Qatar New Posted Dated Check Law

policosanol

phew, big sigh of relief. Thanks for sharing happy.

OK...so the new law has now been kept in abeyance as reported in Gulf Times today.

http://www.gulf-times.com/site/topics/article.asp?cu_no=2&item_no=361260&version=1&template_id=57&parent_id=56

Just wondering what was the hurry to bring it up without studying it properly. Anyways, we can relax and hopefully it never comes into effect.

Maybe bleu or genesis can give their take on this topic.

In the arabic newspapers there is no mention of the rule change as is given in the English newspapers.

What it mentions there is PDC has to be cashed on the date mentioned on the cheque, not a day earlier nor a day late.

That means if you give a PDC to the bank after the date mentioned on the cheque, bank has the right to refuse it.

Guys you can ask the owner to give you an official letter to confirm that he will cash in the cheques only when the rent is due for payment. Or go for bank transfer

To stay in line with the arab backwards mentality that produced this law, employees should now approach their employers and demand their whole years salary up front.

Then PDC's won't be an issue as we'll all have our entire year's salary in the bank to back the PDC's.

Those talking about no sympathy for those and support this ridiculous law must have never had to budget anything in their life. Nor understand that as expats, we don't arrive with a 5hi7 load on money in the bank. If I get here 1May making 20kQR/month and my rent is 10kQR/month, I budget 10kQR/month for rent. How would anyone be expected to fork over 120kQR right away for the year's rent after just coming to Qatar. I can afford the rent obviously, but not at the time of signing a rent contract.

Things like this really make me wonder how this country has gotten to where it is now. Amazing.

Many people will go to jail..

Then deported..

Many people will not afford to rent house..

Thus go back to the home country will be the solution..

Then shortage of workforce occur..

Later, law has to be revised again to attract expatriates & workforce..

so many laws here are a result of problems easily foreseen, but not acted on early enough! I can't leave the country without an exit permit because some idiots did not have sufficient common sense to prevent crooks departing with their money. Now when so many people are seeking to move to cheaper accommodation this law is enforced with minimal notice, to protect the people holding PDCs who do not wish to lose the profits they were making during the shortage of accommodation. Just as the visa on arrival rules were changed and then changed back PDQ so this will happen to this proposal too. The essence of any transaction for anything other than day to day expenses is a promise to pay at a later date, hence mortgages, Hire Purchase, bank loans, overdrafts etc., laws to subvert this simple principle will not be sustainable

as long as some one (landlord or any body) hold valid cheque (the date not due yet), he/she who hold it can encash from the bank issuer. It is correct and will be implement on 10 May onwards.

I am working on the bank and got instruction to implement this case. if no fund,bounce, will charge QR300 after 3rd time.

I fully agree with the views expressed by “sayedRizwan” and it Does Not Necessarily Mean to encash postdate cheque before due date or “e.g. if you have given 12 monthly checks, from 1st of May 2010 to May 2011. The other party may take all 12 checks and en cash these all, on same day”. That posted meant the account holder is normally held fully liable for all bank penalties, civil penalties, and criminal charges allowable by law in the event the cheque does not clear by bank and to reduce or minimize the risk.

If you write a cheque with a date in the future, so that the cheque cannot be cashed until the date on the cheque, then you have written a postdated cheque. Unlike a normal cheque, a postdated check is not necessarily payable on demand. Because they are not payable on demand

WK: in your case, the post dated check works for you and for your client and should be allowed to continue. The way it works back home, it is an agreement between you and your client that you will not cash the check within the 60 days. However, if you decide to reneg on that deal and cash the check early, the bank will honor it. So, as in most things, it is buyer beware.

“Law is clear, you give the check and it can be encased (ENCASHED), there will be all sort of cases, I do not think authorities will bother to start listing both sides of stories, weather (WHETHER) if it was rental or not, wait and see.”

