Lost Interest

fimonkey

how much interest have you lost EXACTLY? i.e how long would you have had the money for, and in which account? (Not being nosey and you have the right to not answer of course, but I'm interested to know whether it really is worth getting all worked up about).

Cheers

RabbitMad

As an aside, client money accounts can earn interest - Lloyds pay it on their client's call account (see https://www.lloydstsb.com).

After I completed on my purchase recently I received a cheque for £40 from my solicitor. This was the amount of interest my money earnt whilst in their accounts.

If I was OP I would ask solicitors for the interest on £85K whilst it was in their accounts. I assume the solicitors requsted the 85K several days or weeks prior to exchange. If they say they haven't made any money get them to prove it.

As deary65 says they are not supposed to profit from this but I would bet a fair few solicitors keep any interest from themselves.

And fimonkey 85K at 5% per annum is £11.36 a day! (or to put it another way 2 bottles of wine)

clutton_2

i have had interest on deposits i have lodged with my solicitor whilst waiting for exchange

Generali

clutton wrote:

i have had interest on deposits i have lodged with my solicitor whilst waiting for exchange

I guess the rules are different for solicitors and Big Bank then. Oh well.

thesaint

As for the solicitor proving that they received nil interest, how do they do that?
It is extremely hard to prove a negative, i.e Prove to me that I can't jump over my house.

benood

Generali wrote:

If it's client money you can't place it in the money market so it doesn't earn interest for the bank according to the treasury dept at Big Bank Ltd where I work. As a result, it's very unlikely that the bank is giong to pay interest to their client and thus make a loss!

Does this mean that the bank with whom the solicitor holds the client monies account can't use the account in calculating their minimum funding requirement? I'd have thought the rules about not profiting from client monies would have stopped at the solicitor level rather than drilling through to the bank - for them it's just another account surely and no more onerous fiduciary duty is attached to it.

hazeyj

clutton wrote:

i have had interest on deposits i have lodged with my solicitor whilst waiting for exchange

Yes I have too. The Law Society set a standard rate which is credited after so long.

RiskAdverse100

Where there is one property being sold by a Seller to a Buyer the deposit is paid by the Buyer's solicitor to the Seller's solicitor on exchange. This deposit is held by the Seller's solicitor as stakeholder until completion takes place.

If the sale of the property to the Buyer completes then the deposit sum being held by the Seller's solicitor then belongs to the Seller and the solicitor should pay it over along with any interest earned. The Buyer is not entitled to any interest.

If the sale of the property does not complete and the contract is treated as having been rescinded (ie both parties agree that there never was a contract) then the deposit then belongs to the Buyer and the Seller's solicitor should return it along with interest.

I should add that contracts are rarely rescinded in this way.

Between exchange and completion the deposit belongs to neither party and this is what holding it as stakeholder means.

RiskAdverse100

deary65

RiskAdverse100 wrote:

Where there is one property being sold by a Seller to a Buyer the deposit is paid by the Buyer's solicitor to the Seller's solicitor on exchange. This deposit is held by the Seller's solicitor as stakeholder until completion takes place.

If the sale of the property to the Buyer completes then the deposit sum being held by the Seller's solicitor then belongs to the Seller and the solicitor should pay it over along with any interest earned. The Buyer is not entitled to any interest.

If the sale of the property does not complete and the contract is treated as having been rescinded (ie both parties agree that there never was a contract) then the deposit then belongs to the Buyer and the Seller's solicitor should return it along with interest.

I should add that contracts are rarely rescinded in this way.

Between exchange and completion the deposit belongs to neither party and this is what holding it as stakeholder means.

RiskAdverse100

This may well be but the holder is still "holding" in escrow. The buyer does not have the use of the money nor does the vendor. The question is who has the better title to the interest.

Generali

benood wrote:

Does this mean that the bank with whom the solicitor holds the client monies account can't use the account in calculating their minimum funding requirement? I'd have thought the rules about not profiting from client monies would have stopped at the solicitor level rather than drilling through to the bank - for them it's just another account surely and no more onerous fiduciary duty is attached to it.

My understanding of client money (from a banking perspective) is that the bank can't use it as part of their regulated reserves, as funding for prop trading, as margin or placed on deposit. It has to be kept in a segregated account at the cash agent.

If memory serves, CSFB was fined about £40mio for not segregating client money - if they weren't segregating it I guess they were using it as part of their normal end of day funding (I speculate there). They were certainly pretty hot on it when I had an interview with them.