NEW RULES FOR LEGAL CONVEYANCING IN SINGAPORE
Starting from 1st August 2011, the Conveyancing act 17 of 2011 (under the Miscellaneous amendments) shall come into force to safeguard stake holder’s money.
Legal Conveyancing before 1st Aug 2011
Conveyanging Lawyer Zulkifli Amin ran away with client’s conveyancing money meant for a property purchase. About $6 million was reported missing from the conveyancing accounts. (01 Jan 2008, The Straits Times)
In the past, when you paid for your typically 1% Option to purchase for a property, on exercising the option, you would need to pay 4% of the property price to complete exercising the option.
It is when a property buyer submits this 4% of funds that things can go wrong.
Most law firms hold this property buyer’s money (“Stake holder money”) under the law firm’s own bank accounts and they pay out the funds to the seller’s lawyers to complete exercising the option on the stipulated date.
In the case of the rogue lawyer, he took off with the law firm’s money which the client gave to the law firm. And during this time, many clients have placed their 4% deposits (for property buyers) and for sellers (Entire sales proceeds – possibly) are deposited into the law firm’s accounts and the lawyer ran away with it.
Law firms must set up a special account to hold client’s money
Law firms in Singapore will be required to set up a special account with the designated banks or with Singapore academy of law. This money is kept safe by requiring 2 signatories of both the buyer and seller lawyer.
All the Buyers have to do is to put the law firm’s name and add “- CVY” to the law firm’s name and the money will be safely deposited into the special account.
As an illustration, Tan and Partners LLP, when you write a cheque, all you have to do is Pay to “Tan and Partners LLP – CVY”
You can also find more information at the Ministry of Law website.
Legal conveyancing
LAWYER – SUM OF FLOAT
During a property transaction, there are often adjustments such as property tax, MCST charges and other miscellaneous costs which needs to be adjusted during a transaction. Your lawyer may ask for up to S$5000 to meet this need. You can either provide this money into a Non-conveyancing account or you may add “-CVY” to the name of the lawyer.
IMPLICATION OF SUCH A MOVE
With the new move, the conveyancing monies are protected. However there is an additional cost incurred by the lawyers. They could S$100 to $150 per transaction, including possible compliance and administrative costs, this could bump up the lawyer’s cost by between $200 to $400 at the very least.
Many conveyancing lawyer firms we spoke to felt that it’s a good move to protect client’s money. However they may have no choice but to pass on the additional cost.
Naturally an orderly and safe transactional environment is welcome, but the additional costs that comes with it, is not welcomed.
The new moves are definitely a boost in strengthening the confidence of foreigners buying properties in Singapore.
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