Published 11 March 2011
The Business Times
By Chuang Peck Ming
Bill seeks to bar lawyers from holding the funds in their client accounts
Law Minister K Shanmugam yesterday introduced a Bill in Parliament seeking to reduce the risk of rogue lawyers running off with clients’ conveyancing money.
If passed, the Conveyancing (Miscellaneous Amendment) Bill will bar lawyers from holding conveyancing money in their regular client accounts.
A penalty of up to three months’ jail or a fine of up to $50,000 will be slapped on lawyers who breach this rule.
Law firms will instead have to open a conveyancing account with an appointed bank to hold clients’ conveyancing money in a property deal.
The conveyancing money includes option deposits, balance of sales proceeds, goods and services tax due, stamp duties payable on sale and purchase, and Central Provident Fund money.
Withdrawal or payout of money from the conveyancing account will require two-party authorisation.
Typically, the counter-signatory will be the lawyer representing the other party in the property deal.
Property buyers and sellers wishing to put conveyancing money in the conveyancing account have to indicate the payee’s name on their cheque or cashier’s order in this format: ‘Name of law firm – CVY’.
Lawyers holding on to CPF money on behalf of clients or the CPF Board can do so in separate conveyancing (CPF) accounts.
Clients who do not wish to leave their money with their lawyers can alternatively instruct them to engage the Singapore Academy of Law to hold conveyancing money through a new conveyancing money service. Payment to the account can be made via cheque or cashier’s order, made to ‘Singapore Academy of Law’.
Lawyers can also receive and hold conveyancing money under escrow agreements between buyers’ and sellers’ lawyers. These are more relevant for complex deals.
The Singapore Land Authority will launch a new electronic payment instruction service to support these measures, which are targeted to come into effect in the third quarter of the year.
The Bill says lawyers can request up to $5,000 in advance from buyers or sellers to cover last-minute adjustments. They can hold this money in their client accounts. Any unused money will have to be returned.
For en bloc transactions, the maximum sum lawyers can hold is $2,000 per unit – up to a cap of $200,000 for the collective sale. The money will be taken out of the option deposit.
The Law Ministry said the Bill is aimed at addressing the problem of a few rogue lawyers making off with clients’ conveyancing money in recent years.
For instance, David Rasif, a 17-year legal veteran, vanished with about $11 million of his client’s money in June 2006. In the following year, lawyer Zulkifli Bin Mohd Amin fled with over $11 million.
The Law Ministry said the proposed measures will tighten controls on payout and withdrawal of conveyancing money, and provide more assurance and security for property buyers and sellers.