Good funds laws in forty-seven states require your closing money to be fully collected and available for immediate withdrawal from the settlement agent’s account before any disbursement happens, and that is why wire transfer requirements dominate real estate closings: a wire sent through Fedwire settles with finality that checks and ACH payments cannot match. In practical terms, you need to send the right amount, by wire, to the correct escrow account, early enough that the funds have arrived and been verified before the closing table opens.
What Good Funds Laws Require of Your Payment
The rule is a verify-before-disburse rule. No one providing closing services may release funds until those funds “have been received and are available for immediate withdrawal as a matter of right from the financial institution in which the funds have been deposited.”1American Land Title Association. Good Funds Laws The exact wording varies by state, but the core requirement is the same wherever these laws exist. The settlement agent is a gatekeeper. Until your money is sitting in their account in a form that cannot be clawed back, nothing moves.
This matters to you as a buyer because it defines what counts as paying on time. Showing up with a payment on the day of closing is not the same as having the funds collected. If the agent cannot verify the money is good, they will not record the deed, pay the seller, or hand over keys, no matter how ready the paperwork is.
Which Payment Methods Meet the Standard
Finality is the test. If the payment can be reversed after your settlement agent receives it, it creates the exact risk good funds laws exist to prevent.
- Wire transfers are the preferred method for most closings. Funds sent through Fedwire settle individually in real time, and once the receiving bank accepts the transfer, it is irrevocable.
- Cashier’s checks are issued by the bank itself and carry the bank’s guarantee. Most good funds laws accept them, though some jurisdictions require them to be deposited a day or more before closing to allow for verification.
- Certified checks, a personal check with the bank’s stamp reserving the funds, are accepted in many states but less common than cashier’s checks for large transactions.
Why Personal Checks and ACH Transfers Do Not Qualify
Personal checks and standard business checks are almost never accepted as good funds for significant amounts because they can bounce. Clearance takes several days, and even after the funds appear, the payment can be reversed if the check is fraudulent or the account is short.
ACH presents a subtler problem. The money shows up electronically, which feels like a wire, but ACH payments can be reversed or returned under Nacha rules. A return can arrive after the funds look collected, so an ACH deposit that appears received might still disappear. Most title companies and settlement agents will not accept ACH for closing funds for that reason.
When Your Wire Needs to Arrive
Two different clocks govern your wire: the Fedwire schedule that defines when wires can move at all, and your bank’s internal cutoff, which is almost always earlier.
Fedwire operates from 9:00 p.m. ET the night before through 7:00 p.m. ET on a business day, with customer transfers cutting off at 6:45 p.m. ET.2Federal Reserve Financial Services. Wholesale Services Operating Hours Your bank’s deadline for same-day processing is usually much earlier, often by early afternoon. Miss that cutoff and your wire does not leave until the next business day, which can push your closing back. Send one to two business days before the scheduled closing date rather than the morning of.
Federal availability rules also matter. Regulation CC requires banks to make wire transfer funds available for withdrawal no later than the business day after the banking day the bank received the payment.3eCFR. 12 CFR Part 229 – Availability of Funds and Collection of Checks (Regulation CC) For a cashier’s check deposited in person, funds must be available the next business day, provided the check is handed to a bank employee, made payable to the depositor, and accompanied by any required deposit slip. If a cashier’s check is deposited by mail or at an ATM instead, the hold extends to the second business day. Regulation CC also allows banks to place extended holds on check deposits exceeding $6,725 in aggregate on a single banking day, which is one more reason wires dominate closings: they avoid the large-deposit hold entirely.
Wet Funding and Dry Funding States
Whether disbursement happens the same day you sign depends on your state. In wet funding states, the lender delivers loan funds at or before closing and the settlement agent disburses on the same day documents are signed. Roughly 41 states and the District of Columbia work this way. In dry funding states, which include Arizona, California, Nevada, Oregon, and Washington, documents can be signed before funding is complete, and disbursement happens after the lender reviews the signed documents and authorizes release. That gap can run a day or more.
For a refinance of a primary residence in any state, federal law adds a three-day right of rescission, so funds typically will not disburse until that period expires.
