NAPERVILLE, Ill. (8/27/13)--An Illinois Credit Union League-backed initiative, a bill amending the Illinois Title Insurance Act to authorize the use of a cashier's check, certified check or teller's check as settlement funds at real estate closings, was signed into law Aug. 16 by Illinois Gov. Pat Quinn.
"By creating a permissive option limited to cashier's checks, teller's checks and certified checks, HB 1335 tailors the focus of the 'good funds' provisions in the Title Insurance Act to reduce unnecessary costs to consumers, while maintaining key fraud prevention components within the existing law for the benefit of lenders and title insurance agencies," said Stephen Olson, ICUL executive vice president and general counsel.
The bill provides that when a financial institution and a title company are known to each other and agree, a cashier's check, certified check or teller's check will constitute legal settlement funds at a real estate closing.
The practice that had evolved since the "good funds" provisions of the Illinois Title Insurance Act were put in place in 2010 was to require consumers to use wired funds for settlement funds in amounts over $50,000. The requirement ensures that collected funds are available before disbursement by the title insurance agency handling the closing and reduces the potential for fraud.
However, wiring funds is much more costly for consumers than obtaining certified funds from their financial institution, the league said. HB 1335 addresses situations that can avoid the added expense upon mutual agreement by the lender and title company to use a teller's check, cashier's check or certified check for settlement funds greater than $50,000.
Also, the check must be delivered to the title insurance agency in time for it to be deposited into its fiduciary trust account before disbursement from that account--although it need not actually be deposited. That change to the Title Insurance Act is entirely permissive and, if used by the title company and lender, could reduce the consumer's costs in a real estate transaction, the league said.