This time with $6M of clients' conveyance money.
The surprise is not that it happened again but how little is done about it....
There is somthing I need to get off my chest....
About 9 years ago I was persuaded to buy a property. I had little interest in property investments but after much persuasion and groundwork the others did, I relented and went along with it. After signing the papers (purchase agreement) at the developer's office, I was told that I needed to look for a bank for a loan and a lawyer. Lawyer? Why do I need a lawyer for a transaction with a developer I can trust..? For conveyance was what I was told by the sales guy at the developer's office. I didn't want to show my ignorance so I went home to check what 'conveyance' means.
Here's what is done during conveyance:
- Check the sale and purchase agreement before you sign to make sure it is fair and sensible.
Search the property title and confirm its ownership. This shows mortgages on the property and any other restrictions that may apply. (Read through the S&P agreement something I could do myself)
- Check with the relevant government authorities to ensure that the property is not affected by any government notices or projects, e.g. road widening, construction of MRT lines, etc. (There's probably a govt database for planned public works)
- Check that the owner is not a bankrupt (No need to check since the developer is a listed company)
- Check the mortgage document is in order, if you are buying, or that it has been discharged if you are selling.(Yes, check the address & names to make sure it is correct)
- Prepare and send out legal documents such as the transfer of ownership. (Take from a standard template and change the name & address)
- Prepare an account for you and advise you on the amount you have to pay to complete your purchase.
I figured it will probably cost me $200-$300 because the the paper looks simple enough to be done in half a day by a law clerk. I called a few law firms and to my dismay they wanted somewhere between $2000 and $3000! I found out later they cannot charge less than $1800 as this was recommended by the Law Society. In a country where aged cleaners work an entire month for less than $1000, lawyers are charging $2000 for paperwork. There is no powerful body to recommend that our cleaners be paid no less than $1800 but there is one that recommends how much our rich lawyers driving BMWs get paid for doing conveyance.
It took me a few days to get over the cost of conveyance and decide on a law firm to do the conveyance. I met up with the lawyer to sign a number of documents. After that, the lawyer told me to prepare a number of cheques made out to law firm. What??? ...I'm buying the property from the developer but had to make payment to the law firm instead of the developer directly. At that time there were cases of lawyers running away with their client's money......I was very hesitant but was told there was no other way to do this. Luckily, the lawyer was honest and everything went through smoothly.
It is almost a decade since I bought that property. When it comes to conveyance, little has changed - property buyers are still asked to write cheques in favor of the law firms doing conveyance and rogue lawyers are still running away with the money.
Can someone tell me:
1. Why can't buyers purchase cashier orders for the payments. They cost only $5 and completely eliminate the risk for 'run road' lawyers. The other way is for banks to offer escrow accounts for such transactions from with money can only flow to the seller under the instruction of the lawyer. Simple methods to ensure that money can only go from buyer to seller will save us from more dramatic stories of runaway lawyers.
2. Why can't we have licensed conveyancers to do this type of routine work? Our govt believes in meritocracy and that everyone should be paid their economic worth. Our highly intelligent lawyers should be freed up to make more money doing complex work instead of being burdened with such mundane work. Cleaners, factory workers and IT professionals compete (with each other & FTs) , I'm sure lawyers do not want an exclusive monopoly that protect their fees because they are capable of competing like everyone else.
3. Where do 'run road' lawyers go? These lawyers seem to be able to vanish ...
Really appreciate some answers for the above questions. I've been asking them for many years and nobody seems to be able to give me an answer.