The money has to be there (new law)

Ideally, it’s a simple transaction.

Someone puts their house on the market, often with the help of a broker. They find a buyer who agrees to a price. The buyer gets financing from a lender. Funds are transferred to an escrow account and the house is sold.

With all of this, there is an assumption that the lender has transferred the funds before the deal closes. Unfortunately, this isn’t always the case.

Minnesota law permits a broker to front the funds if there is an established relationship with the lender. Though this usually works out for everyone, recent cases have shown that it doesn’t always, leaving one broker out $175,000 and another out $500,000.

A new law says that a deal cannot be closed unless the funds have arrived from the lender.

Sponsored by Rep. Joe Atkins (DFL-Inver Grove Heights) and Sen. Linda Scheid (DFL-Brooklyn Park), the law is effective Aug. 1, 2008.

HF3888/SF3594*/CH347