2025-07-04 28Hse Editor
If you’re interested in a highly sought-after property, agents often suggest showing your sincerity by writing a small deposit check and signing a Provisional Sale and Purchase Agreement. This way, if the seller agrees to the offer, the contract can be signed immediately, securing the property.
But when writing the check, who should it be made payable to? Many people face this question, especially if the seller’s law firm is not yet known. Some agents may recommend writing the seller’s full name as the payee. However, this is risky—if the seller ends up in debt or turns out to be a fraud, they could simply cash the deposit and disappear.
Another suggestion is to leave the payee blank until the seller agrees to the offer. However, this is best avoided. Since the check already has the buyer’s signature, anyone could fill in the payee’s name and cash it. If a fraudster does this, the buyer would have no way to recover the funds.
What if the check is lost and hasn’t been cashed? The issuer can stop payment through online banking, phone banking, or at the bank counter, though there will be a handling fee.
The safest approach is to write the law firm representing the seller as the payee. If you don’t know which law firm the seller is using, you can write the name of your own lawyer’s firm and have them transfer the deposit to the seller’s lawyer. Another option is to write “lawyer” as the payee initially and fill in the full law firm name once the deal is finalised.
Checks are meant to offer convenience over carrying cash, but many people make mistakes when filling them out, or face other issues, leading to the check being returned by the bank (commonly known as a "bounced check"). This can potentially result in criminal liability.
Common reasons for bounced checks include mismatches between the payee’s name and the account name, insufficient funds in the issuer’s account, errors in the amount or date, or incorrect signatures or stamps. In such cases, the payee usually asks the issuer to provide a new check.
However, not everyone is willing to accept a new check. If a deposit check bounces during a property transaction, the buyer may be seen as breaching the contract, resulting in the forfeiture of the deposit. The agent may also claim both parties' commissions as compensation.
To avoid such issues, always double-check the information on the check before handing it over, or consider using a cashier's order instead. While there’s a fee for issuing a cashier's order, it’s highly reliable since it’s issued by the bank.
To avoid such issues, always double-check the information on the check before handing it over, or consider using a cashier's order instead. While there’s a fee for issuing a cashier's order, it’s highly reliable since it’s issued by the bank.
Additionally, if the payee tries to cash the check and finds that the issuer’s account has insufficient funds, it could be seen as issuing a bad check, which may carry criminal consequences. Therefore, always ensure there are enough funds in the account when writing a check.
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