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Last edited 10 Jul 2018
A disbursement is a type of payment which is made from a bank account or other funds, or a payment that a third party such as a solicitor makes on behalf of their client for which they are entitled to reimbursement.
Common examples of disbursements include money paid out for the running of a business, cash expenditures, dividend payments, and payments made by an organisation’s solicitor to third parties for certain fees (e.g. court, medical, courier fees, expert reports, etc.).
During the conveyancing process, a disbursement is a type of payment made when property ownership is transferred from one party to another. Disbursements are not part of a solicitor’s basic fee, nor are they additional charges for which the solicitor receives a commission; instead they relate to various fees and taxes that must be paid.
The most common disbursements that can apply to property purchases include:
- Stamp duty land tax.
- Land Registry fees (to register the change of ownership, along with details of any new mortgage on the property).
- Official copy entries and filed plans.
- Landlord’s registration fee (may be payable to the freeholder for registering details of the ownership change).
- Search fees. For more information on the various different types, see Search fees.
Some disbursements may need to be paid up-front while others will be required when the purchase completion is due. Some of the fees are of fixed amounts and can be given with the original quote, however, others are variable and will be determined by the property purchase price or the particular charging structure of local authorities.
If a disbursement is collected by a solicitor but then payment of it is no longer required, it must be returned to the client. If the amount actually paid is lower than that taken by the solicitor as a disbursement, then the balance should be refunded to the client.
While some clients may wish to handle the conveyancing process themselves, thereby avoiding having to hire a solicitor, in practice it is can be convenient to use a solicitor to make such payments. This can be because some organisations only accept payments through solicitors and do not directly deal with the public, or because the solicitor has an existing account with a particular organisation. Also, a solicitor is responsible for making sure all relevant payments are made sp that the property purchase can go through as easily as possible, and the layperson may not be fully aware of all those payments that are required.
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