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Settlement in MD - Does buyer lose conrol of money wired to settlement agent?

I have settlement in 10 days on a house I am buying in Maryland . I have been asked to wire the closing cost (minus the earnest money) to the settlement agent, instead of taking a certified check to the closing.

Enter nervousness. With a check, I would have control of the money until I hand it over at whatever point at the settlement. If I wire the money over now, under what terms does the money stay with the settlement agent? Yes, I could ask the settlement agent, but I would like to hear independent opinion.

If something goes wrong, do I still have control of the wired money? I know the contract terms will dictate who owes what if something goes wrong, but regardless do I surrender legal control of the money once I wire it over? Are they merely holding it for me to be used in ways I permit them to, or are they allowed to say...well the contract says...

I'm new to MD and I don't understand the idea of the settlement agent "representing the contract"? What does that mean? Why does the contract have a representation and not the guy forking over the money? I am used to having a lawer represent me and only me on a real estate transaction.

Inspection and appraisal went ok, and the loan process is almost done, so I don't expect any roadblocks to a closing, but I don't like parting with a large chunk of money without knowing the ramifications. Thoughts?
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December 12 2012 - Bethesda
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Answers (11)

Hi User106552, express your frustrations to the settlement company, sometimes they will take a check if you ask.  You could always change settlement companies.  It is always a good idea to employ a Lawyer to ensure everything goes well.  If you need a lawyer I know one that specializes in Real Estate
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May 07 2013
Unless you are dealing with a bank that is not based in the USA there should be absolutly no reason you can't bring a certified/bank check to settlement. If this settlement company does not allow it then I would change settlement companies.
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January 03 2013
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Thanks Bridget. My bank tells me it will take 2 days for wired fund to get to the destination, so I will wire it no later than Wed for Friday's settlement. 2 days seem too long...but it's probably their worst case scenario. 

I am still not fully clear on what is the status of the money that's wired over (can be released to me without seller's consent or not), but the deal has gone forward without slightest complications so far, so I will not worry about having to recover the money...will ask the settlement agent at the settlement what the real deal is...for future reference.
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December 17 2012

You should be able to wire the funds the morning of settlement.  If there is a large amount of money involved, the title company likes to ensure that teh money is available for funding.  Maryland is a "Wet Settlement" state, this means that the funds must be available at settlement for the sale to go through on a purchase.  Since the settlement is late on a Friday, the bank will be closed and the monies will not be technically available for disbursement.  A wire is avaialble as soon as it is received by the title company, so a wire confirmation will constitute a wet settlement. 

A wire is a safe way to transfer money to a title company. There is a trail of funds and should something go wrong the title company would release the funds back to you.  You can check with them to determine time frames and their procedure to release the funds.  They are holding the funds for the express purposes of the purchase of the home you are buying. 

If you do use a certified check, you may have it written to
1.  you
2. the title company or
3.  you and the title company

You will NOT make the check to the seller.  You will sign over the check at settlement.

If you have a buyer's agent, they are your representative. If you chose to move forward with the listing agent, they have a fiduciary responsibility to the seller, so you are not represented. You can choose to have a real estate attorney review your side of the deal at your cost.

Good luck with your settlement and best wishes in your new home!

Warm Regards,
Maryland Mortgage Mama

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December 17 2012
Most of my buyers bring a  banker's check with them to the closing.  Ask the closing company to let you know who to make the check to.  It should not be a problem. 
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December 13 2012
I wouldn't wire the money if I were you. Ask if they will simply allow you to bring a certfied check made out to the seller.
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December 12 2012
Profile picture for user106552
Thanks all for the replies.

They are not necessarily asking for money today, but they (settlement company) say that since it takes some time for the check to clear (even if a certified check), and the closing is happening late Friday, they want to avoid issues by having the money wired over no later than one day before the closing.

So if I understand you all correctly, seller has a say on disbursement of *any* money I send to the settlement agent?

I say "any" money, because I would have thought (hoped) that there is a distinction between the earnest money they are holding...that I sent as a part of the offer, vs. any other money I send them to get ready for the settlement. The latter, I would have thought, I would retain exclusive right on, till the time/day I authorize the settlement agent to disburse it. Well, that's the way I would set set this up any way.

I don't even remember if I signed any contract with the settlement agent and if it explains my relationship with them. Probably not...the contract signed with the seller probably has applicable language. Gotto go re-read it.

I'll find out from my banks what's involved in wiring fund/how long it takes, and wait for the HUD-1...and wire the money not too soon.
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December 12 2012
First, I wouldn't wire any money to the title company until you have a final copy of you settlement statement, called a HUD-1, which shows all of the different money changing hands and ultimately tells you how much cash you have to come to the table with.

A wire is a same day transfer so there is no reason you can't make this transfer that morning. I can't say I've heard of a title company asking money from the buyer more than a day ahead of time (day early just to be sure all money is ready for the day of settlement/closing).

All of that said, if you do send the money early, make sure you have information from the title company in writing requesting the cash, the purpose of the cash, and the instructions. There really is no reason the title company could hold money (outside of the earnest money) if the contract doesn't go through for whatever reason.

Ask for clarification from the title company first. If they do still insist the money be there this early, ask your agent to get feedback from their company's broker. If you're still not comfortable, do get a separate attorney. Best of luck.
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December 12 2012
Why don't you share your concerns with the closing company.  It may be OK if you bring your banker's check with you.
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December 12 2012
Profile picture for B Mike West
I can't speak to how the funds are handled in MD.  I suspect the process is similar to what happens in California.  In California, once your funds are sent into escrow, the settlement agent can not do anything with them unless he or she receives instructions that have been approved.  The settlement agent is a neutral party following the written instructions agreed to by the buyer and seller.

So the short answer is that you do not have control over those funds once they are in the hands of the escrow officer.  If something happens and you want to get the funds back, the seller will have to agree to release them.

Remember that the seller has accepted your offer and removed their property from the market based on your promise to purchase that property.  If you were to decide to back out of the deal without an acceptable reason, you will be damaging the seller. 

At the same time, the settlement agent is providing you protection by ensuring that the seller meets all of the terms of the contract that they have agreed to.

Your buyer's agent should be able to guide you through this process, explain everything and help you avoid any problems.  Although it might not seem like it at this point, most buyers do survive the process unscathed.
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December 12 2012
You way wish to consult legal counsel at this point, in my opinion. I have never heard of a requirement to wire the money ahead of time to the settlement attorney. What reason are they giving for this?
Its true, the settlement attorney represents the contract terms as written, but for the process to be considered fair, the buyer gets to select the settlement company in most cases. 
Sellers and buyers are free to retain their own independent counsel if they choose. 
Should something go wrong prior to or at settlement, you might need to ask the sellers for a release to get all your money returned to you, and what if they refuse? That would be my concern.
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December 12 2012
 
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