August 6, 2020
By: John L. Mashack
Recently a man in Florida allegedly drove off the dealership lot with a Porsche he purchased using a cashier’s check for $139,203.05 that he printed on his home computer. He was caught the next day trying to purchase nearly $62,000.00 in watches using another fraudulent cashier’s check. This time the jeweler held on to the watches until the check could be verified as legitimate. This is a great example of the reason title companies cannot accept cashier’s or bank checks the day before or the day of closing.
A cashier’s check is a check that is written by a bank, drawn on the bank’s funds, and signed by a cashier at the bank. This contrasts with a certified bank check, which is written by the individual account holder and is drawn from their bank funds, but the bank guarantees that the individual’s bank account has the funds to cash the check and sets these funds aside until the check clears.
In the past these types of checks were treated as guaranteed funds that could be wired against once they posted to the recipient’s bank account the next business day. However, due to an increase in fraudulent cashier’s checks and certified bank checks, many banks have begun to hold these checks until they clear, which may take up to 5 business days. Earlier this year, our own bank advised us that it may take closer to 10 days for these checks to fully clear.
What this means is that as a practical matter, we can no longer accept cashier’s checks or certified bank checks for real estate closings, where we may not know the final amount that is due from the buyer/borrower and lender until the day before, or even the day of closing. Also, we are expected to remit payoffs, seller proceeds and other disbursements within a day after closing, which we cannot do on funds that have not cleared our account.
We hope this sheds light on our policy to accept only wires as cash to close for real estate closings. We will send an encrypted email with our wiring instructions at least 48 hours before your closing, which you will use to wire funds to our real estate escrow account. Due to the cyber security threat of fraudulent wire requests, we ask that you call our office prior to wiring funds to verbally verify any wiring instructions that you receive from us.
Please call us at (703) 737-3800 if you have any questions about cashier’s checks and wires, or if Loudoun Commercial Title can be of any other assistance.