Palmers’ expert comments on CHAPS problem

News Article

Carey Jacobs, a Partner at Essex-based Palmers Solicitors, has been asked to contribute to Estate Agent Today magazine by The Bold Group, an expert support group for conveyancers in the UK.

Carey was asked to provide her opinion on practical solutions to the problems experienced by those attempting to move house in the midst of the recent Clearing House Automated Payment System (CHAPS) breakdown.

The CHAPS system is used by 5,000 financial institutions and handles on average 138,245 transactions per day worth around £277 billion.

The incident occurred earlier this month when the Bank of England issued a direction to all banks that, owing to technical problems, they should not make any CHAPS (telegraphic transfer) payments.

In the article, Carey explains why it would have been inappropriate to effect legal completion on the day CHAPS failed to process transactions and identifies a practical solution for those who were attempting to move.

“Effecting legal completion if the money never actually arrived (whatever undertaking was given to do so) would have been a spectacular own goal – especially in the light of the various property fraudsters who affect our professional lives these days. The time delay between legal completion on the purchase and mortgage redemption by our seller would have breached our duties to the advancing lender,” she comments. The full article can be read at: www.estateagenttoday.co.uk/industry-views/1510-it-s-not-on-chaps.

“By dealing with early occupation by way of licence [as enabled by the Standard Conditions of Sale (SCS), 5th Edition], we got the chains physically moving, but did not have to effect legal completion until the monies were in place. All of our clients were advised about the risks of allowing (and taking) early occupation, and all chains agreed to waive the requirement to pay licence fees for early occupation which are provided for in the SCS.”

Palmers has a large residential conveyancing department which offers practical and clear advice on the legal aspects and procedures which need to be negotiated from the point of offer to moving house.

Furthermore, Palmers is on the panels of the major mortgage lenders, enabling savings to be made in the majority of purchases and re-mortgages. The firm’s conveyancing team can assist with property sales and purchases, remortgages, new-build (plot) sales and purchases as well as more complex areas of residential property law, such as leasehold enfranchisement, land acquisition and tenancy and licence agreements.

For more information, please contact Carey Jacobs or Clare Butcher.