Hey man, You have not returned to this topic:

http://www.qatarliving.com/node/1014346

Gsingh that's all good in theory. Can you explain to me in practical terms. I sell material to a guy and give him 60 days credit, how do I know that I will get my money after 60 days. He gives me PDC for 60 days and since cheque bouncing is an offence, he honours it. Without PDCs, do I extend him open credit? No, too risky. Do we go for L/C even for small amount, waste of money for us in L/C charges. Do I lose the order? No because my job goes. So what to do? PDCs work for us and for our clients.

I think the QL guys got a little confused in understanding the report...

This means that no cheque will be bounced and will be immediately honoured by the bank itself, because the law has been made so strong that people will be forced to keep money in their account to avoid dishonouring of cheques...

However once the system comes into practice, there will be no need to issue PDCs...

Check the last two paras of the news item ...

Also...

According to a senior banker, the system of issuing post-dated cheques will get scrapped with the law taking effect.

If we have full amount of money with us , then there is no need to issue a post dated cheque.

This law will make too much disturbances in doing buisness in Qatar.Now the world financial crisis is reflecting the buisness sector.In addition now Qatar Banks making this type of Law ,will affect over the buisness.Why real estate investors are bothering? The post dated cheques are isuuing by the mutual undrestanding of both parties.If there is no fund in the bank account at the time of the cheque date , that time they can take action against it, then why QCB is making a law like this? what is it's intuition? May it will boost the buisness sector?

Expatriates can go back to their own country , but what can do by the locals ,how they can make buisness , and how they can earn money and meet their expenses of the life, because in Qatar they can't become farmers,they need to make buisness to make money for their lively hood, Post dated cheques are playing a good role in Buisness.

So defenitely this law affect the buisness sector in a bad manner.

In every sector there is some frauds, we want to make law to prevent them, it's mandatory, but making a law like this will affect everybody.Some expatriates are issuing PDC and the very next day they are going back to their home country and those who got cheques from them will suffer a lot.To prevent such situations, making a law like this is foolish, because it affect each and every one.

Here we want to make a law , which affect only upon those who are doing such indecent manner of buisness.

I remember something like this took place in my hometown (Venezuela) then people stopped asking for post-dated checks. I guess I'll need to talk with my landlord about this :)

Thats what the rest of the world does and thats what the government wants to encourage. The banks offer the facility, you just have to be lucky enough to get a sensible landlord who accepts it.

Can you set up direct debits here? Surely landlords would accept that instead of cheques now?

Luckily we're in the process of moving banks so all our rent cheques will be invalid anyway. We won't be handing any more over either without an addition to our contract!

ff

Everybody here is trying to create their on laws or defining their own definition to the amendment. It is clearly visible from the statement that If you give anyone a post dated cheque, he can encash it at anytime. If there is no fund in your account, you will be prosecuted as per the law.

There is no one said that 90% payment by bank and 7 - 8% commission things, they are totally wrong.

The post dated cheque paid for House Rent and Car loans will be going to be an issue.

As Wolfman said, if he has something against this law in the contract, it will not be valid as per the penal code. You cannot have a contractual term that is against the country's law. So no use if you take an affidadavit from your house owner that he will not present the cheques before the mentioned date!!

Somebody from the media or the govt. has to answer this issue.

It is better to abolish the system of issuing PDC's in total. Beat the bush instead of beating around.

Law is clear, you give the check and it can be encased, there will be all sort of cases, I do not think authorities will bother to start listing both sides of stories, weather if it was rental or not, wait and see

Assurance means nothing. The law counts and will win in the end. If you believe in 'assurances' then you must be a stupid idiot.

The real estate industry yesterday sent “reassuring” signals to tenants about the changes to Commercial Law (No 27 of 2006). “The law can’t really be applied to rental and tenancy laws in the country.

