The Good Funds Statute was enacted in 1994 to address the situation most infamously demonstrated in the Abbey Financial case, where a lender failed to fund a loan which had already closed, leaving attorneys in the precarious position of either having closed the loan and refusing to record the papers or having recorded the papers and not having the funds to pay off the seller and existing liens. In the case of Abbey Financial, several of the attorneys representing Abbey closed the loan and recorded the papers, including the mortgage, without having the necessary funds to payoff the seller or the existing liens.

The Good Funds Statute M.G.L. c.183, § 63b provides that no mortgagee who makes a loan to be secured by a mortgage, shall deliver the mortgage into the possession of the Registry of Deeds or Registry District for the purpose of recording unless prior to the time the mortgage is so delivered, the mortgagee has caused the full amount of the proceeds of such loan due to the mortgagor, the mortgagor's attorney or the mortgagee's attorney in the form of a certified check, bank treasurer's check, cashier's check or transfer of funds. The statute further provides that neither the mortgagor's attorney or the mortgagee's attorney shall be required to make disbursements or deliver said proceeds to the mortgagor in such form. The primary purpose of the "Good Funds" statute was to allow consumers and conveyancers to rely on funds at a closing.

Joel A. Stein, Esq.
Friedman & Stein
25 Braintree Hill Office Park Suite 204
Braintree, Massachusetts 02184

Tel: (781) 848-8411
Fax: (781) 843-1573
E-Mail: jastein@friedmanstein.com

(Joel Stein is a past president of the Massachusetts Conveyancers Association. He presently serves as director emeritus.)