Escrow & Title
In Colorado, 'good funds' laws for real estate closings require that all funds be:
ADeposited in cash only
BAvailable and irrevocable (wire transfers or certified checks) so that the closing can proceed and funds can be disbursed✓ Correct
CDeposited at least 5 business days before closing
DHeld in a federally insured account for 30 days before disbursement
Explanation
Colorado's good funds requirements ensure that all funds needed to close a transaction are available (collected and irrevocable) before the title company disburses funds, records the deed, and completes the closing. This protects all parties from checks that might not clear.
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Key Terms to Know
Deed
A written legal instrument used to transfer ownership of real property from one party (grantor) to another (grantee).
Title InsuranceInsurance protecting against financial loss from defects in a property's title that existed before closing but were unknown at the time of purchase.
Chain of TitleThe sequential record of all transfers of ownership for a piece of property from the original patent holder to the present owner.
EscrowA neutral third-party arrangement where funds, documents, and instructions are held until all conditions of a real estate transaction are satisfied.
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