From Channelnewsasia – March 10, 2011
SINGAPORE: The Ministry of Law (MinLaw) has set out new measures to safeguard property buyers and sellers from rogue lawyers that run off with their conveyancing money.
Following a series of public consultations and pilot trials, MinLaw will no longer allow lawyers to hold conveyancing money in their regular client accounts.
Breach of this new rule has a penalty of up to three months' imprisonment or a fine of up to S$50,000.
Instead, law firms now have to set up a conveyancing account with an appointed bank to hold clients' funds, which are used to pay stamp duties, among other things.
The proposed amendments to the laws governing conveyancing were read in parliament on Thursday and the new rules are targeted for implementation by the third quarter of this year.
MinLaw wants to protect the money used for the purchase or sale of properties here. Such funds – which include payment for stamp duties, option deposits, and balance of sales proceeds – are usually entrusted to lawyers.
In June 2006, David Rasif, a 17-year legal veteran, made off with about S$11 million of his clients' money. Most of this money had been entrusted to Rasif by an American couple that wanted to buy a bungalow off Holland Road.
In November 2007, lawyer Zulkifli Bin Mohd Amin took more than S$11 million of clients' money. Some of it is believed to be conveyancing funds. Both Rasif and Zulkifli are still at large.
To lower the risk of lawyers running off with clients' cash, MinLaw will also require two signatories before any money is paid out from the conveyancing account.
For example, if the seller's lawyer requests for a withdrawal from his CVY account, the buyer's lawyer will need to countersign the request. This is to make sure the identity of the payee and the pay-out amount are correct.
MinLaw said clients must also follow a naming convention when making payments to the conveyancing account (Name of law firm – CVY). While writing cheques, clients must always add the suffix, "CVY", after the law firm's name to ensure protection of the money.
For complex deals, the ministry said lawyers from both sides must jointly open an escrow account.
Buyers and sellers who do not wish to deposit money with lawyers can opt to have it held by the Singapore Academy of Law (SAL).
SAL can hold option deposits as stakeholder and hold conveyancing money on behalf of buyer and the seller.
An Electronic Payment Instruction (ePI) service by the Singapore Land Authority (SLA) will also be made available to facilitate transactions under the new measures.
The ePI service allows lawyers log in to lodge and digitally sign pay-out forms, which will be sent to the other party for authentication and counter signature before money is released. In cases where a counter-signatory refuses to sign, the Law Society will facilitate the resolution of disputes.
MinLaw said lawyers can request up to S$5,000 in advance from buyers or sellers to cover last-minute adjustments. The lawyers can hold this money in their client accounts; any unused sums will need to be returned. Buyers and sellers have the discretion to agree to this.
For en bloc transactions, the maximum prescribed quantum for these last-minute funds that can be held by lawyers in their clients' accounts is S$2,000 per unit, subject to a cap of S$200,000 for the collective sale. The money will be taken out of the option deposit.
MinLaw and the Law Society plan to conduct regular training sessions for lawyers beginning May 2011. There will also be a guidebook for lawyers and special papers for public distribution, as well as a help desk to handle enquiries by lawyers and the public at large.