ArcaMax

Dear Monty: My question is about selling my home to purchase a home with my husband. Can the check (cash proceeds) from my home be endorsed at settlement (both settlements will be on the same day) and turned over toward our new house at settlement? I'd like to avoid a trip to the bank to get a cashier's check.

Monty's Answer: While the desire to simplify the process by directly endorsing and transferring the sale proceeds check is understandable, this approach presents several potential complications and risks that should be carefully considered.

Most title companies and settlement agents have strict policies regarding acceptable forms of payment for real estate transactions. They typically require "good funds" through wire transfers or cashier's checks rather than personal or endorsed checks from other settlements. This requirement protects all parties and ensures the transaction funds are guaranteed and immediately available.

The timing of same-day closings can also create logistical challenges. Even if both settlements are scheduled for the same day, unexpected delays in the first closing could impact the second transaction. The proceeds check from the sale might not be available in time for the purchase closing, potentially causing costly delays or complications.

Additionally, endorsing and transferring a settlement check introduces unnecessary risk. Settlement checks often involve substantial sums, and having such a check transported between locations increases the possibility of loss or theft. Wire transfers or cashier's checks provide a more secure method of moving large amounts of money.

A BETTER WAY TO CLOSE

Coordinate with both settlement agents to arrange the most efficient transfer process. Many title companies can facilitate same-day closings by working together to ensure funds are properly transferred. They may be able to wire funds directly from one settlement to another, eliminating the need for intermediate steps.

If a wire transfer between settlement agents isn't possible, schedule the closings with enough time between them to visit the bank. While this might seem inconvenient, it's a small investment of time to ensure the transaction proceeds smoothly and securely. Many banks can prepare cashier's checks quickly, especially if arrangements are made in advance.

Consider scheduling the sale closing in the morning and the purchase closing in the afternoon to allow adequate time for fund transfers. This buffer can help prevent delays and reduce stress during a complex process. It's also worth noting that some states have specific regulations regarding handling settlement funds. Working within established protocols helps ensure compliance with these requirements and protects everyone's interests.

You should discuss these arrangements with your real estate agent and settlement agents early in the process. They often suggest the most efficient approach based on local practices and their experience with similar situations. They may also recommend specific banks that regularly handle real estate transactions and can process cashier's checks quickly. While the desire to streamline the process is commendable, the small additional effort required to handle the settlement funds properly is well worth it to ensure a smooth and secure transaction. The goal should be to complete both transactions successfully while minimizing risk and ensuring compliance with all legal and procedural requirements.

Richard Montgomery is a syndicated columnist, published author, retired real estate executive, serial entrepreneur and the founder of DearMonty.com and PropBox, Inc. He provides consumers with options to real estate issues. Follow him on Twitter (X) @dearmonty or DearMonty.com.

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