What are certified funds? Why am I being told I must have them? The title company wants me to bring “certified funds” to closing but I had planned on writing a check, I have the money in my account, so I don’t see what the big deal is.
Don’t worry, we’re going to explain what they are, why you need them and when to bring or send them to the title company.
In a simple explanation, certified funds are just as it states. They are certified to be good, guaranteed funds, that are valid and non-refundable. There are different types of certified funds:
- Wired funds
- Bank Money Order
- Cashier’s Check
Wiring funds- This is a common method that is used to send certified funds for closing. In this method the funds are being transferred from one bank to another. Once the money has been “wired” from your bank and received at the title company’s bank, the wire will be receipted in and your certified funds will be logged with your file. You might be wondering if the wired funds could be returned and it cause a delay with your closing. Wired funds can not be returned without the approval of the bank the title company uses, as well as approval from the title company. When wiring funds there are some things to be aware of:
- Wire cut off times. This is the time that your bank would have on sending wires and the title company’s bank will have a time cut off on receiving wires.
- If your bank is in another town or State, they may require that you physically come into the branch to request the wire.
- Be aware of the amount of time it may take for the wire request to be processed. You want to make sure your funds arrive to the title company on time so that your closing is not delayed.
Bank Money Orders and Cashiers Check- This is another common way that certified funds are brought to the closing table. These items will be issued by the bank and can not be cancelled or recalled. Most banks will charge you a set fee to get either of these. Since you are using your funds from your account for the bank to issue the Bank Money Order or Cashiers Check, the bank by law must honor the amount that the Bank Money Order or Cashier’s Check is issued for.
Why can’t I just write a personal check? It won’t bounce, the money is there, and I can show you on my online account. The reason why personal checks are not considered certified funds is because they can be cancelled if there is an issue with the check or an issue with the account that the check is written on causing it to be an invalid source of funds. Think of it this way, the personal check would have to “clear” the bank that the check was written on first before the payment would be considered good funds. This could take 7-10 business days or longer if there is a holiday during that time. Certified funds are required because those funds are valid at closing. Otherwise the seller(s) wouldn’t be able to receive their funds from closing, the agents that represent both sides wouldn’t receive their commission, pay offs on the current liens wouldn’t be able to be sent on time, and other necessary funds wouldn’t be able to be dispersed on time. This means that your closing would not happen on time per the terms of the sales contract that you executed. The exception to the person check rule is that your earnest money can be in the form of a personal check if it is $1,500.00 or less.
When it is close to your closing date, the title company and your lender will give you the amount that your certified funds will be. To make sure which type of certified funds you will need to have, double check with your title company to see what their policy is on the type of certified funds they accept.
We at Red River Title Company know that buying or selling a home or any piece of property for that matter can be stressful and confusing. It’s our goal to help make things as smooth and stress-free as possible. If you have any questions about certified funds, please don’t hesitate to let us know. We look forward to serving your needs.