Saturday, December 01, 2007

Another lawyer 'run road'.....


This time with $6M of clients' conveyance money.
The surprise is not that it happened again but how little is done about it....
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There is somthing I need to get off my chest....
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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.
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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.
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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.
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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.
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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.
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Can someone tell me:
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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.
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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.
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3. Where do 'run road' lawyers go? These lawyers seem to be able to vanish ...
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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.

16 comments:

at82 said...

Someone should report the Law Society to the Competition Commission of Singapore for the engaging in the anti-competitive act of price fixing and thus breaking the Competition Act.

Anonymous said...

Conveyancing fee. Aahhh, suddenly remember one had to pay $500 in lawyer fee to Lee & Lee for the purchase of a HDB flat in the 70's and 80's.

Then JBJ questioned why only Lee & Lee; so after that one had a choice to get his own lawyer to do the work. How many bothered to do that?

Nowadays the lawyer fee for processing a new HDB flat runs into thousands of dollars, never mind that HDB flats are all so uniformly built and the legal work involved would be much like rubber stamping.

Still who is to say the legal fee should not be so high? It is all very legal you know.

Capt_Canuck said...

Lawyers are like that all over the world. Lawyers exist because people dont trust each other. If conveyance lawyers here are like those in Canada, then the answers to your questions are this:

1)Excellent idea for stopping the run away lawyer thing, but then again if you do that you are basically saying that you dont trust a lawyer. If you dont trust the lawyer, then why are you using that lawyer? you only use the lawyer that you trust and that you know wont run. Though, if you make a bank do that sort of thing and have them create a whole account just to hold an amount of money and then give it out a few weeks later, then that is a bunch of paperwork for the bank and they will eventually charge you money for that service. So now you are paying your lawyer fee of $1800 to $3000 (dont think for a minute because the lawyer does less work you save money here. Law society needs to keep high prices to attract more lawyers or else Singapore will lose all their lawyers to China or other countries that are already paying more. Same problem you have now, just on a bigger scale) plus paying the bank fee of probably $200-$500 for the renting of a bank account. So your solution has now added more money to the conveyance.

2)Again, you are asking why doesnt Singapore create a job position to do routine work and take easy money away from people. Ummm, let me think about this. Perhaps it is because your MM was a lawyer, he knows the reason that lawyers are rich now is because they do hard work for good money and they also do easy work for easy money. Do you have doctors in Singapore that only treat coughs and colds and other mundane things but leave the more interesting things like fungal infections and flus to someone else? Besides, with the limit amount of conveyancing in the whole market going on (especially with the high prices now), how much do you think a person doing routine work would have to charge to stay in business? you couldnt just have one person doing the whole island cause then he would stay in business (and be rich) but it would be a monopoly and only the PAP can have that in Singapore. Then once you have two people you can have three, then four, then five and before you know it you have the market flooded and they arent making any money at it and they will make it so cheap that they will be starving and have to do other work to keep afloat. Then what do you have? Sounds like a lawyer to me now (doing a main job of something and a few conveyancing on the side). Your solution has just taken the easy money from a lawyer and given it to someone else.

3) With nearly $2-$3 million dollars in your bank account the question is not where do you run but where do you NOT run. North American lawyers, from what I hear, like the Cayman Islands because of lax extradition laws. So, basically, all a running lawyer has to do is find a country that has no extradition laws and grab the money and go.

Just goes to show that the MM has been right all along. You want to have reliable and depandable people that wont be corrupt, you have to pay them millions of dollars a year to keep them honest. Only way to keep a corrupt person honest. Instead of letting them steal money illegally, give them the money legally.

anonimous said...

the procedure needs to be changed.

why is it even important that the lawyer should be trustworthy? This got nothing to do with PAP or Kuan Yew, merely protocol to get certain things done. The escrow account will ENSURE no one has to worry about whether the lawyer is trustworthy.

At least you know the bank will use the money for their own investments BUT will also return it to you at the end of the day. No one knows what lawyers do with the money.

Anonymous said...

Er...any risk of town council people also "run road"?

Anonymous said...

such a waste he was not a politician. he could have been honest.really.lol.

Anonymous said...

Zul and David are in a faraway place partying with the ladies of the night as we debate on this issue...

Anonymous said...

Lawyers seems to be the most mercenary professionals, making money out of other people's misery.

It also happens that a lot of crooks happens to be lawyers.

Anonymous said...

Well, the danger is that these are not ordinary crooks that you can sense from their looks. These are sleek, well heeled types that makes them more dangerous because you tend to think they are very trustworthy.

But what can one say, when there are crooks even in charitable organisations and religious bodies, the very embodiment of moral high ground.

