Insured Closing Letters

kjewell — Mon, 01 Mar 2010 13:34:10 +0000

An insured closing letter is issued in connection with real estate closings. The letter may be addressed to any of the parties to the real estate closing (i.e. a seller, purchaser, landlord, tenant, lender or current lienholder). The letter outlines the closing agent’s liability for losses arising from failure of the closing agent to comply with written closing instructions or from fraud, dishonesty or negligence of the closing agent in handling funds or documents in connection with a real estate closing.

When you know that a title company or agent will act as closing agent, you should request an insured closing letter. If the title company or agent will conduct several real estate closings for you, please request a “blanket” insured closing letter which covers all transactions. In all instances, please review the insured closing letter carefully to determine that your interests are adequately protected.

Author: Chris Wischer (bio)
Phone: 812.452.3595
email: cwischer@bamberger.com

Indiana’s New Good Funds Law

kjewell — Fri, 21 Aug 2009 18:02:30 +0000

Effective July 1, 2009, Indiana adopted legislation similar to legislation in thirty-two other states requiring “good funds’ in closing real estate purchase and loan transactions. This legislation is designed to protect consumers from fraud or other criminal actions which may occur in a real estate closing.

Key points of the new law are the following:

Unless all parties agree to another arrangement, the closing agent must place all funds received for the closing in an escrow account.
Funds exceeding $10,000 in the aggregate must be delivered to the closing agent in the form of an irrevocable wire transfer.
Funds for less than $10,000 in the aggregate must be “good funds” such as cash, certain certified or cashier’s checks, irrevocable wire transfers, real estate broker trust account checks, and U.S. government checks.
The holder of a mortgage lien to be satisfied at closing may require the closing agent to pay the lien with an outgoing wire transfer.

Many law offices, title companies and other closing agents have previously required the funding of their closings with wire transfers instead of cashier’s checks or other forms of payment. A benefit of wired funds is that such funds provide the greatest protection against fraud. The funds are immediately available for disbursement unlike a cashier’s check or certified check which may take several days to clear all applicable bank accounts. Cashier’s checks or certified checks are also subject to stop payment orders and counterfeiting efforts. When funds are irrevocably transferred by wire, the funds cannot be recalled and the closing agent may make immediate disbursement.

Several different groups provided input to the new legislation, including the Indiana Land Title Association, Indiana Association of Realtors and Indiana Mortgage Bankers Association. The groups focused on consumer protection as their primary goal. The new legislation may change some closing procedures but it will decrease the risk of financial losses incurred at real estate closings.

Author: Jason P. Lueking (bio)
Phone: 317.464.1591
email: jlueking@bamberger.com

The Bamberger Blog » real estate closing

Insured Closing Letters

Indiana’s New Good Funds Law