Help Needed with Interest Calculation in Late Completion

riccume

When calculating the number of days of interest in a late completion, should the original closing day be included?

Here my case: I was scheduled to complete a property purchase on a Friday but ended up wiring the funds to the seller's lawyer only on the following Wednesday (he received the funds on that Wednesday but after 2pm). My lawyer argues that I should pay for 7 days of interest (Fri-Sat-Sun-Mon-Tue-Wed + Thurs due to the fact that the payment was received after 2pm on Wed) while I insist that the Friday shouldn't be included because that was the agreed-upon closing date, hence the interest should be for 6 days only.

I haven't been able to find a standard method for this calculation but struggle to see how my lawyer's approach can be correct. If we follow his approach, and for example I had wired the funds on the day of closing (Fri) but after 2pm hence ending up with a late completion, according to his approach I would have had to pay for 2 days of interest (Fri + Sat due to payment after 2pm on Fri). Doesn't look right.

Thanks!

Debt_Free_Chick

I think your lawyer is right. Normally, the seller would have received cleared funds (cash) by midday on the day of completion.

riccume

Thanks. So you are saying that if I had wired the funds after midday on the closing date (Fri), the interest would be calculated on two days (Fri+Sat)?

Because, you see, this is what my lawyer is doing. I'm charged for the closing date (Friday) and I'm charged for the day AFTER the seller received the funds (Thursday) because the funds hit is account on Wednesday afternoon after 2pm.

Debt_Free_Chick

If you completed on Friday, the funds were due then so, yes, the seller should have had cash in the bank on that day, earning interest from that day.

The interest you owe is from the day the funds were due right up to the day the funds were actually deposited and started earning interest. As they were received by the seller after 2pm on Wednesday, they were not received until Thursday so interest for Fri-Thur looks right to me. But perhaps see what others say.

RabbitMad

It doesn't look right to me.

Had completion been a Thursday and you had transferred the money before 2pm you wouldn't have had to pay interest, after 2pm you would have had to pay interest for the Thursday. The money would have been there for the Friday before 2pm so no interest.

In your case as the money was there on the Wednesday (after 2pm but ready for the Thursday) you shouldn't be paying interest for the Thursday (day of actual completion)

Of course there could be all sorts of other costs you will be responsible for (aborted moving costs, interest further up the chain etc) so perhaps arguing over one day's interest is not really cost effective. Even if the property was £1,000,000 the daily interest at 8% is only £220 which is less than 1 hour of solicitor time.

Richard_Webster

In your case as the Money was there on the Wednesday you shouldn't be paying interest for the Thursday (day of actual completion)

It wasn't "there" - "there" is received by the seller' solicitor before 2pm. It wasn't, so it it is treated as not received by them until the Thursday.

I think it is 6 days - Sat/Sun/Mon/Tue/Wed/Thu. If they had the money in time to complete before 2pm on the Friday there would have been no extra interest. If hypothetically, you could have completed on the Saturday (not possible because solicitors and banks not generally working) it would have been 1 day and so on.

RabbitMad

Richard_Webster wrote: »

It wasn't "there" - "there" is received by the seller' solicitor before 2pm. It wasn't, so it it is treated as not received by them until the Thursday.

Sorry, I was not clear, I meant that it was there ready for the Thursday.

We both agree 6 days interest.