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from Local Attorney, Michael H. Wasserman

Wednesday, October 26, 2011

FUNDS AT CLOSING - UPDATE - UPDATED

First American Title Insurance Company announced today that it too will no longer accept third party checks at Chicago area residential real estate closings. They join Chicago Title and PNTN, who already declared an end to the age old practice of telling buyers to bring funds to closing in the form of cashiers checks made payable "to themselves."

These net effect of these three announcements (and the many more that are about to follow) is that the rules have changed for ALL local closings... and anyone not keeping abreast is going to have an unfortunate  problem at their next closing.

1st American's notice takes the issue even one step further, and this will be of particular concern and import to real estate lawyers:  First Am will no longer accept third party title insurance company checks either. In other words, Buyers who intend to use the proceeds of a sale to close their next purchase at First American better have a lawyer (or realtor) who is hip to the new requirements  --- or enough time to have that title company check clear into their bank account, and be able to document ("source") the funds to satisfy their mortgage lender.
FAT logo

Date: October 26, 2011 

To Our Valued Customers:   

Consumer banking technology now allows people to directly deposit checks into their bank accounts using Smart Phone applications and other computer technology. There have already been documented cases of fraud associated with this new technology. As such, we now require that all funds presented to us be payable directly to First American Title. 

In addition, if a customer is presenting a title company check to us from a different transaction, the title company check must be made payable directly to First American Title. 

When requested to redirect proceeds from our closing to another title company, First American Title will accommodate with written direction from the seller. 

Thank you for your cooperation. Should you have any questions, please feel free to contact XXXXXXXXXXXXXXXXXX

 It will be interesting to see how rigidly this rule is enforced over the next couple of weeks, but I see a very painful learning curve ahead for a lot of us.

Careful practitioners are not only going to have to update their own office procedures and client-closing instructions.... they are going to have to educate their clients, Realtors, and opposing counsel too!

Monday, October 24, 2011

UPDATE: GOOD FUNDS AT CLOSING - DON'T MAKE THAT CHECK PAYABLE TO YOURSELF -

Title Companies are changing the way some Buyers are going to need to bring purchase money funds to closing. If these changes are rigidly enforce, the transition is likely to be a rough one and anyone with a purchase or sale closing coming up in the near term should expect a greater likelihood of delays / aggravation.  

The long standing "best practice" for having Buyers bring funds to a closing table has been to instruct them  to bring cashiers' checks to a closing table made payable to themselves.

Until now, it has  just  the way things have been done my whole career.

Back in June, I reported seeing a notice from one of the local Chicago Title offices indicating that CT would require all checks be made payable directly to the title company. At that time, only one or two offices were actually requiring this, and everything was business as usual.

Closing bays at Chicago Title's flagship offices  in Chicago now sport notices that CT will no longer accept such 3rd party checks.

Now, effective October 27th, Professional National Title Network, Inc (PNTN) is also requiring that only incoming checks made payable directly to PNTN will be accepted. Checks made payable to individuals to be endorsed over to the title company will no longer be acceptable.

I expect that other companies in the  Fidelity National family, and agencies underwritten by CT will likely follow suit soon.

Closings will still take place, but i can already envision a great many of them will be delayed while uninformed or ill advised buyers rush back to their banks to replace the checks they bring to closing with checks that the title companies will actually accept.