The Good Funds law is in place to make sure that the parties to a real estate transaction can rely on the funds that are being used in connection with the transaction. The law outlines what constitutes good funds. The following outlines what funds are acceptable pursuant to the law.

Good Funds for a Seller or Lender

When $50,000 or more has to be brought in by a seller or lender in a transaction, the form of the incoming funds can fall into one of the following categories:

• Wired funds;
• Checks drawn on the closing trust account of a title insurance company or a title insurance agent;
• Check issued by the State of Illinois, United States, or political subdivision of either; or
• Collected funds, which are funds that have been deposited, finally settled, and credited to the title company. These would be funds that would not otherwise be considered good funds, but are acceptable because they were deposited by ATG and cleared in advance of the closing

Good Funds for a Buyer

When $50,000 or more has to be brought in by a buyer in a transaction, the form of the incoming funds can fall into any of the categories listed above as good funds for a seller or lender. However, a buyer has two additional options when the total incoming funds required from the buyer totals $50,000 or more. Buyers can also bring in incoming funds that fall into one or both of the following categories:

• Cashier’s, Certified, Official Bank, Teller’s Check, or Bank Money Order that is from a United States or state bank (this is for buyers’ only and the total of all checks from this category must be less than $50,000); and/or
• A check drawn on the trust account of a lawyer and/or real estate broker that the closing agent reasonably believes has sufficient funds (this is for buyers only and the total of all checks from this category must be less than $50,000).

When a buyer brings incoming funds from one of the above two categories, the amount from each category must be less than $50,000. However, there can be a combination from the two categories that totals $50,000 or more.

ATG will also accept a personal check from the buyer up to $500 for any incidental charges that arise.

Recent Amendments to the Good Funds Law

Recent amendments to the Good Funds Law provide certain exceptions when the title company or title agent and the lender are known to each other and the title company or title agent agrees to accept these funds. To vary from what is outlined above as constituting good funds, you must have prior approval from ATG’s Underwriting Department.

If you have any questions, Contact an Underwriter.