The old standard operating procedure for Chicago area residential closings may be changing a bit, based on an announcement I recently received from Chicago Title.
Outbound emails from CT's REO unit in Carrol Stream now advise recipients that the title company will no longer accept third party checks at closings. Apparently, company auditors want all funds to be made payable directly to the title company. The new rule is effective May 1, 2011, but I am told that Carrol Stream is implementing a "soft" introduction of the new rules to allow time for word to get out of the change.
The rule of thumb for as long as I have been handling Chicago area real estate closings has been that any funds a Buyer (or Seller) would bring to the closing table would be in the form of a wire transfer or a cashiers/certified check made payable to that Buyer (or Seller). Once the parties were satisfied with all of the closing documents and settlement figures, the Buyer would endorse that check over to the title company, who routinely accepted and deposited funds into the closing escrow.
If something went wrong at closing, the conventional wisdom holds that a Buyer can more easily reclaim the funds intended for closing by merely endorsing and re-depositing funds back into his or her own bank account.
Sure from time to time, instructing a client to write a check payable to "your self" had unintended consequences, but the system has worked well for my clients up to this point and Buyers had that extra measure of confidence that their money is safe and that they have full control over it up until the last possible moment in the closing process.
Switching over to the new system should not be too much of a problem - at least for those "in the know." There will no doubt be lawyers, loan originators and real estate agents who do not get (or read) the memo, who's clients will have to make an emergency run to the bank from a closing to get their closing checks re-issued. The rest of us will sit at the closing table and wait.