Real Estate closings in Virginia are governed by the "Wet Settlement Act", which requires "collected funds" to complete a settlement. In other words, the Purchaser needs to provide money to the Settlement Attorney in the form of a cashiers check, certified check, bank wire or actual cash. These funds need to be immediately available to complete the closing.
For years, the customary practice was for both the lending banks and the Purchaser to provide cashier or certified checks for the closing. Over the last several years, the majority of lenders have switched to bank wires for their loan proceeds. These bank wires are usually not sent until the day of closing. In some instances the wire will not be commenced until after the underwriter has given final approval and/or the loan documents are signed.
Purchasers are trending toward providing a bank wire for their cash needed to close (down payments and closing costs). With the increasing problem of possible fraudulent or counterfeit cashiers checks, it is the poicy of many law firms and settlement companies to direct the Purchaser to wire the necessary funds for the closing. Also many banks will not give the settlement attorney access to funds provided by a cashiers check until the next business day (which could delay closing), whereas wired funds are immediately available for disbursement.
All professionals in the real estate transaction (the realtor, lender and settlement attorney) should inform the Purchaser that a bank wire will be necessary. The Settlement Attorney can provide their trust account wiring instructions in advance. The Purchaser can then pre-arrange for the bank wire. This will relieve the stress of running to the bank for a bank check when the amount to close is not available until the day of closing.
By working together to encourage bank wires, another potential problem with the closing ("I did not know they would not accept a personal check") can be avoided.
Contact me at 434-951-0858 or Tucker@TGBLaw.com if you have questions.
William D. Tucker, III
Tucker Griffin Barnes P.C.
Charlottesville, VA 434-973-7474
Lake Monticello (Palmyra, VA) 434-589-3636