We are obliged to give priority to the rental law,” Fine & Country realty firm’s country manager Mounir Bensegueni told Gulf Times. An official at Al Asmakh Real Estate Development said they had been instructed by the management to give assurance to tenants. “Tenants who have called inquiring about the change have been told that an addendum will be added to their contracts by us saying we will not cash their cheques before the due dates they have written on them,” the official said.

Cheques are now the equivalent of cash. Refer below.

Local banks have started to alert customers ahead of next week’s implementation of a new law stipulating that post-dated cheques can be cashed on presentation.

The Article 580 of Qatar Commercial Law (No 27 of 2006), which makes cheques “payable at sight”, states that “if a cheque is presented before the date set as its issuing date, it shall be paid on its presentation date”.

This means that if the bank is presented with a cheque, which has been issued on a post-dated basis (commonly known as post-dated cheque), the holder can present it for payment immediately and not have to wait until the post-date on the cheque to encash it.

The system of issuing post-dated cheques will get scrapped with the law taking effect, a senior banker told Gulf Times yesterday.

He said Qatar Central Bank had already notified the local banks about the relevant provisions of the Commercial Law of Qatar taking effect.

Local banks have started communicating with their customers about the provisions of the new law.

Sources at International Islamic said: “We will fully comply with the laws of the land and it is our policy to educate our customers about these.”

When contacted, HSBC Qatar said: “HSBC always complies in full with both the letter and spirit of the relevant legislation and regulation everywhere it conducts business. With regard to Article 580 of the Commercial Law (No 27) relating to post-dated cheques, HSBC is communicating the requirements of the new law to customers and recommends that customers familiarise themselves with the relevant article that is available on the Qatar Central Bank website.”

Once the law takes effect, industry sources say, it will be the “drawer’s responsibility” to ensure he/she has sufficient funds before issuing a cheque. This means that those with insufficient funds in his/her account to cover the value of a cheque that is presented for payment can be subject to criminal liability.

Legal expert Nizar Kochery said drawers of cheques would no longer be able to rely on their instruments being cashed on or after a “future date”.

He said: “A cheque is the equivalent of cash. While a cheque facilitates easy handling, the drawer must issue it with full seriousness, fully abiding with the laws of the land.

“The days of post-dated cheques have gone. Cheques can be presented for payment anytime after they are handed over to the drawee. The banks will be required to honour and pay the cheques immediately on presentation,” Kochery said.

The Qatar News Agency (QNA) yesterday said the weekly Cabinet meeting had taken “necessary procedures for the issuance of a draft law amending some provisions of the Commercial Law (No 27 of 2006), after reviewing a relevant Advisory Council recommendation”.

What will happen to the 'real' loan?

So how banks can make additional money without interest??

I think the bank can encash post dated checks even it is not yet due, however, the issuer should still fund the checks on its due date or else issuer will still be penalized when it bounced.

If it is like this, when you urgently need a cash, just issue a post dated check to a friend and have it encash and have it funded on its due date. It is like havin a loan.

This is just my opinion.

better give one cheque for the whole year...

just wasting my time writing & ink..

that's the bad part of human being.. GREED.. got 10,000 need 100,000.. so on so forth.. never ending story..

What is Qatar without all the contribution from the expatriates.. how worth all the oil & gas resources if there is no manpower.. how this kind of thing can't be thought of..

i also issued PDC's for our house rent and was very alarmed with this new PDC news. i checked our contract and luckily (or unluckily) there's a paragraph stating that,

"the rent shall be paid in full in advance every month by cheques issued by myself that covered the whole rent period and to be delivered to the owner."

from my understanding this means that i am not obligated to pay the whole year's worth of rent in one payment. if ever the owner tries to encash my PDC's before the issuing date (date written on the individual checks), he will be violating our lease contract. simply put, my obligation to him is to pay him the rent on a monthly basis and not on a whole lump sum basis.

the question now is, can i sue for harassment against the owner in the case that the owner tries to force me to pay all of one year's rental if he presents and tries to encash all my PDC's to the bank at the same time even with this clause in our contract?

what you think guys?

