Senate Bill 470 amended the General Statues to add Chapter 45A which is entitled the "Good Funds Settlement Act." The Act pertains to disbursement of funds before deposited funds are collected and before required documents are recorded at the register of deeds. The Act becomes effective October 1, 1996 and applies to settlements on or after that date.

G. S. 45A-2. The Act only applies to transactions that involve a one- to four-family residential dwelling or a lot restricted to residential use.

G.S. 45A-4. The settlement agent (which is defined in G.S. 45A-3(15) as "the person or persons responsible for conducting the settlement and disbursement of the settlement proceeds, and includes any individual, corporation, partnership, or other entity conducting the settlement and disbursement of the closing funds") is not to disburse closing funds before recording deeds or loan documents that are required to be filed by the lender, if applicable, and verifying that the closing funds used to fund the disbursement are deposited in the settlement agent's trust or escrow account in one or more forms prescribed by the Act.

The agent is not to disburse settlement funds unless those funds are collected funds, unless the Act provides otherwise. G.S. 45A-3(7) defines "collected funds" as those which are "irrevocably credited." However, the Act allows the settlement agent to disburse funds that are not collected funds in its trust or escrow account if the deposit was made by one or more of seven forms which are:

1. a certified check;

2. a check issued by the State of North Carolina, the United States, or a political subdivision of the State of North Carolina or the United States;

3. a cashier's check, teller's check, or official bank check drawn on or issued by a financial institution insured by the Federal Deposit Insurance Corporation or a comparable agency of the federal or state government;

4. a check drawn on the trust account of an attorney licensed to practice in the State of North Carolina;

5. a check or checks drawn on the trust or escrow account of a real estate broker licensed under Chapter 93A of the General Statutes;

6. a personal or commercial check or checks in an aggregate amount not exceeding five thousand dollars ($5,000) per closing if the settlement agent making the deposit has reasonable and prudent grounds to believe that the deposit will be irrevocably credited to the settlement agent's trust or escrow account;

7. a check drawn on the account of or issued by a lender which is approved by the United States Department of Housing and Urban Development as either a supervised or nonsupervised mortgagee as defined in 24 C.F.R. section 202.2.

The remainder of the Act addresses the duty of the lender, purchaser, or seller in G.S. 45A-5 and validity of loan documents in 45A-6, penalty for violations. G. S. 45A-6 states that failure to comply with the act does not govern validity or enforceability of settlement documents.