C'mon CHAPS, don't be Faized!

Earlier this week removal man Matt Faizey had an article published by Estate Agent Today in which he commented about the CHAPS payment time being extended. 

In my opinion, all this article proved was how little Matt really understands about conveyancers (the term conveyancers includes Solicitors and Licensed Conveyancers), the conveyancing/home buying and selling process, and the banking system.

Despite Matt’s often incorrect, and unnecessarily vitriolic views (I am not going to take the bait), many conveyancers feel that the CHAPS time extension could be a benefit to those clients who get caught up in ‘banking’ delays on the day of completion.

In most contracts, the standard conditions of sale stipulate a 2pm time for completion. In other words, all completion monies should be transferred by 2pm all the way up the chain.  

Just because the banking hours will be longer doesn’t mean that these conditions will change. 

However, if a completion is delayed, conveyancers will have more banking hours to work with, in order to try and get matters completed correctly, instead of having to organise risky licences to occupy and so on.

The simple fact is it often takes a long time for funds to go from one bank to another. 

On a good day, it can sometimes take less than an hour, on a bad day, sometimes much, much longer than an hour. 

However, in a simple chain of three (A, B and C), conveyancer B cannot send their client’s purchase money to conveyancer C until their bank has confirmed that their client’s sale money has arrived safely in their bank account from Conveyancer A. 

Even in a short chain delays can occur, and if you have five, six or more parties in a chain and each CHAPS payment takes over an hour or two to reach its destination, you can see how long delays can occur. 

That is without there being any other serious delays such as money arriving late from a lender or client, or banks carrying out long-winded internal checks because an unusual surname might come up as high risk.

Often, there seems no rhyme or reason why some CHAPS payments go quickly and some slowly. One Bold Legal Group member’s office had nine completions last Friday, all done and dusted financially by 12.30pm. 

Yet on another day, one completion can take all day.

CHAPS does not, and never has guaranteed the time it will take to send and arrive. It is ONLY guaranteed to be the same day. 

In most cases conveyancers can, and do, send as early as possible (admittedly there are a few bad apples) but it has been known for the first payment not to reach the other party until 4pm. 

However, the bank has completely fulfilled its obligations if that is the case. So the issue here often is NOT when conveyancers send the funds nor extending the hours, it is the CHAPS/banking system itself.

Conveyancing is unlike many other commercial or professional services I can think of. When I was practising and say third in a chain of five, ninety nine times out of a hundred I would be ready to complete. 

All money in, all documents signed and so on. Despite this and as mentioned above, I could not send out my client’s completion money until their sale money had arrived. Often that wasn’t until quite late in the day. 

So I (and other conveyancers in the chain) will have done all we can to be efficient and professional, but because of one hold up below us (for a good or bad reason) our client’s suffered as did our reputations.

A few of my members have suggested a way to try to resolve the late completion issue. It will mean a change in the way conveyancers work and I can’t say right now if it is achievable or not. 

What I can say is I will take the suggestion forward. I am not going to explain what it is until it has been worked through because if I do, you can bet your bottom dollar that without understanding the complexities involved someone else, who doesn’t understand conveyancing, will expect it to be introduced overnight. 

However, when I write my next article, I will explain what the idea is and why it has, or hasn’t progressed.

I will end this article with comments from two Bold Legal Group member firms and one from me:

“How many clients have we had this year that have failed to move in on the agreed date because of the time of the CHAPS payments? None! How many of my clients and their families have been left stranded in removal vans? None! 

All that the extension to the CHAPS payments does is actually give the conveyancer the ability to transfer funds on the day of completion rather than agree to move our clients in on undertakings and licences. Legal remedies that are far from satisfactory.”

“Does Mr Faizey not have the sense to realise that if conveyancers have the money, we send it out as soon as possible? We want all of our completions done by the rightful 2pm contract time, why wouldn’t we? We want happy clients and most of us work on a fixed fee.”

“Don’t get me started on why we allow such a short time between exchange and completion. We don’t allow it to happen, often against our advice we are instructed by our clients to exchange and complete within a nanosecond of each event. In an ideal world we would ban such a dangerous suggestion! Maybe removal companies could refuse to take bookings unless there was a specific time between exchange and completion? Problem solved.”

Have a great Christmas and New Year and may all your delays be short ones.

*Rob Hailstone is founder of the Bold Legal Group