“My father was from Aberdeen, and a more generous man you couldn’t wish to meet. I have a gold watch that belonged to him. He sold it to me on his deathbed. I wrote him a cheque for it, post dated of course.”
The post dated cheque is beloved by residential conveyancing solicitors throughout Scotland. It gives that flexibility which a telegraphic transfer just does not. Many is the time that we have been thankful for the simplicity that the cheque brings in a purchase and sale transaction where we are not left to defend the vagaries of the bank system to our clients because the purchase price has not hit the seller’s bank account. There is nothing simpler than just lifting the phone and telling your fellow solicitor that you have received the final searches, your loan funds have arrived, the cheque can be encashed and on that basis the keys released.
Every solicitor in Scotland knows that a cheque gives you that bit of flexibility that a telegraphic transfer just cannot. Explaining this to the client however can sometimes be a bit trickier. Many is the time that we have had to explain why a cheque is in fact a better way of completing the transaction. In this day and age where modern technology is a click away and we are told to push something and pull other things this way and that – a cheque seems like something out of the dark ages.
A settlement by way of cheque is of course not a panacea. The client’s mortgage cannot be paid off until the cheque has cleared leaving the inevitable additional 3-5 days interest to accrue. Explaining to a client that it is perfectly reasonable for us to release the keys for his property when the cheque will take 5 days to clear is sometimes a bit of a difficult conversation. It is not a perfect system but it is surely better that the client is able to uplift his keys on the date of entry as quickly as possible and face additional interest rather than hope :-
- that the transfer of the purchase price from the sale has arrived in the solicitor’s account before 3pm;
- that the funds have arrived from the lender before 3pm;
- that solicitor has managed to set up a transfer out by 3pm;
- that the purchase price actually arrives at 5pm – not at 8pm as happened in a recent transaction and
- that the estate agents are still open!
Personally, I think that the cheque will continue to survive until the banking system sorts itself out and there is an ability to transfer funds so that they instantly appear in the recipient’s account and we do away with the 3 PM bank cut off. You would have thought that this would not be the most difficult thing to do but the telegraphic transfer system has really not changed since its inception in 1984 – 30 years ago! – so I am fully expecting to sign off on cheques for the foreseeable future.
Telegraphic transfer is dead – long live the cheque!
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The information and opinions contained in this blog are for information only. They are not intended to constitute advice and should not be relied upon or considered as a replacement for advice. Before acting on any of the information contained in this blog, please seek specific advice from Gilson Gray.