Utah Association of REALTORS®

IMPORTANT RETRACTION / CLARIFICATION-Good Funds Rule Gets Muddied

In yesterday's mid-week bulletin there was a message titled, "Good Funds Rule Clarified" which reported that the State Insurance Commission WOULD allow CASHIER'S CHECKS to be used as immediate tender at closing. THIS STATEMENT IS ONLY TRUE UNDER CERTAIN CIRCUMSTANCES (see explanation below). One of the executives at the Commission office, in discussing this issue initially, stated that the Commission's interpretation of the good funds rule under Federal and State law would authorize cashier's checks as immediate tender. However, the Commission staff member (Gerri Jones) who has direct responsibility over enforcement of the rule called the UAR today and stated that the prior information was not entirely accurate; there is much more to the story.

The following is an attempt to describe the Federal and State law on this issue, and the options available to REALTORS: What types of funds can be dispersed on the same day they are deposited?
1. Cash (see U.C.A. 31A-23-307(2)(d)(i))
2. Wire transfers (see U.C.A. 31A-23-307(2)(d)(ii))
3. Cashier's checks, certified checks, teller's checks, U.S. Postal Service
money orders, and checks drawn on a Federal Reserve Band or Federal Home
Loan Bank ONLY IF the title company gets a WRITTEN GUARANTEE FROM THE BANK
ON WHICH THE CHECK IS DEPOSITED THAT THE FUNDS HAVE BEEN "COLLECTED OR
CLEARED" FOR THAT DEPOSIT. (see U.C.A. 31A-23-307(2)(c) & (2)(d)(iii))

What types of funds can, in all practicality, be dispersed on the same day they are deposited?

1. Cash &
2. Wire transfers
Why can't cashier's checks, certified checks, teller's checks, money orders, etc. usually be dispersed the same day?
1. The Banks will usually refuse to send a written guarantee to the title company stating that the funds have been "collected or cleared." Why would the Banks refuse to immediately guarantee a check which, presumably, has been paid for with immediate cash?
1. It's anyone's guess. It might have something to do with a little thing called "interest." What can REALTORS do to solve this issue?
1. Request that the title company contact the bank in question to request a written guarantee that the funds have been "collected or cleared."
2. Try to find cooperative banks.
3. Or, wait until the day following the date of deposit to expect funds to be dispersed. What should REALTORS be careful of?
1. It is a crime to ask the title company to disperse funds immediately, without having received their written guarantee from the bank. Where can I read the law for myself?
1. good luck
2. for the Utah State Code http://www.insurance.state.ut.us
3. for the United States Code http://www4.law.cornell.edu/uscode/12

What is next?
1. The UAR plans on addressing this issue in future bulletins and news articles. The Utah State Insurance Commission has also agreed to supply articles for upcoming bulletins.
2. The UAR plans on approaching the local banking industry to see if we can reach a solution to make it easier for the real estate industry to accommodate buyers and sellers. We have received numerous complaints of closings which were delayed at the end of the month because funds weren't dispersed, resulting in Seller's having to pay an entire new month's worth of mortgage interest.
3. We encourage you to become familiar with the law for yourself.
Conclusion:
In short, with out any more effort, only cash and wired funds may be disbursed on the same day they are deposited. We apologize for any confusion the prior bulletin may have caused. If you have any questions or verifiable situations where this issue has caused financial pain for your clients, please contact Christopher J. Kyler, UAR Director of Government Affairs and General Counsel at 800-594-8933 or at chris@utahrealtors.com.

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