How to Send the Wire
Your settlement agent or title company provides wiring instructions. For a domestic wire, those include the recipient’s name and address, the bank’s routing number (ABA number), and the specific account number for the escrow or trust account. The instructions also include a reference line, often labeled “For Further Credit” or “Memo,” where you enter the file number or escrow ID that lets the agent match your payment to your transaction. Skip that reference and your money can sit in a general holding account while the closing stalls. For international wires, you also need a SWIFT code and possibly country-specific identifiers.4Bank of America. Wire Transfers
You can initiate a wire at a branch or through online banking, though many banks require an in-person visit for large amounts. Review every field before submitting. A wrong digit in the account or routing number can send your down payment to a stranger, and recovering a misrouted wire is neither fast nor guaranteed. Once the wire is sent, you receive a confirmation receipt with a unique reference number. Send that receipt to your settlement agent right away so they can watch for the incoming funds.
Expect fees on both ends. Domestic outgoing wire fees at major banks typically run $20 to $40, sometimes less online than at a branch. Incoming wire fees range from nothing to about $20.
Protecting Your Wire from Fraud
Wire fraud targeting real estate closings is not theoretical. The FBI reported more than $275 million stolen through real estate-related fraud from over 12,000 victims in a single recent year. The usual scheme: a scammer gains access to email between you and your settlement agent, then sends a convincing message with altered wiring instructions. You wire your down payment to the scammer’s account. By the time anyone notices, the money has been moved on or converted to cryptocurrency.
Verify Before You Send
The Consumer Financial Protection Bureau recommends several concrete steps.5Consumer Financial Protection Bureau. Mortgage Closing Scams: How to Protect Yourself and Your Closing Funds Before closing, identify two trusted people in the transaction, such as your real estate agent and settlement agent, and confirm the closing process and payment instructions with them in person or by phone. A shared code phrase can help you verify identities later. When you receive wiring instructions, do not act on them from email alone. Call the settlement agent at a number you independently verified, not one from the email, and read back the account name, routing number, and account number before sending anything.
Never send financial information over email. Scammers can replicate addresses and formatting closely enough that careful readers miss the difference. Treat any last-minute change to wiring instructions as a red flag. Legitimate settlement agents rarely change wire details at the last moment.
If You Send Money to the Wrong Account
Speed is everything. Contact your bank’s wire department immediately. Caught within roughly 30 minutes, the bank may be able to cancel the transfer before it finishes processing. After that, the bank can attempt a recall by contacting the receiving bank, but the receiving bank is not legally obligated to return the funds. Recovery rates drop to low single digits after the first 24 hours.
File a complaint with the FBI’s Internet Crime Complaint Center at ic3.gov as soon as possible.5Consumer Financial Protection Bureau. Mortgage Closing Scams: How to Protect Yourself and Your Closing Funds The FBI’s Financial Fraud Kill Chain process can sometimes freeze funds at the receiving bank, but only if you report within hours. One hard limitation: wire transfers are not covered by the Electronic Fund Transfer Act’s error-resolution protections, which explicitly exclude transfers through systems like Fedwire.6Federal Reserve. Electronic Fund Transfer Act (Regulation E) Unlike a fraudulent debit card charge, no federal regulation requires your bank to make you whole after a misdirected wire.
Documentation Your Bank May Ask For
Large closing deposits sometimes trigger bank compliance review in the weeks before closing. If you fund your account with cash exceeding $10,000 in a single day, the bank files a routine Currency Transaction Report with FinCEN. The report itself does not stop your transaction, but deliberately splitting cash deposits into smaller amounts to avoid the threshold is a federal crime called structuring, punishable by up to five years in prison and fines up to $250,000.7Financial Crimes Enforcement Network (FinCEN). Notice to Customers: A CTR Reference Guide
Separately, banks must file a Suspicious Activity Report for transactions of $5,000 or more if they suspect illegal activity, structuring, or no apparent lawful purpose.8eCFR. 12 CFR 208.62 – Suspicious Activity Reports If the bank’s compliance team asks for documentation of the source of your closing funds, respond quickly. Those requests are common for large or unusual deposits and can hold up your wire if ignored.
If funds do not arrive in the required form or by the required time, the settlement agent will not record the deed. That delay can trigger per-diem interest charges from the lender, penalties under the purchase contract, and scheduling problems for everyone in the transaction chain. If you are buying one home and selling another on the same day, a funding delay on either side can derail both closings. Sending early, verifying by phone, and keeping your confirmation receipt in hand are the three habits that keep good funds requirements from becoming a problem at your table.