The NC Good Funds Settlement Act, In Plain English
Ever wondered why your closing attorney can't "just disburse" the second you sign? The answer is a North Carolina statute called the Good Funds Settlement Act.
Josh Oliver
Founder, Rhythmic Title Company
The statute, briefly
The North Carolina Good Funds Settlement Act (NCGS § 45A) governs how and when a closing attorney (or other settlement agent) can disburse funds in a residential real estate transaction.
The rule, in essence:
A settlement agent cannot disburse funds for a closing until they have received "good funds" sufficient to cover the disbursements, and the deed and deed of trust have been recorded.
That's the whole thing, but the implications are significant.
What counts as "good funds"
The statute defines specific categories, including:
- Wired funds confirmed received in the attorney's trust account
- Cashier's checks (subject to size limits)
- Funds from another attorney's trust account
- ACH credits in some cases
Personal checks and uncertified funds do not qualify above small thresholds. That's why you wire cash to close, not write a check.
Why recording comes first
The statute generally requires the deed and deed of trust to be recorded before disbursement. This protects everyone:
- The seller can be confident that when funds are released, title has actually transferred.
- The buyer can be confident their deed is on record before money leaves the system.
- The lender can be confident their lien is in first position at the moment funds disburse.
Why this changes timing in NC
In some states, you sign in the morning and have keys by lunch. In NC, the sequence is:
- Sign at the attorney's office.
- Attorney drives or e-records documents to the Register of Deeds.
- Recording is confirmed (same day or next business day).
- Attorney does a "bring-down" title update post-recording.
- Attorney disburses.
- Possession transfers per the contract.
This is a feature, not a bug, but it does mean you should plan possession around disbursement, not signing.
Practical implications
- Get wires sent early. Wires must be received and confirmed before disbursement. A wire sent at 4:55 PM may not clear in time.
- Don't expect keys at the moment of signature. Keys release when the contract says they do, usually after disbursement.
- Out-of-state lenders, take note. Your CD goes through an attorney, your funds wire to a trust account, and disbursement waits for recording. Build that into your timeline.
The Good Funds Settlement Act is one of the reasons NC closings are notably low-fraud and clean. The trade-off is a sequence that requires patience, and a closing attorney who keeps the file moving.
Frequently asked questions
- What is the NC Good Funds Settlement Act?
- It is the North Carolina statute (NCGS Chapter 45A) that governs how and when a settlement agent, typically the closing attorney, can disburse funds in a residential real estate closing. It defines what counts as 'good funds' and ties disbursement to recording.
- What kinds of payments qualify as 'good funds' at a NC closing?
- The statute lists specific categories such as confirmed wired funds, certified or cashier's checks within statutory limits, funds drawn on another attorney's trust account, and certain ACH credits. Personal checks and uncertified funds do not qualify above small thresholds.
- Why does the deed have to be recorded before the attorney disburses?
- Recording first locks in title transfer and lien position before money moves. That sequence protects the seller (paid only after title transfers), the buyer (deed on record before funds leave), and the lender (lien in first position at the moment of disbursement).
- Does the Good Funds Settlement Act apply to refinances and home equity loans?
- Yes. The act applies to residential real estate closings in NC involving a loan or transfer of property, which includes refinances and home equity transactions.