THE Law Ministry has tweaked proposed changes restricting lawyers' access to their clients' money in property deals and is going for a second round of public consultation before finalising changes.
The new suggestions will let conveyancing lawyers hold their clients' money, although a string of safeguards will be put in place to make it that much harder for them to run off with the funds.
In the first round of public consultations last August, the ministry had suggested that lawyers no longer be able to deposit conveyancing money into their regular clients' accounts and that the Singapore Academy of Law (SAL) be the main entity to hold it.
But after feedback, the ministry tweaked the measures to allow clients to choose to leave money matters with their lawyers but to be kept in approved banks, or leave it in the hands of the SAL.
The moves are geared towards providing a final solution to the longstanding problem of lawyers running off with their clients' money. In the last six years, at least four rogue lawyers have fled with almost $20 million in funds meant for property transactions and held in client accounts in their law firms.
Conveyancing funds include the option to buy deposits, purchase and CPF money as well as the stamp duty payable on the deals. These typically come up to at least a six-digit sum for an average private property transaction.
Last year, about 33,000 private homes were sold. In addition, the HDB recorded some 28,441 flat resale deals, based on its last annual report ending March 2009.
Under the new proposals, law firms will have to open up a separate conveyancing account in approved banks which is separate from the client's account.
Money from such conveyancing accounts can be withdrawn only with the signature of the lawyers of both parties of the property transaction and the payout will be only via cashier's order.
In addition, the ministry will also appoint a party to set up a central signature repository of lawyers' signatures to allow the banks and the SAL to check the counter-signatures against the records.
Lawyers will be allowed to hold up to $5,000 of their client's money in their regular accounts, if their clients approve, to deal with last-minute payments and miscellaneous costs incurred in transactions.
For en bloc projects, they will be allowed to keep up to $2,000 per unit, subject to a $200,000 cap.
To give the changes bite, new legislation will be tabled in due course to subject those who breach the rules against keeping such conveyancing funds to fines of up to $50,000 or three years' jail.
The proposals are not expected to slow down the transactions, which typically take two to three months to complete.
A trial run involving SAL and the three local banks - DBS, OCBC and UOB - on 400 new property deals will be conducted in April and May to iron out any kinks in the system.
Source, Straits Times 18 January 2010
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