- February 09, 2010
- All Illinois Issuing Offices
- Good Funds Legislation, Illinois Public Act 096-0645, (to be codified as 215 ILCS 155/2)
Effective January 1, 2010, Public Act 096-0645, Good funds legislation is applicable. The statute provides that a title insurance company, title insurance agent, or independent escrowee shall not make disbursements in connection with any escrows, settlements, or closings out of a fiduciary trust account or accounts unless the funds in the aggregate amount of $50,000 or greater received from any single party to the transaction are "good funds" as defined by the statute and are unconditionally held by and credited to the fiduciary trust account of the title insurance company, title insurance agent, or independent escrowee.
Under the statute, the following funds are considered "good funds" as defined under 215 ILCS 155/26(c):
(1) Lawful money of the United States.
(2) Wired funds unconditionally held by and credited to the fiduciary trust account.
(3) Cashier's checks, certified checks, bank money orders, official bank checks, or teller's check drawn on or issued by a financial institution chartered under the laws of any state or the United States.
(4) A personal check or checks in the aggregate amount not exceeding $5,000 per closing, provided that the escrowee has reasonable grounds to believe that sufficient funds are available for withdrawal in the account upon which the check is drawn at the time of disbursement.
(5) A check drawn on the trust account of any licensed lawyer or licensed real estate broker licensed under the laws of any state, as long as the escrowee has reasonable grounds to believe that sufficient funds are available for withdrawal in the account upon which the check is drawn at the time of disbursement.
(6) A check issued by the State of Illinois, the United States, or a political subdivision of this State or the United States.
(7) A check drawn on the fiduciary trust account of a title insurance company or title insurance agent, provided that the escrowee has reasonable grounds to believe that sufficient funds are available for withdrawal in the account upon which the check is drawn at the time of disbursement.
If "good funds" are not provided as set out above, then the funds must be "collected funds" as defined in 215 ILCS 155/26(d):
"Collected funds" means funds deposited, finally settled, and credited to the title insurance company, title insurance agent, or independent escrowee's fiduciary trust account.
These goods funds guidelines are a minimum of what is required by law for funding in the State of Illinois. You are free to have a more conservative policy, because compliance with these "good funds" laws or regulations may be inadequate to protect you from loss in this turbulent situation. For your protection, and to reduce the risk that you might close a transaction in reliance upon purportedly "good" but uncollectible funds, we strongly urge you to require your customers to wire funds to you whenever possible. We also strongly urge you to require that all funds be deposited, fully settled and unconditionally credited to your account before closing a transaction.
Requiring funds to be tendered electronically reduces the risk but does not completely eliminate the risk that the funds are uncollectible. Funds transferred electronically by wire (CHIPS or Fed wire) are preferred over electronic funds transferred (EFT) through the Automated Clearing House (ACH). It is possible that funds transferred through ACH can be recalled for an extended period of time.
If you have questions relating to this bulletin, please contact your local underwriting personnel or Stewart Legal Services.
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THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.