A while ago some Scottish people on here were helpful in advising me when to set a closing date for a sale. I do not live in Scotland but have just sold a property in Edinburgh and the buyers will take possession on Friday this week. The solicitor has advised me the funds will not be available for about a week due to the use of solicitors cheques. I am not buying another property so don't need the funds to buy but how would this work if I did? I am suspicious about solicitors depositing proceeds from sales and making sneaky significant amounts of interest in bank accounts. Can anybody enlighten me?
This is standard practice in Scotland Sales settle by solicitor's cheque which is safe but not cleared Payments are not normally made until the cheque has cleared Occasionally settlement is made by CHAPS which is cleared funds but it can be difficult as there is no guarantee of how long the payment will take
It's pretty unusual for CHAPS payments not to arrive on the same day if you send them before a certain time. This solicitors cheques thing sounds a lot more of a nuisance than the very occasional electronic payment arriving a day late.
In Scotland we always pay by solicitors cheque. If you sell and buy on the same day it is always done by cheque. Only very occasionally do we do a bank transfer simply because it can take until 3.30 for payment to go through and that can just be to settle the sale. That would mean your purchase couldn't proceed and you could therefore be homeless for a night.
Cheques take a full week to clear properly. The 3 day thing for cheques isn't strictly correct as the issuer of the cheque can, between days 3 and 5 still stop the cheque and recall the funds. Only from day 6 are the funds fully clear.
It isn't a nuisance. You would have been told the terms of the payment in your terms of business letter issued by the conveyancing solicitor. You can still have a CHAPS payment to your account on full clearance day when the funds clear into your solicitors account.
Also, scottish solicitors send cheques the night before settlement so the solicitors acting on behalf of your buyer would send the night before so your solicitor had the cheque first thing that morning. Once the final paperwork is done there would be a call to confirm eveything is in place and your solicitor could cash your cheque.
If you were buying your solicitor would have done the same, ie sent a cheque the night before.
Yes, we had this too when we sold a house recently in NI. I think the solicitors are reluctant to change in both countries as it must be quite nice to have all that client fund interest for weeks at a time. Strange that the rest of the UK seems to be able to use CHAPS successfully.
Yes, the cleared funds are paid out by cheque thereby taking another six days to clear into my account - I paid for faster payments to avoid the second period of clearing given it was a six figure sum.
I'm Scottish & I can't believe that cheques are still being used in this day and age. The funds from our house sale got "lost" - Our solicitors saying they had paid it to the solicitors of the house we were buying, while they claimed they had no record of the money being paid in. It was a nerve-wracking few days!
When I bought recently there was a clause in the business terms to state that the solicitors would not pay out any interest below £50- and then anything over that it would be split 50/50. So check your terms.