You have waited weeks or months for this day—the day the real estate transaction closes on your home. All the documents are signed, and you’re ready to get your check, right? That’s not always possible.
Whether you are the real estate agent, the seller or the buyer, the check may not be available as soon as all the paperwork has been signed. You wonder why you have to wait since you’ve prepared everything on your end.
Attorneys must follow Rules of Professional Conduct, a code of ethics that governs their relationship with clients and their role as ﬁduciaries in real estate transactions. These rules 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. Before the attorney can disburse funds, three things must happen.
- 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 the 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. If you have any questions or concerns during a real estate closing or other transaction, please let us know as soon as possible.
Published by Michelle Stinnett on November 4, 2016