When you buy or finance real estate in Georgia, your closing attorney can’t disburse any funds-whether to pay off a loan, send proceeds to a seller, or cover closing costs-until those funds have been deposited, finally settled, and credited to the closing attorney’s escrow account. In the real estate industry, this requirement is often called the “Good Funds Law.”
What are “Good Funds” in a real estate transaction?
The Georgia law, found in O.C.G.A. § 44-14-13, doesn’t actually use the term “good funds.” But it does require that funds used in certain real estate closings be verified and collected before disbursement.
In practice, “good funds” refers to money that has cleared and is immediately available for disbursement, not personal checks or ACH transfers that are still pending. This law protects everyone involved in a transaction by ensuring that the attorney is holding real, cleared funds before completing the closing.
How the Good Funds law affects our firm’s funding policy
The Georgia Good Funds Law applies only to purchase money or refinance loans made by a lender secured by a 1-4 family residence. At Sherman & Phalen, however, we apply the same standards to all closings, including cash purchases. This consistency ensures accuracy, prevents fraud, and protects every party involved in a transaction. And if you’ve closed at another firm, you may see that they have a different policy. Some firms may allow a personal check up to $5,000, while others require a cashier’s check for any amount $5,000 or less. We set our policy in the middle.
Sherman & Phalen’s Good Funds Policy
At Sherman & Phalen, we follow Georgia’s Good Funds Law and have set our funding policy accordingly. Please coordinate with our office to confirm the best way to send your funds and ensure they arrive on time.
Our policy for receiving closing funds is as follows:
• Personal checks accepted up to $2,000;
• Cashier’s checks issued by a local or national bank or credit union accepted up to $5,000; and
• Wires are required for amounts above $5,000.
Always allow enough time for funds to clear before your scheduled closing date. (You may have seen that we have a payment portal for earnest money payments, but that payment portal cannot be used for closing funds.)
Why It Matters for Your Closing
Before the closing attorney can record documents or release funds, all money needed for closing must be deposited into the firm’s escrow account and fully available. That’s why timing and payment methods matter.
For buyers, this means you can’t bring a cashier’s check or a personal check for a large down payment. For lenders and investors, it means the closing can’t occur until all required funds have cleared. Planning ahead helps avoid last-minute delays. The paralegal for your transaction will make sure you understand how and when you need to send any closing funds.
Protecting Yourself from Wire Fraud
Wire fraud remains one of the biggest risks in real estate transactions. Criminals may attempt to impersonate real estate agents, law firms, or lenders by sending fake or “updated” wire instructions.
Sherman & Phalen will never change wire instructions by email. After we send you our wire instructions and before you send any funds, call our office at 770-579-0109 to confirm the account information. That one phone call is the best protection against fraud.
Frequently Asked Questions
Can I bring cash to closing? Even if your transaction is not subject to the Good Funds Law (such as a “cash” purchase), our firm policy does not allow cash to be used at the closing table. Cash cannot be verified or deposited in compliance with our escrow procedures.
Why can’t I use a personal check for my down payment? Personal checks take time to clear, and attorneys must have cleared funds in their escrow account before disbursing any money. However, for smaller amounts, such as minor adjustments or recording fee differences, we do recommend bringing your checkbook to closing.
What if my bank delays my wire transfer? Closings can’t occur until funds are received and available, so it’s best to initiate the wire the day before closing whenever possible. If your financial institution has any questions about the wire, please call our office.
