Solicitors and people dealing with solicitors have traditionally regarded banker’s drafts as the equivalent of cash, only safer. This is because a banker’s draft is effectively guaranteed by the bank and is only given if the bank’s customer has enough funds in their account to cover the amount of the draft. It has been seen as better than cash as it cannot be miscounted and can only be paid to the named payee. It is, in effect, a cheque that won’t bounce.
However, the reality is somewhat different. First, although the banker’s draft is unlikely to bounce, in these uncertain days that does depend on the survival of the bank that gave it. Secondly, banker’s drafts, like cheques, can take up to six working days to clear, which means that the person receiving the banker’s draft, e.g. your solicitor, cannot use the money on the day after receipt, or following day after receipt. This means that if the money needs to be used for a specific purpose, e.g. to complete a house purchase, the banker’s draft must be with the solicitor in plenty of time to allow the funds to clear through the banks. There is therefore little point in using banker’s drafts for this purpose – you may as well give your solicitor a cheque which is just as fast, and cheaper.
The third problem with banker’s drafts is that, like cheques, they can be stopped – even if there is money in the paying customer’s account, so anyone receiving a banker’s draft should not rely on the money until the draft is cleared.
In view of the above difficulties, if you need to get money to your solicitor or anyone else so that it can be used for a particular transaction, either make sure that a banker’s draft or personal cheque is with them at least six clear working days before the money is needed, or arrange for the money to be sent directly through the banking system. This can be by BACS which normally takes three to four working days and is often free or at a small cost. Alternatively, money can be sent as a same day money transfer for which there is usually a charge. However, even then, make sure the money is sent the day before it is needed. This is because the banks often credit those receipts at the end of the day which means that the solicitor may not be able to use it in time for a particular transaction, e.g. so that you can move house.
Finally, when sending large amounts (e.g. over £10,000.00) through the bank system, first check with your bank whether they will allow you to do this as several banks have limits on the amounts that can be sent from your personal accounts.
However, the reality is somewhat different. First, although the banker’s draft is unlikely to bounce, in these uncertain days that does depend on the survival of the bank that gave it. Secondly, banker’s drafts, like cheques, can take up to six working days to clear, which means that the person receiving the banker’s draft, e.g. your solicitor, cannot use the money on the day after receipt, or following day after receipt. This means that if the money needs to be used for a specific purpose, e.g. to complete a house purchase, the banker’s draft must be with the solicitor in plenty of time to allow the funds to clear through the banks. There is therefore little point in using banker’s drafts for this purpose – you may as well give your solicitor a cheque which is just as fast, and cheaper.
The third problem with banker’s drafts is that, like cheques, they can be stopped – even if there is money in the paying customer’s account, so anyone receiving a banker’s draft should not rely on the money until the draft is cleared.
In view of the above difficulties, if you need to get money to your solicitor or anyone else so that it can be used for a particular transaction, either make sure that a banker’s draft or personal cheque is with them at least six clear working days before the money is needed, or arrange for the money to be sent directly through the banking system. This can be by BACS which normally takes three to four working days and is often free or at a small cost. Alternatively, money can be sent as a same day money transfer for which there is usually a charge. However, even then, make sure the money is sent the day before it is needed. This is because the banks often credit those receipts at the end of the day which means that the solicitor may not be able to use it in time for a particular transaction, e.g. so that you can move house.
Finally, when sending large amounts (e.g. over £10,000.00) through the bank system, first check with your bank whether they will allow you to do this as several banks have limits on the amounts that can be sent from your personal accounts.
