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.
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!
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.
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!
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