Faisal Ali Addabi

Summary of the problem

Let us assume that you own limited number of real estate (apartments and villas) and you want to invest in leasing this real property and that due to your multiple financial obligations, you need, from time to time, to have relatively big credit balance in your bank account. In accordance with your practical experience in this field, you know that the best legal way of obtaining investment proceeds (the monthly rentals) is acceptance of payment via cheques but it is known to lawyers that there are apparent and hidden legal risks and problems associated therewith.

The most important question which should be asked is as follows: what is the best way of accepting payment via cheques which enjoys the strongest and fastest legal protection to the extent that it enables the landlord to obtain the investment proceeds easily and within the shortest possible period?

Summary of the solution

In order for the Landlord to ensure that his\her cheque has full criminal protection and will not lose it under any circumstances, the landlord’s lawyer must ensure that all the following four legal conditions are met:

Firstly: all legal requirements must be available on the cheque, the cheque must contain all the following legal requirements: the word “cheque” written on the cheque in the same language of the cheque, place and date of issue of the cheque, an unconditional order to pay a specific amount of money, amount of the cheque in letters and numbers, the beneficiary’s name or to order, drawee’s name, and the drawer’s name and signature

Secondly: the cheque must be presented for payment during its validity period which is six or eight months from the date of issue as prescribed by laws of most countries in the world, after the expiry of validity period the cheque will turn into a bill of exchange and lose the criminal protection

Thirdly: the landlord shall reject any partial payment of the cheque by the drawer as the partial payment of the cheque will make it lose its criminal protection and turn it into a bill of exchange as prescribed by laws of most countries in the world

Fourthly and finally: The landlord must reject any cheque which bears the sentence “guarantee cheque” or which is described as “guarantee cheque” in any contract or document accepted or signed by the landlord and the tenant because in principle and as prescribed by laws of most countries in the world, the cheque is a payment instrument not guarantee instrument. Many final judgments in many countries in the world have decided that the so-called guarantee cheque or security cheque loses the criminal protection, accordingly if you accept any security cheque, your acceptance may expose you to the biggest legal prank as the security cheque will lose the quick and decisive criminal protection represented in severe penalties (imprisonment and fine) and turns into a bill of exchange which enjoys slow and lengthy civil protection represented in issuing payment orders (payment in instalments).

Faisal Ali Addabi\Advocate