Using CHAPS in time sensitive property transaction

Article

23 November, 2017

Changes to the way CHAPS operates means that to the latest editions of Standard Commercial Property Conditions (SCPCs) and the Standard Conditions of Sale (SCSs) require amendments which are the standard terms frequently incorporated into property transactions.

CHAPS (the Clearing House Automated Payment System) is a same day payment system regularly used in property and other types of transactions. On 13 November 2017, the Bank of England announced that it had commenced direct delivery of the CHAPS service, which was previously operated by CHAPS Clearing Company Ltd.

The use of the CHAPS in day to day transactions albeit through a different operator should continue as previously. However, the latest editions of SCPCs and SCS do not encompass this latest change and will require amendments. In particular, the definition of "clearing bank" in condition 1.1.1 (c) of the Third Edition of SCPC and condition 1.1.1 (b) of the Fifth Edition of the SCS have now become incorrect.

The Law Society is in the process of amending both sets of conditions but has not given timescales. In the meantime it has suggested that "clearing bank" should be amended.

Contracts that are currently being negotiated will require this amendment to be made in order to reflect this change. For contracts that have already been negotiated but have not completed an amendment as recommended by the Law Society would also be necessary.

If you have any questions regarding any changes in relation to any contracts currently being negotiated, please contact the Housing & Regeneration (property) team on 01772 220022 or clcik here to submit an equiry via our website.

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