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Real Estate and Title Insurance News

Amended Effective January 1, 2011

EDITOR'S NOTE: The following article summarizes the good funds provisions of the Title Insurance Act, added in 2010 and amended effective January 1, 2011.

On January 1, 2010, Public Act 96-645 took effect in Illinois amending the Title Insurance Act by placing restrictions on the types of funds that may be disbursed for escrows, settlements, and closings from a closing agent's fiduciary trust account. A closing agent is defined as a title insurance company, title insurance agent, or independent escrowee. Specifically, the new sections provided when disbursed funds must constitute "good funds" or "collected funds."

To disburse funds received from a single party to a transaction when the funds are, in aggregate, $50,000 or more, the funds must be good funds or collected funds. In this context, good funds are funds in one of the following forms:

1. Wired funds unconditionally held by the closing agent;

 

2. A check issued by the State of Illinois, United States, or a subdivision of either; or

 

3. A check drawn on the fiduciary account of a title insurance company or agent that the closing agent reasonably believes contains sufficient funds.

Collected funds are funds deposited, finally settled, and credited to the fiduciary trust account of the closing agent.

To disburse funds received from a single party when they are $50,000 or less, the funds must still be good funds or collected funds. However, the definition of good funds expands upon the previous definition to include the following:

1. Lawful United States currency;
    
2. A cashier's, certified, official bank or teller's check or a bank money order, from a U.S. bank, held unconditionally by the closing agent;

 

3. Personal checks in aggregate not to exceed $5,000 per closing, which the closing agent reasonably believes are drawn on accounts with sufficient funds; or

 

4. A check drawn on the trust account of a lawyer or real estate broker which the closing agent reasonably believes has sufficient funds.

Also, when a lawyer represents a single party in a transaction who is bringing in more than $50,000, the lawyer should write his or her name on the check disbursing the funds, followed by the words "Title Insurance Agent Fiduciary Trust Account."

The 2011 Good Funds Amendment

Public Act 96-1457 take effect on January 1, 2011, and amends the 2010 additions to the Title Insurance Act regarding good funds. The new amendment creates flexibility for a party bringing $50,000 or more into the transaction.

Such a party may bring amounts less than $50,000that are added to the aggregate, which exceeds $50,000, and those amounts will be considered good funds if provided in the following forms:

1. A cashier's, certified, official bank or teller's check or a bank money order, from a U.S. bank, held unconditionally by the closing agent; and

 

2. A check drawn on the trust account of a lawyer or real estate broker who the closing agent reasonably believes has sufficient funds.

The party may then supplement that amount with up to $5,000 in the form of personal checks drawn on an account that the closing agent reasonably believes contains sufficient funds. This should ensure that more closings successfully finish even if the final numbers are not exactly as anticipated, so long as the change does not require the party to write a check for more than $5,000.

In addition, the new amendment clarifies that a seller, buyer, or lender constitutes "a single party" under the act even if that party constitutes multiple persons or entities. This definition is the same that ATG has been using, and you can see a fuller discussion of the issue inour articleon this topic.

THE TRUSTED ADVISER is published by Attorneys’ Title Guaranty Fund, Inc., P.O. Box 9136, Champaign, IL 61826-9136. Inquiries may be made directly to Mary Beth McCarthy, Corporate Communications Manager. ATG®, ATG® plus logo, are marks of Attorneys’ Title Guaranty Fund, Inc. and are registered in the U.S. Patent and Trademark Office. The contents of the The Trusted Adviser © Attorneys' Title Guaranty Fund, Inc.

[Last update: 10-8-10]