Bankers Draft or Chaps on exchange

JustTakeAllMyMoney

Hi,

Im due to exchange tomorrow and on exchange put down £33k, last time I did this I got a bankers draft from the building society. This time I did the same got a bankers draft but from my bank 'Natwest' as it gurentees the funds. Now I thought bankers drafts cleared straight away when paid in as Natwest has already debited my account, but they are telling me five days to clear (like standard cheque) :eek:

Do you think my solicitor will accept my bankers draft, I thought they needed to transfer my funds to exchange,but they are going to have to wait 5 days for it to clear.

What have other people done just used CHAPS payment, do you think I will be ok with a bankers draft ? What about on completion as well as I will need to pay another £10k then, can you only complete when the solicitor has my cleared funds so would I be best using CHAPS ?

nmiah786

Bankers draft should not take 5 days to clear. I've always paid via bankers draft and my solicitors been fine with it. The most it should take is one day. Bankers draft is supposed to be a cash effectively. However, I'm worried that your solicitor did not request you to give them the bankers draft at least 3 days before exchange.

Chaps should clear into the solicitors account the same day provided you do it before a certain time (3pm I think).

HTH

never_enough

I'm surprised by this, I thought bankers drafts were cleared straight away.
Did it go ok?

Menna

Unfortunately a couple of years back, (or it might have been months, when you work for a bank every day feels like a drudge, thankfully I left) they stopped bankers drafts effectively being cash as they were being used fradulently (surprise, surprise), so now they do need to clear like normal cheques.

The reason this has not become common knowledge is because a lot of institutions still accept bankers drafts as being the equivalent of cash, but if you ring your bank, they'll probably tell you they wont pay out on it until it has cleared.

Having seen some of the really good, and bold as brass frauds on drafts, I certainly wouldnt use them.

Your solicitor can get express clearance on the draft, which will cost another £15, which means the bank will give an answer as to whether they would pay the cheque or not when presented, but if you've shelled out for a draft and then paying an express charge, you might as well pay for a chaps or TT instead.

A bit of tedious info for you!

lynzpower

I used chaps for mine it was cleared within the hour.

Did have to pay for the privilidge though, but I think you do with Bdrafts anyway.

ginger_nuts

i was advised by my solicitors not to use chaps as sometimes the money goes missing . My solicitor received a bankers draft via post .
i didnt no if I was going to complete until the last minute .I was working on completion day until 12 noon .I didnt no until 12:10 if it had completed .

Mikeyorks

Menna wrote:

Your solicitor can get express clearance on the draft, which will cost another £15, which means the bank will give an answer as to whether they would pay the cheque or not when presented,

A Draft will always be met on presentation, that's its sole benefit - so there is little point in a 'special presentation' - which only has applicability for personal cheques. Where the cheque is sent to the drawers Branch, and they confirm adequate funds ... or otherwise.

But a Draft is not the equivalent of liquid funds - its just 'guaranteed' funds - it only translates to liquid funds after it has gone through the clearing cycle.

What about on completion as well as I will need to pay another £10k then, can you only complete when the solicitor has my cleared funds so would I be best using CHAPS ?

Yes - your Solicitor will only complete with cleared funds. Otherwise he will be subsidising you - and is unlikely to do that. So if the cleared funds are not coming synchronously from your purchaser - you will need to provide them / the balance. Would strongly suggest you ask your Solicitor what methods he will accept / recommends?

Me_Myself_2

Solicitors can only complete on cleared funds. The bank will not allow them to transfer money on uncleared funds and any other money in their clients account belongs to other clients and this would be totally againt the solicitors strict rules and regulations.

We have never had any money get 'lost' in the chaps transfer system and see it as a very safe and effective way to transfer money.

There is a deadline for the transfer of money, but you need to take into account the fact that your solicitor needs to pass this money on to the next solicitor in the chain and so on.

Sometimes, if there is a long chain, we recommend that wherever possible, some of the transfers are done the previous day. This can help speed things up on completion day.

AndrewSmith

I think CHAPS is the best way to send the money as the system is completely automated.

If you use a bank draft the solicitor will want it to be paid into his client account before utilising the funds for completion. This may add to delay as it means a trip to the bank for the solicitor firm which I guess they only do once at the end of each day.

I would NEVER send a bank draft in the post, even by recorded delivery. It is the same as sending rolled up bank notes with a sticky label saying 'solicitors' on it.

mystic_trev

ginger_nuts wrote:

i was advised by my solicitors not to use chaps as sometimes the money goes missing . My solicitor received a bankers draft via post .
i didnt no if I was going to complete until the last minute .I was working on completion day until 12 noon .I didnt no until 12:10 if it had completed .

I'm afraid this is complete nonsense. Even if the Bank draft was sent by recorded / registered post it could still get lost - then what would happen? You'd miss out on completion and be sued by everybody in the chain. The £2,500 compensation you'd get from the Post Office wouldn't cover much of that - would it?!

Any Solicitor who dosen't use CHAPS should be avoided.

Sun

ginger_nuts wrote:

i was advised by my solicitors not to use chaps as sometimes the money goes missing . My solicitor received a bankers draft via post .

Thats bull!!!! ! CHAPS is the best method to pay...

see here:

http://www.apacs.org.uk/payment_options/chaps.html