Good Funds Laws And Your Commercial Transaction 

08/10/2026 10:43 AM       Mark Goodman

If you’re buying or selling commercial property, you need to know that money that is transferred at closing is available at that very moment. You wouldn’t want to get a check from a buyer only to find out that the check bounced or the bank needs days in order to be able to process the transaction and allow you access to the money. There are some clear funding rules that are in place during a commercial transaction, one of which is known as the Good Funds Law. We take a closer look at Good Funds Laws and explain how they impact your commercial transaction in today’s blog. 

According to the American Land Title Association (ALTA), good funds laws have been put in place to deter fraud, to provide certainty during closing and to assist in the formation of a healthy and stable economic market. Essentially, good funds laws set requirements for acceptable forms of closing funds and state specific processes that need to take place in regards to their distribution so that the transaction stays on track and parties get the funds they are owed without delay. 

As the Residential Closing Funds Act of 2005 states, funds dispersed during closing must be backed by good funds at the time of issuance such that they are not dishonored when presented to the financial institution upon which they are drawn. And while good funds laws can vary a little state to state, oftentimes they require closing funds to be brought in one of the following acceptable forms: 

• Cash 

• Cashier’s check 

• Check issues by the state or a political subdivision 

• Wired funds 

• Certified funds 

• Teller’s check or similar official check 

• Check issued by a federal government instrumentality organized under the Farm Credit Act of 1971 

The act essentially states that title companies are responsible for holding the disbursement of funds until it has been determined that funds have been delivered by an approved and accessible means. We’re acting as a neutral third party to ensure the funds are really there and other parties have access to these funds to satisfy an outstanding mortgage or as proceeds from a sale, and forcing funds to be delivered in one of the approved manners protects everyone’s best interests. Payment failures can jeopardize a sale, and we can help ensure payments are made as needed to keep the transaction on track.

For more information about Good Funds laws in your area, or for help with a different aspect of commercial property acquisition, connect with the team at Commercial Partners today at (612) 337-2470.