If you’ve wondered why your title company insists on a cashier’s check or wire transfer instead of a personal check at closing, the answer lies in Texas’s Good Funds Law, a requirement designed to protect everyone involved in your transaction.

What Is the Texas Good Funds Law?

The Good Funds Law requires that funds disbursed at closing be in a form that guarantees availability, such as wire transfers, cashier’s checks, or other certified funds, rather than personal checks, which could potentially bounce after the transaction has already closed.

Why This Requirement Exists

Before this type of requirement, transactions occasionally faced complications when a personal check used for a substantial portion of a real estate closing failed to clear, creating significant problems after ownership had already legally transferred. This law protects all parties by ensuring funds are genuinely available before the transaction is finalized.

What Counts as “Good Funds”

• Wire transfers, directly sent from your bank to the title company’s account
• Cashier’s checks, issued by a bank guaranteeing the funds
• Certified checks, similarly guaranteed by the issuing financial institution

Why Personal Checks Generally Aren’t Accepted for Closing

Personal checks don’t provide the same guarantee of immediate fund availability, creating risk that a check could bounce after the transaction has closed and ownership has transferred, which is precisely the risk this law is designed to prevent.

Important Wire Fraud Safety Considerations

Given that wire transfers are commonly used to satisfy Good Funds requirements, it’s essential to understand:

• Wire fraud is a genuine, serious risk in real estate transactions, with scammers sometimes intercepting email communications to redirect wire transfers to fraudulent accounts
• Always verify wiring instructions directly by phone, using a previously verified number for your title company, never simply trusting instructions received via email
• Be suspicious of any last-minute changes to wiring instructions, which is a common fraud tactic

Steps to Protect Yourself When Wiring Closing Funds

1. Obtain your title company’s wiring instructions directly, ideally in person or through a verified phone call
2. Call to confirm the instructions before sending any funds, using a phone number you’ve independently verified, not one provided in the same email containing the instructions
3. Be wary of any urgency or pressure to wire funds quickly without proper verification
4. Confirm receipt with your title company after sending the wire

Why This Matters Even More Given Rising Wire Fraud Concerns

Real estate transactions have unfortunately become a target for wire fraud schemes, making the verification steps above not just good practice, but essential protection for what’s likely one of your largest financial transactions.

What Happens If You Don’t Have Certified Funds Ready

If you show up to closing without properly certified funds, this can delay your closing, potentially creating complications with your specific closing date and any related moving or financial arrangements, making it important to plan ahead and have your certified funds properly arranged before your closing appointment.

Questions to Ask Your Title Company

1. What specific form of certified funds do you require for this closing?
2. What is your verified phone number I should call to confirm wiring instructions?
3. What is the deadline for having funds available before my scheduled closing time?
4. What steps do you recommend to protect against wire fraud for this specific transaction?

The Bottom Line

The Texas Good Funds Law protects all parties in your Victoria County real estate transaction by requiring verified, guaranteed funds at closing rather than personal checks that could potentially bounce. Understanding this requirement — and taking proper precautions against wire fraud — helps ensure your closing proceeds smoothly and securely.

Preparing for closing on your Victoria County home purchase or sale?

Harold Thomas Realtor Assoc. United Country Real Estate | Texas Ranch and Home Victoria, TX 77904

📞 Harold Thomas: 361-238-0728 🌐 haroldthomasrealtor.com 📅 Schedule a Free Land Consultation with Harold