estate transactions. While the Good Funds Law only applies to residential real estate, some title companies have elected to also apply the law to commercial real estate transactions. The law applies to buyers, sellers, and lenders.

The basic purpose of the law is to eliminate the use of checks and instead to require, with limited exceptions, the transfer of funds to purchase the property at closing to the title company by electronic transfer. While the law initially required that any funds for more than $1,000.00 be electronically wired to the title company prior to the closing, the Ohio legislature has increased this amount to be effective on September 29, 2017 from $1,000.00 to $10,000.00. Cash, personal checks, certified checks, official checks, or money orders are still acceptable for expenses up to $1,000.00 or $10,000.00 (after September 29, 2017). This threshold cannot be circumvented by issuing multiple checks or utilizing a multitude of different forms of payment. Additionally, while the Ohio legislature has elected to increase this threshold amount, some title companies, as the risk bearers of any such fraudulent checks, may establish a policy to accept these alternative forms of payment in an amount less than this statutory threshold.

For buyers, the Good Funds Law means that they can no longer bring a certified check for the purchase price (unless the dollar amount is less than the threshold above). Further, a lender must electronically wire the funds to the title company in sufficient time for the deposit to show up in the title company’s bank account prior to the scheduled closing. For sellers, if they need the funds from the first closing to immediately attend a second closing to purchase another property, they may need to delay the second closing until the funds from the first closing have been wired and received by the next title company in sufficient time for the second closing. Thus, going forward, the electronic transfer of funds to purchase property in Ohio will be a mandatory process for buyers, sellers, lenders, and title companies.