This was discussed before also. They want to stop the postdated checks usage and encourage direct debit from bank accounts. But I'm in the same boat as most as well. I have provided 12 post dated cheques to my landlord . I don't think he even knows how a direct debit system works....

the next alternative is to ask company to pay directly to landlord. Or ask for whole year housing allowance to be ready in the bank

take it the other way round:

now hesitate to give the cheques to your landlord...tell him you will only give cash coz of this law enforced. ;)

but personally..this law is no good!

It must be so nice to have a landlord who accepts rent one month at a time, but for the other 99% of us renting, we have to give checks in advance.

And yes, some of us still live paycheck to paycheck.

yfyokz, WTH.......we don't need your tramadolor any other drugs. Just get lost.

searcher, do you think landlords with accept PDC with out signature

Just give PDC cheque without your signature ...

I see an oppourtunity for banks to introduce overdraft facilities. Let's see what happens.

The fact is in the end, the drawer still pays, one way or another.

I am afraid he is not correct,

I spoken to one of the senior banker and it is confirmed it is applicable of ALL, even personal checks.

Even banks are confused but they will have to honor checks.

Oh...thanks irf77 for the update.

kakaw....seems you have a point...hope you are correct.

Sandman69 giving monthly check is normal, idea is that tenant do have to provide 150 or 200 thousand rent in one go, the land lord want security that he will get regular cash so posted checks compensate both parties, fair enough.

Kakaw, good point, it will be some what relief if only for business, going to call my banker just to reconfirm.

This is a Commercial law, or for businesses and has nothing to do with normal people and their checks.

Otherwise from now on anyone can open a business, collect all the cash by cashing the checks then run away.

I hope I'm right...or let my landlord take all me checks and stick in his A**.

Capital police and the Court here in Qatar are the worst system in the world.

Does anyone ever had a check from someone the has no account or money at the bank?

If yes...did you try to go to the police or court?

If yes ...did you ever get your money>?

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You figure the answer

No...you cannot in cash in one way basis...with diff. date.

Yes the tenant can issue the checks even how many checks he can give and The other party can take all checks...but you can in cash depends on the date of the checks stated.or the bank will give you as a cash it depends on date of the checks...

For all of you who may soon be "Homeless" or in Jail, What were you thinking, when you give someone PDC's a year or more in advance? This is nothing more than an unsecure line of credit. I have no sympathy for those who have extended themselves beyond their current means. With all the money flowing around in this country there is no reason to not have some in an account and readily available. This is 2010 and we are adults. Are we still living "Paycheck to Paycheck"?

Try to understand the new law in conjunction with who owns most of the real estate. Then you will understand what is the real reason behind such laws.

Chelsea,

he could go on the 13th and cash all 24 cheques, This

Yes, Full amount.

and he'll get a portion (for example 90%) of 2 years worth of rent in one lump sum from the bank. The bank will then take out my rent from my bank account each month to pay themselves back and then they earn 10% commission?!

NOOO

I have not read any where such arrangement with Bank.

So make sure your landlord continue to deposit monthly basis as he should be, ethically.

OK I'm confused!!

We've just given 2 years worth of rent cheques to our new landlord... From what I'm understanding, he could go on the 13th and cash all 24 cheques and he'll get a portion (for example 90%) of 2 years worth of rent in one lump sum from the bank. The bank will then take out my rent from my bank account each month to pay themselves back and then they earn 10% commission?!

This is common practice for banks back home (US). You can pay in advance with a post-dated check, but the post date is really only an agreement between the payer and the payee. The bank will cash a check with a recent past date (within six months is standard) or any date in the future.

Again...Stupid law if this pushes thru!!!

The date on the cheque is considered as the issuing date of the cheque irrespective of the date on which it was signed.

Three points mentioned in the article make things look that a PDC can be encashed even before the date its due:

- a cheque is redeemable when presented at bank irrespective of issuing date,

- the drawer is responsible in case the cheque bounces for lack of funds when the cheque is presented at the bank.

