Understanding Ohio’s Good Funds Law
Real estate closings involve large sums of money moving between buyers, sellers, lenders, title companies, payoff lenders, real estate brokers, and other parties. Because timing matters, Ohio has rules designed to make
This is the basic purpose of Ohio’s Good Funds Law. For Ohio homebuyers, sellers, real estate agents, loan officers, title professionals, and business owners, understanding this law can help prevent closing delays, wire problems, and last-minute surprises.
What Is Ohio’s Good Funds Law?
Ohio’s Good Funds Law generally requires settlement or closing agents to make sure certain funds are collected and available before money is disbursed in a real estate closing. In plain English, the title company or escrow agent should not hand out sale proceeds, pay off mortgages, release broker commissions, or issue other closing payments until the funds needed for closing are properly received.
The law applies to many Ohio real estate closings, including residential transactions. It is especially important when a buyer must bring money to closing for a down payment, closing costs, or other amounts due.
The rule protects everyone involved by reducing the risk that a closing agent disburses money before the buyer’s funds actually clear.
What Are “Good Funds”?
“Good funds” are funds that the closing agent can rely on as available and collected. Depending on the amount and the situation, this may include:
• Wire transfers received by the title company
• Certain cashier’s checks or certified checks
• Funds from a lender that have been properly delivered
• Other payment methods accepted by the title company under Ohio law and its internal policies
In many Ohio closings, buyers are told to wire funds directly to the title company or bring an approved form of certified funds. Personal checks are often not accepted for larger amounts because they may take time to clear and may be returned for insufficient funds
The exact payment method matters. A buyer should not assume that any bank check, money order, personal check, or electronic payment app will be accepted. Title companies often have strict instructions, and those instructions should be followed carefully
Why Certified Funds Matter at Closing
Certified funds matter because closing is built on trust and timing. A seller expects to receive proceeds. A lender expects its mortgage payoff to be made. A buyer expects to receive title to the property. Agents and other service providers expect payment.
If the buyer’s funds are not actually available, the entire transaction can be disrupted.
For example, if a buyer brings a personal check for a large amount, the title company may not be able to disburse funds that day. Even if the buyer has enough money in the account, the title company may need confirmation that the funds have cleared. That can delay possession, loan payoff, recording, and seller proceeds.
Certified funds help reduce that risk because they are more reliable than ordinary checks. Wire transfers are often preferred because the money moves directly between financial institutions and can be confirmed by the title company.
Common Closing-Day Issues Ohio’s Good Funds Law Helps Prevent
Ohio’s Good Funds Law is designed to prevent several practical problems that can occur on closing day.
Delayed Seller Proceeds
Sellers often plan around the timing of their sale proceeds. They may need the money to purchase another home, pay off debts, move, or fund a business need. If funds are not collected, the title company may not be able to release the seller’s money on time.
Mortgage Payoff Problems
Most home sales involve paying off the seller’s existing mortgage. If closing funds are not available, the payoff may be delayed. This can create extra interest, payoff statement issues, or confusion about whether the old loan has been satisfied.
Recording Delays
In many transactions, documents such as the deed and mortgage are recorded after closing requirements are satisfied. Funding problems can delay recording, which may affect when the buyer’s ownership and the lender’s mortgage are officially reflected in the county records.
Possession Disputes
Buyers and sellers may disagree about when keys should be released if funding is delayed. A buyer may believe the deal is done after signing documents, while the seller may not want to give possession until funds are confirmed.
Wire Fraud and Payment Mistakes
Real estate wire fraud is a serious risk. Criminals may send fake wiring instructions that appear to come from a title company, real estate agent, or lender. If a buyer wires funds to the wrong account, closing may fail and the money may be difficult to recover
Good funding procedures encourage buyers and title professionals to verify wire instructions and confirm receipt before closing funds are disbursed.
Why Buyers Should Plan Ahead
Ohio buyers should ask early how much money they need to bring to closing and what payment method is required. Waiting until the morning of closing can create avoidable stress.
Buyers should:
• Confirm the final amount needed to close
• Ask the title company what forms of payment are accepted
• Verify wire instructions by phone using a trusted number
• Contact their bank in advance about wire cut-off times
• Ask whether their bank requires in-person approval for large wires
• Keep proof of the wire or certified check
• Avoid sending funds based only on email instructions
A wire sent late in the day may not arrive before closing. Some banks also have daily transfer limits or extra security steps. Planning ahead can help keep the closing on schedule.
What Sellers Should Know
Sellers should understand that signing closing documents does not always mean proceeds can be released immediately. The title company may need lender funds, buyer funds, signed documents, payoff confirmations, and recording approval before disbursement.
If the seller is using proceeds for another closing, the timing should be coordinated carefully. Back-to-back closings can work, but they require communication between title companies, lenders, agents, and attorneys.
Why Real Estate Agents, Loan Officers, and Title Professionals Should Coordinate
Good Funds issues often come down to communication. Real estate agents, loan officers, and title professionals can help clients avoid problems by confirming funding requirements early.
Helpful steps include:
• Reviewing closing timelines before the scheduled date
• Making sure buyers understand wire or certified check requirements
• Confirming lender funding conditions
• Watching for last-minute changes to cash-to-close amounts
• Warning clients about wire fraud
• Coordinating possession expectations
• Encouraging legal review when contract or funding disputes arise
Loan officers should also communicate clearly about final closing disclosures and funding conditions. Title professionals should provide secure instructions and confirm acceptable payment methods. Agents can help manage expectations between buyers and sellers
When to Contact an Ohio Real Estate Attorney
Most closings proceed smoothly, but funding disputes can become serious. An Ohio real estate attorney can help when there are disagreements over delayed disbursement, failed funding, wire fraud, possession, contract deadlines, escrow instructions, or closing obligations.
Business owners involved in commercial or investment property closings may also need legal guidance when funding delays affect operations, lease obligations, financing, or related transactions.
Yonas & Phillabaum, LLC Attorneys at Law assists clients with Ohio real estate matters, including closing issues and transaction disputes. Careful planning before closing can reduce risk, but legal guidance is often valuable when problems arise
General informational note: This article provides general information about Ohio’s Good Funds Law and is not legal advice for any specific situation
