This article discusses about the procedure involved in disbursing money. Details such as method of payment, discharge of seller’s mortgage, release of deposit etc. are also discussed.
Method of payment
As per both the standard conditions, the consideration for the transaction should be made only by a direct transfer of cleared funds and an unconditional release of deposit by the stakeholder. As per SC 6.7 the money should come directly from the solicitor’s account held by a clearing bank.
The bank’s money transfer system allows the funds to be transferred directly from one bank account to other on the same day. This system of telegraphic transfer is computerised and is applicable even if the money is transferred from different banks.
Ideally before completion, the seller’s solicitor would have informed his counterpart about the required money for transfer along with bank details to which the money should be transferred. This information would have been provided when the buyer’s solicitor made a request for complete information; in fact, it is a part of standard enquiry in a TA 13 Completion Information and Undertaking Form used in Protocol transactions.
On receiving account details, the buyer’s solicitor instructs his bank to remit a certain amount to the seller’s solicitor’s account. It is important that these instructions are given sufficiently ahead of the day of completion to ensure that the money reaches the seller’s solicitor’s account before the time limit for receipt of fund expires. There could be delay in transmitting funds from one bank to another, as opposed to transmitting funds between two branches of the same bank. The bank would charge a small fee for this service. The seller’s solicitor should ask his bank to inform him as soon as the money is received so that he can proceed with the completion formalities. Sometimes when the seller has a direct computer link with his bank, funds can be transmitted directly, thus enabling him to effect the transmission of funds himself rather than relying on telephone calls or personal visits to the bank and waiting for a clerk to effect such transfers.
Cleared funds
To ensure that SRA Account Rules 2011 are complied with, money should be paid only from cleared funds in clients account. Thus the buyer should make sure that funds are transferred from the client account in sufficient time.
Discharge of seller’s mortgage
Once the money reaches the seller’s solicitor’s account, he then arranges for money to be transferred to his client’s lender’s account. This is done so as to conduct immediate discharge of mortgage. When the seller’s lender is represented by a different conveyancing solicitor and the payment is made by telegraphic transfer, the seller’s solicitor asks his counterpart to transfer the discharge money directly to solicitor’s account and then transfer the balance money to him.
Release of deposit
The deposit money is held by the conveyancing solicitor in the capacity of an agent for the seller and need not be released expressly for his use on completion. When the buyer’s conveyancing solicitor holds the money as a stakeholder, he should provide the seller’s solicitor with a written release addressed to the stakeholder authorizing payment of the deposit to the seller as he directs.
Photo courtesy: Eric Schmuttenmaer