As one eminent Buddhist Reverend said - nothing can save this world now, each of us have to try to save ourselves the best way we can. Pray.

bp said...

Can we ask the lawyer to buy indemnity insurance in case they run road?

yamizi said...

Hi Capt_canuck,

Just feel like sharing some of my opinions after I had read your comment.

I think lawyers exist because legal system exists. Probably it may be true that they exist because people don't trust one another primarily, however I think they exist to understand the essence of law and to, when a situation arise where the enforcement of law to be done, represent the respective parties to give them a fair say in a court.

To your point 1,

I don't think that by trusting a lawyer means that we don't put up any defence. Probably you're right, that by open a temporary account may ended up induced more charges, however I believe given our intelligent authority, they should and I believe is their responsibility to come up with a proper workflow to safeguard buyers' interests.

I'm not exactly sure how the current conveyance procedure is like but probably the cheque can be just directed to the developers directly? Or like what luckytan had mentioned made via cashier order?

I just feel sad for those buyers whom had their money taken by these unethical lawyers. I wonder can they pursue the case with their employers. However if it is a one-man-show legal firm, then best of luck to them.

To your point 2,

I think in many other countries, there are already vocations like 'paralegals'. I was told that they are the one that drafts the common legal papers. If conveyancing is common, then I believe paralegals will have the necessary precedents for them to modify to suit buyers' requirements. End day just need a lawyer to endorse and sign on that. To compliment with a risk-free payment workflow, I think paralegals are good alternatives to turn to. I think many of the mid and big size legal firms in Singapore have a handful of paralegals. In fact our Temasek Polytechnic has trained handfuls of paralegals years after years.

To your point 3,

I think it totally makes sense. It goes to show how these escape plans were carefull devised. They ain't dumb.

I don't know how is it like in other countries but it is sad to know that honesty can only be maintained with over-charged (not high) pay.

Regards

Anonymous said...

welcome to Singapore.
Everything here is organised in such a way that the governement can steal (legally that is) as much money out of your pockets.
I don't understand. Singaporean must be masochistics and enjoy being screwed. In any other countries for half of what is being done to you, people would be on the strets protesting.
You complain and yet when it is time to choose you still vote for Harry Lee and mini me Lee...
As I said: You really like being screwed....

Anonymous said...

The leadership of the Law Society tends to be dominated by lawyers from the large law firms. It is inevitable that the perspective of the Law Society tends to reflects that of the Large Law Firms.

Lucky Tan's suggestion of buyers payment by cashiers order in favor of the Seller, of the 4% stakeholder money, to be held by the Seller lawyer as stakeholder, is a VERY ELEGANT SIMPLE AND WORKABLE solution to the problem.

So why has it NOT been done as yet?

Lucky, you should know this has been proposed previously by lawyers (from Small & Medium Law Firms) but nothing came of it.

The present system tends to favor the Large Law Firms ( about 10-12 firms out of approx 600++ firms) because they hold HUGE amounts of Clients Funds in fixed deposits. Unless otherwise agreed with the client, the interest on these FD is retained by the Very Large Law Firms.

Most Small and Medium law firms would like nothing better than to do away with the system of holding clients money.

It is unnecessary, adds greatly to costs and administrative procedure ( very tight audits, independent auditors must be engaged) and ultimately increases the risk of loss to the client and general public .

The Law Society's unspoken perspective seems to me to be that Very Large Law Firms are "safe" from any misuse of Clients Funds while Small and Medium Firms ( who are also their business competitors in sme fields) are inherently dishonest. Hence whenever one of thses shameful frauds occur, the soluction is to impose still more restrictions / regulations on Small & Medium Law Firms ,NOT change the system itself.

And in the interest of transparency, yes I am a lawyer with a medium firm! And altho you might not believe it, most lawyers are honest and take their responsibilities as officer of the Supreme Court seriously!

LuckySingaporean said...

anon 10:13,

That is a great answer. So in addition to the large fees the big firms make doing routine work, they make interest from the FD from the money held. So they want to hold on to the money just to make this 'extra'. So a simple process change is resisted so that a handful of rich and powerful can make an 'extra'.

What makes lawyers more honest than the cleaner who sweeps my balcony? I don't leave my brand new Nike shoes out there to entice her. Really what makes lawyers more honest than ordinary human beings? Do lawyers take a genetic test for honesty? Their track record show they are average or less than average when it comes to honesty.

Anonymous said...

No, you don't have to write cheques to the lawyer, especially, if you are buying a property from a developer. All your cheques should go straight to the developer.

I've bought a property without take a loan and I just have to write a cheque in favour of the developer
and ask my lawyer to send it to them whenever they ask for progressive payments.

Any lawyer who ask you to send money to him/her first is not trustworthy.

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