Today is the day that CHAPS settlement will be extended by one hour and 40 minutes.
The Clearing House Automated Payment System guarantees same-day payment so long as funds are available by a certain time on a working day. That time, from today, is now 6pm.
The Bank of England expects the direct participants in CHAPS to pass on the full benefits to their customers.
But what this will mean in practice for the home-buying and selling public, estate agents, conveyancers and removal firms remains to be seen.
On the face of it, extending the hours for CHAPS will be a bonus and will allow some completions to possibly take place on the actual day of completion when they previously may have been delayed until the next day.
The most commonly used form of contract used by agents is the Standard Conditions of Sale (fifth edition) which has a printed time of 2pm. That can be varied with the agreement of both sides.
However, the Law Society is not currently proposing to change clause 6.1.2 as it might be viewed as encouraging later completions.
Most contracts do not require completion to take place by a certain time, but merely provide that, where the completion monies arrives after a specified time (the contract says 2pm) they are deemed to have arrived on the next working day.
However, at the moment, provided each set of funds in the chain reaches its destination before bank closing on the day of completion, the 2pm deadline is unlikely to be enforced.
Let’s assume a firm sends the completion monies late in the day (or the delivery of the funds is delayed for some reason) and they arrive at 5.15pm but the conveyancer has closed up and gone home.
Despite the purchaser’s and estate agent’s protestations, the keys won’t be released.
Currently, assuming most conveyancers work until 5pm, completion funds arriving at 4.45pm would normally allow completion to take place, albeit late. However, from today, although funds might now arrive at 5.45 pm, if the seller’s conveyancer has departed, completion will be deemed to have taken place the next day.
This looks to me like a can of worms that has just been prised open.
On top of the issues that conveyancers might have with this situation, we also have to consider the issues that estate agents and removal firms (who both tend to work later) might encounter. They could be far more distressing and frequent.
Will the public and estate agents end up preferring to instruct and work with conveyancers who are prepared to extend their working hours to line up with the new CHAPS times, or will nothing really change?
As the days, weeks and months go by, I would be interested in hearing from you as to how this change has impacted on you, your clients, plus your removal and your conveyancer contacts.
If I gather enough information, I will prepare a report/summary for EYE to publish in due course. Please send any thoughts or comments to email@example.com