- the bankers statement that this regulation will bring an end to the era of post dated cheques.

Anyways shall have to wait till 13th May 2010 when this regulation comes into effect to make things clear.

banks will not loose money as they will charge same amount i think 25 per cheque from the persons account who paid cheque

its simple that if you give PDC to anyone and dnt hv money in your account u r at the verge of being prosecuted as the rule is that if PDC presented to bank at any point of time it should be encashed and if a person dont have specific amount of money in the account the cheque will be considered as BOUNCED CHEQUE and the person who gave the cheque will have to face the concequences...

and thats for sure.... :(

Maybe in English it may not make sense but the Arabic version of this law should make things clear.

Yes WK it is very strange indeed. Does not make any sense.Except look at this closely 'cheque redeemable once presented at the bank irrespective of its issuing date'' The ''issuing date''???? How would anyone know of the issuing date when you give PDC?? does this mean that the valid date on the cheque is taken as the ''issuing'' date. If this is the case then no need to worry but then Qatar has some really strange laws.

We discount L/Cs at times like that. Let's see if the same will be the case for PDCs but this has to be the strangest law related to banking ever passed anywhere.

banks will lose money, i am surprised how this is not being understood by them....its charity, not banking.

as you will see no where discounting or such is mentioned, it is rather straight forward transactions, however I hear that you guys are saying and it will be interesting if bank at their own level may start such option....

will be very interesting how this whole thing pans out.

The Advisory Council yesterday passed an amendment to the Commercial Law No 27 of 2006, making a cheque redeemable once presented at the bank irrespective of its issuing date and urged the government to set up special sections in courts to deal with bounced cheques.

In a meeting on April 21, the Cabinet had approved amendments to two articles of the Commercial Law and referred it to the Advisory Council for consideration. The council’s general secretariat was advised to consider the draft law on an urgent basis.

Cheques will be encashed immediately on presentation at a bank, according to the relevant provisions of Qatar’s Commercial Law, which takes effect on May 13, 2010. If a cheque bounces for lack of funds when presented at a bank, the drawer will be liable for its value and he/she may be prosecuted, convicted of a penal offence, fined or imprisoned, sources said.

Advisory Council secretary general Fahad bin Mubarak al-Khayareen said the Committee of Financial and Economic Affairs at the council had submitted a report on the

proposed changes to the members.

To tackle what it called “lengthy litigations”, the council recommended to the government to set up special departments within courts to hear cheque-related

disputes and settle them swiftly.

“Such an arrangement will be useful since they will help maintain the rights of the beneficiaries, especially since many cheques are issued to property developers and owners of car agencies,” said Nasser Rashid al-Kaabi, a member of the council.

The Advisory Council, a consultative body, urged the government to give the “Cheques Department” at the Capital Police Station more teeth to deal effectively with “bounced cheques” so that the amount could be recovered from the drawer without seeking court’s intervention.

“This will help restore investors’ confidence in cheques and prevent problems which can adversely affect the country’s economic growth,” explained the secretary general during the discussions.

Al-Kaabi said the Qatar Central Bank could play a more effective role in this regard by instructing the country’s financial institutions to disclose the names of their customers who had been penalised for issuing cheques without having sufficient funds in their accounts.

He argued that banks should issue cheque books only to clients who had sufficient funds in their accounts.

Rashid bin Mohamed al-Maadhadi, another member, said the number of cheque-related disputes had increased significantly in the recent past. “Traders and investors have incurred losses because of lengthy litigations to recover their money.”

The provisions of the law take effect on May 13 following the expiry of the three-year period notified after its implementation. The law was issued on July 27, 2006 and implemented six months after gazette publication.

According to a senior banker, the system of issuing post-dated cheques will get scrapped with the law taking effect.

Earlier reports said QCB had already notified the local banks about the relevant provisions of the Commercial Law of Qatar taking effect in May.

