ONE lawyer noticed his clients being “extra cautious” when engaging him to oversee their property transactions.
It was not unexpected, said Mr Suppiah Thangaveloo of Thanga and Co, given the recent series of lawyers absconding with clients’ cash.
“I’ve not heard any snide remarks but I’ve noticed that many of (the clients) are more inquisitive in matters concerning money,” he said. “They’re just being careful; previously, most clients would entrust everything to the lawyers.”
Clients’ concerns could soon be put to rest, if proposed changes tabled by the Law Ministry kick in later this year. Lawyers would be barred from receiving conveyancing monies during property transactions.
The deposit monies would, instead, be held in trust by the Singapore Academy of Law (SAL) or some other entity appointed by the Law Minister, for payment to approved parties such as the sellers, mortgage banks or others as indicated.
Other expenses, such as stamp and legal fees or agents’ commission, will be paid directly to the designated receiver via cashier’s orders. The Ministry of Law is in discussion with banks to participate in the scheme.
These changes, lawyers say, are necessary after a spate of cases involving rogue lawyers making off with their clients’ cash – most memorably, David Rasif who vanished with about $11 million in 2006.
As a result, the Legal Profession (Solicitors’ Accounts) Rules were amended in July 2007 to mandate that no sum exceeding $5,000 should be drawn except upon a cheque signed by two lawyers.
But this seemed to have had little effect: In November that year, lawyer Zulkifli Mohd Amin ran off with an estimated $6 million, some of it allegedly from a conveyancing deal. Both men remain at large.
Currently, lawyers hold on to clients’ monies as deposit in both private property and HDB deals, when the buyer exercises the option to purchase, pays stamp fees to the Inland Revenue Authority of Singapore or completes the purchase of the property.
“In the existing process, the buyer will pay a deposit of nine per cent or four per cent as the case may be; he pays that money to the seller and this is held by the seller’s lawyer as a stakeholder,” SAL’s chief executive Serene Wee told 938LIVE.
“If SAL is selected as the stakeholder, then (the buyer) will pay over that deposit to SAL. It’s just a matter of changing who is the stakeholder.”
Delays for seller and buyer?
But for the buyer and the seller, would the change in procedure mean more red tape slowing down the sale, or greater inconvenience such as having to buy a cashier’s order?
To cope with the expected surge in volume of work and avoid a logjam, SAL will be enhancing its systems and increasing staff strength, said a spokesperson.
Today understands no delays are expected in the conveyancing process which currently takes two to three months.
Clients also do not have to deal with SAL directly, as the administrative work is undertaken by their lawyers.
For the latter, “more work needs to be done and more forms will need to be filled – that is not unexpected if this law comes into force”, said lawyer Rajan Chettiar.
“There will be costs involved, but I don’t think legal fees will go up much as the conveyance market is already so competitive.”
One lawyer, who declined to be named, thinks the new rules target in particular smaller firms “because the lawyers who ran away with the monies came from smaller practices”.
“Truth is, many lawyers are only too happy to get rid of this burden of holding the cash,” he added.
In the long run, these changes will be good for business, said Mr Gan Hiang Chye, a consultant at law firm Rajah and Tann.
“It’s a little more work for the lawyers and their clients, but I think they can take it in their stride … and in the long run, it makes the procedure more secure for the clients.”
The Law Ministry is inviting the public to provide feedback on the proposed measures. The consultation period ends on Aug 26.
Source : Today – 12 Aug 2009