Bulletin: OH2017005

Dear Associates:

Recall that Ohio’s Good Funds Statute (Ohio Revised Code Section 1349.21) was revised effective April 6, 2017, as set forth in previous Bulletin 2017001. Recent Ohio House Bill 49, which will be effective September 29, 2017, has made additional revisions to the Good Funds statute. Note that the only changes are to 1349.21(A)(2) and(B)(2) wherein the aggregate value of acceptable funds as described has been increased from $1,000 to that of $10,000. And the previous reference to “Electronically transferred funds via the real-time gross settlement system provided by the federal reserve banks” in 1349.21(B)(4) has been deleted and now simply provides for “Any other electronically transferred funds.” In all other respects, the amended legislation is identical to the previous legislation effective April of this year.

As now revised, it provides that no escrow or closing agent knowingly shall make, in an escrow transaction, a disbursement from an escrow account on behalf of another person, unless the following conditions are met:

(A) The funds necessary for the disbursement:

(1) Have been transferred electronically to or deposited into the escrow account of the escrow or closing agent and are immediately available for withdrawal and disbursement;

(2) Are in the aggregate amount not exceeding $10,000.00, have been physically received by the agent prior to disbursement and are intended for deposit no later than the next banking day after the date of disbursement; or

(3) Are funds drawn on a special or trust bank account as described in division (A)(26) of section 4735.18 of the Revised Code.

(B) The transfers or deposits described in division (A) of this section consist of any of the following:

(1) Business checks drawn on special or trust bank accounts described in division (A)(26) of section 4735.18 of the Revised Code;

(2) Cash, personal checks, business checks other than those described in division (B)(1) of this section, certified checks, cashier’s checks, official checks, or money orders that are in an aggregate amount not exceeding $10,000.00 and are drawn on an existing account at a federally insured bank, savings and loan association, credit union, or savings bank;

(3) Electronically transferred funds via the automated clearing house system initiated by, or a check issued by, the United States or this state, or by an agency, instrumentality, or political subdivision of the United States or this state; or

(4) Any other electronically transferred funds.

Note that money orders from a convenience store or similar location are not permitted, even though they are under the $10,000.00 threshold. Funds drawn on a real estate broker’s trust account (as described in ORC 4735.18(A)(26)) may be in the form of a business check.

Be aware that the legislation doesn’t compel agents to accept funds up to the $10,000 prescribed amount or to accept any method of electronically transferred funds. Agents are free to adopt their own policy limiting the amount of funds they deem acceptable or the type of electronic transfer they are willing to accept. Agents are strongly encouraged to only accept electronic transfers that are irrevocable.  

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