The Good Funds Law. Read On.

If you’re looking to buy a home, you should be aware of The Good Funds Law and how it affects you at closing.

Style: "Sharp_25_3"Here’s an overview:

– Closing agents must deposit all funds received in connection with a real estate transaction into an escrow account unless all the parties involved agree to another arrangement.

– All funds over $10,000 received from any party to the real estate transaction must be wired. These funds are credited to the closing agent’s escrow account. Wire transfers are required by this Act so that the monies are guaranteed for immediate disbursement at the time of closing to all parties involved.

-Funds less than $10,000 received from any party related to the transaction must be in the form of “good funds” as defined by the Act.

“Good funds” includes:

– Wired funds
– Certified or cashiers check drawn on existing bank account, savings and loan, credit union or savings bank chartered under the laws of a state or the United States
– A check drawn on the trust account of a real estate broker
– A personal check of $500 or less
– A check issued by the State, the United States, or a political subdivision of the State or the United States
– A check drawn on the escrow account of another closing agent
• A check issued by a farm credit service authorized under the Farm Credit Act of 1971 (12 USC 2001 et.seq.)

– Closing agents are permitted to advance up to $500.00 from an escrow account to pay off specified incidental fees to facilitate the real estate transaction.
– A lender whose mortgage is being paid off at closing may request that its payoff be in the form of wired funds as long as wired funds are deposited in the closing agent’s escrow account in an amount sufficient to cover the payoff.
– Earnest money to be applied to the home’s purchase price totaling $10,000 or more must be wired into the closing agent’s escrow account for closing. Earnest money under $10,000.00 brought to closing must be good funds as defined by the Act. An earnest money check deposited into a closing agent’s escrow account prior to closing must be fully cleared and collected prior to disbursement at closing.

Your Realtor can help guide you along this law regarding escrow transactions. Contact us of you have any questions.


About rowlandtitle

Rowland Title Company is Madison County’s premiere title company, celebrating its 125th year in business, and providing title insurance, escrow and closing needs to all 92 Indiana counties. For more information visit Rowland Title at (
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