Paul Kostro's Blog
Real Estate Transactions & Attorney Trust Account Checks
Earlier today I represented a Seller in a residential Real Estate transaction. At the Closing, I received a check from the Buyer's attorney for the net proceeds of the sale in the amount of approximately $109,000.00, drawn on the attorney's Attorney Trust Account with Wachovia Bank, N.A. In accordance with the Seller's (my client's) instruction, the check was made payable to the order of my Attorney Trust Account (so the funds would be available for a soon to close real estate purchase).
After the Closing, I promptly went to the nearest branch of Bank of America, N.A. to deposit the check into my Attorney Trust Account, where I was unexpectedly told that only $4,900 would be available in two calendar days, but the balance would NOT be available for seven calendar days (five business days). When I protested, I was told that this is the policy of Bank of America -- when I demanded that I be provided with something in writing that expressed that policy, I was given a printout of the Bank's Reg CC (Revised 9/28/05) Compliance Requirements (copy available here).
ATTORNEYS BEWARE -- transactions that need to be financed with the proceeds of another transaction no longer can be easily processed through Bank of America, N.A.
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2 Comments:
N.J.S.A. 17:46B-10.1(2.b) states: "No title insurance producer or company shall disburse funds representing closing or settlement proceeds of a real estate transaction unless those funds shall have been deposited in a separate trust or escrow account by cash, electronic wire transfer, or certified, cashier's, teller's or bank check, or other collected funds; provided nevertheless, that nothing contained herein shall be construed to prohibit a title insurance producer or company from disbursing against funds deposited in a separate trust or escrow account other than by cash, electronic wire transfer, or certified, cashier's, teller's or bank check, or other collected funds in an amount not to exceed $1,000. A "bank check" means a negotiable instrument drawn by a state or federally chartered bank, savings bank or savings and loan association on itself or on its account in another state or federally chartered bank, savings bank or savings and loan association doing business in this State. A "teller's check" means a draft drawn by a bank on another bank, or payable at or through a bank. A New Jersey licensed attorney's trust account check and a trust or escrow account check from a New Jersey licensed insurance producer shall be considered "collected funds" for the purposes of this section.
See:
ADVISORY COMMITTEE ON PROFESSIONAL ETHICS OPINION 454 -- Attorney's Trust Account - Immediate Drawing Upon Depositing Client's Check.
ADVISORY COMMITTEE ON PROFESSIONAL ETHICS OPINION 687 -- Drawing Upon and Disbursing Funds Received at Real Estate Closings in the Form of Negotiable Instruments other than Cashier's or Teller's Checks.
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