I am still not too sure but only this could be the probable idea behind this. This way the holder of the cheques gets immediate liquidity albeit at a discount of maybe 5%-7%.

The Banks give him that money based on the 'security' of the cheque and collect the money in installments as and when the PDC fall due. that way the land lords are benefited and should make no difference to the person who issues the cheques except if it is dishonored the banks backed by govt agencies are going to come at that person like a ton of bricks.

thats right mehnis, there has to be a charge / discount otherwise, it doesnt make any business sense for the banks..

The above cannot be the way it is for sure. Never heard of such a weird proposal. My take is that all the checks that were given as PDC can be en cashed immediately by the holder as a discounted cheque. The bank discounts the cheques immediately at a lesser value or less than par the difference amount is commission or income to the bank whereas the customer who is holding these cheques gets maybe 90-95% of the value of the cheques.

The banks then present the cheques on the date of each cheque and if it is dishonored then action is taken against you.

irf77,

the banking business survives on 'interest' and if they provide liquidity to their customers for free, they will not be in business for long..

WK business or personal i think bank will regard check as standard documents and process it, regardless.

Rishi, I am not sure if i followed you, this is nothing to do with charge but the central bank regulation to honor the checks regardless of date.

wk, in that case, its good for both the parties but bad for the banks' business..

unless ofcourse the banks charge an amount for this service..if they do, it is the same as a bank gaurantee charge.

What about all the businesses that run on Post dated cheques :-/

Amount involved is much higher than rents.

Syed, i agree with Clara, The law is what is stated in original post,

The law should protect scenarios like rent and monthly payments, right now the moment you give out check you are at mercy of other party!!!

How will people who provide monthly rent check e.g. get projected? not clear.

good for the landlord but bad for the tenant...

what if the tenant wants to leave the house before the completion of the contract period, will he get his money back from the land lord??

sayedrizwan, this law, as I have heard, was implemented because some people in Qatar use post-dated cheques as a way to "pay" with the intention never to pay. There is no point of prosecuting the drawer, you got it wrong.

On the other hand, what pisses me off, is that the law does not protect people who pay regular rent and car payments this way AND no new system for that was implemented!! I absolutely agree with Happygolucky that they should have made them return the cheques at least those that say "rent" or "car payment". OR not to apply this law on cheques issued before May 13!!!

I guess you all got it wrong. What i have understood from the article in Gulf Times is that the bank will honor the post dated cheques, in case the cheque is returned (bounced) due to lack of fund, the drawer will be liable for its value and he/she may be prosecuted. (i.e in our case the landlord not we the tenent)Hope i got it right...

Speed and Xena,

Both of you are 100% correct, however the law state otherwise!!!

Which is why I asked, in other parts of world is anybody aware of similar law?

check, if I had the funds in my account at the time? doesn't make any sense...

Giving a post dated check means you don't have that money in right then, but you will have it to honour the check on the alloted date....

why bother otherwise?

If someone has given PDCs for 3 years amounting to QR 400,000/- against his rent. You think Landord will have full rights to submit all the cheque at once (if he wish)?

There must be something missing here!!

Khawaga is absolutely right, Cheques will be encashed immediately on presentation at a bank and also if some Cheques get bounce, landlord can take action against you.

what?

This article is also in Gulf News. one of my friend sent me the news through email.

post dated

what kind of sections Or legal they are following if they can withdraw the post dated checks the whats the meanning of past dated.

post-dated checks? No hospital for this kind of disease!

They should have also passed the regulation then that all landlords who have taken post dated cheques should return the same to the tenant by 12th May 2010.

nomansland: he means that your land lord (house owner) can cash all your 12 checks at the same time rather than one per month. You may want to discuss this with your landlord.

IRF77 clarify it as I paid 12 post dated check to my House owner

wot Crap ? :(

What the fish, Do u mean the other party with can withdraw on the day he receive all checks or u mean every month the other party can encash