Why Can’t I Have my Check at Closing?

All the documents are signed. You have waited weeks or months for this day—the day the real estate transaction closes on your home. Whether you are the real estate agent, the seller or maybe even the buyer, you may expect to get a check as soon as all the paperwork has been signed. Instead, you are told by the closing attorney that you will have to wait. What is the attorney waiting for and why?

Attorneys must follow a code of ethics that governs their relationship with clients and their role as fiduciaries in real estate transactions. These rules are called the Rules of Professional Conduct. They dictate that an attorney may not use the funds in their trust account belonging to one client in order to disburse a real estate transaction for another client. Therefore, before the attorney can disburse funds, all the money for the transaction must be in the trust account and available for withdrawal. 

Michelle Stinnett Real Estate Attorney

First, the attorney must have all the money from the buyer or buyer’s lender and/or seller deposited in their trust account as required by the Good Funds Settlement Act in the North Carolina General Statues. This includes any earnest money, buyer’s funds, and seller’s funds if the seller has to bring money to closing. All this money must be certified funds and available for withdrawal from the attorney’s trust account before any checks can be issued. Certified funds include money orders, cashier’s checks, and wired funds. A personal check is not considered certified funds and receipt of a personal check will further delay disbursement of all checks after a closing.

Next, if the purchase is being financed, the lender’s funds must be in the trust account and the closing attorney must have authorization to disburse those funds. Before the lender will authorize the use of the loan funds, all the closing documents must be properly executed and most lenders require approval. Another condition of funding authorization is that the executed deed and deed of trust must be recorded with the Register of Deeds office.

Finally, once all the money is in the trust account, the lender has given funding authorization, and the recording documents have been recorded, the closing attorney can then release checks to the parties in the transaction. 

At Hutchens Law Firm, our real estate department works diligently to disburse funds promptly and will contact the real estate agents in the transaction as soon as checks are available to be released.