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Lawyers Not Cashing in on Weekend Deposits

Feb 07, 2012
In the November issue of The Mover Matt Faizey talked about how the often very short time between exchanging contracts and completion is making planning difficult for professional movers and his crusade for a compulsory 21 day gap.

Matt also criticised solicitors who he believes compound the problem by pushing people into moving on Fridays in order to make extra money by keeping large amounts of their client’s cash over the weekend. We put these points to Nick Ritson, a solicitor with Milton Keynes law firm Austin Ray and asked him to comment. 

“In the vast majority of cases we pay any monies due to the client on the same day we receive them, and almost invariably this is by ‘same-day’ transfer rather than by cheque. So it’s rare that we have any substantial funds over the weekend, or indeed overnight.

Usually, if someone is buying and selling on the same day, the solicitor will use all the client’s sale proceeds for their onward purchase, and it is only the solicitor at the ‘top’ of the chain who will have any funds to pay out to their client.

If we have any substantial funds over the weekend we will automatically put these on deposit and pay the interest to the client when we pay the money out to them. However current interest rates are around 0.2% so on £100,000 I am informed the amount of interest earned over the weekend would be about £1.00, so one would have to have a lot of funds to earn anything substantial from it.

I have checked with my Accounts Department and it would appear that if we have over £20,000 from a client we have to put it on deposit after one week, and even if we don’t we have to pay interest to the client at the appropriate rate. If it was obvious that the money would not be used within the week, we would put it on deposit straight away, although with interest rates being so low at present this is somewhat irrelevant.

In all my 26 years as a solicitor I have never heard that completions are on a Friday so that solicitors can earn interest on the funds over the weekend. I suppose this may have been the case in the distant past when immediate transfers were not available and interest rates were much higher. The main reason is so that people can take just one day off work and have the weekend to unpack.

You suggested there ought to be a lot of completions on a Monday so that people can have the weekend to pack, but of course they can take as long as they like to pack over the preceding weeks before they move, but they only have one day to actually move in.

A lot of our time is now taken up with discussing completion dates and whether we are going to be able to make the suggested date. Clients obviously get very anxious and the number of estate agent enquiries as to whether we will make a date or asking whether we’ve sent or received a particular letter/fax/e-mail can sometimes take up most of our day, and that of our support staff, meaning we have less time to get on with the work needed to get to an exchange. I think there is a lot to be said for educating clients to not think about moving until we are ready to exchange and then having some sort of accepted time between exchange and completion. I know it is human nature to get excited about a move and to want things done quickly, but there must be something we can do to manage clients’ expectations and help to make their move a more enjoyable experience.

Just one further point, I think I’m right in saying this is the only country where we are able to have a whole chain of transactions completing on the same day. Certainly other lawyers abroad have often looked at me as if I’m mad when I explain the size of same-day completion chains. This is a system that has been developed by lawyers and considering what is achieved is, I believe, a very clever system and one which we have come to take for granted and rely on.”

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