by Eunice Ong
Published March 1, 2017
Property transactions are generally expensive exercises.
Purchasers are often required to pay some 20% to 25% of the purchase price up-front, and in cash. (And this figure may go up if you can’t obtain a 90% loan.) Compulsory and pricy expenses are also involved, such as stamp duties, valuation fees and legal fees.
Given this, the two parties generally involved in property transactions - i.e. the vendor and the purchaser - often try to find ways to save money wherever they can. One common way: by not engaging lawyers.
Do you need lawyers for property transactions?
This fact generally surprises people: in Malaysia, not at all the time.
It may actually be a viable cost-cutting measure for experienced vendors to not retain lawyers. But this is not, in my view, a prudent or advisable move for normal folks, for whom, in some circumstances, it is absolutely vital to retain a lawyer:
Where the purchase is risky.
While what is ‘risky’ is very subjective, most property transactions do involve significant and risky sums of monies. If it is a risky purchase, you should want to know what your rights are from the outset, what to do if you want to or the purchaser intends to back out from the transaction, or how/when monies should be paid.
When the purchase/sale is particularly complicated.
An example of a complicated transaction: when the property developer’s company has been wound up, and a liquidator has stepped into the company’s shoes to finalize its affairs. In such events, there are statutory, regulatory and timeline issues to comply with, for both vendors and purchasers.
Where the transaction details are suspect.
You may not quite understand the contents of your sale and purchase agreement(s), but suspect that the apportionment has been wrongly calculated. You may not trust the other side or the real estate agent involved. The person who would best and most impartially advise you in these scenarios is a lawyer.
There is a perception that lawyers in property transactions merely work with templates and rubber stamps. This is not true.
Lawyers dealing with property must tend to the general burden of strict transaction timelines, statutory requirements, the inconsistencies of administrative practices at individual land offices and/or government departments, the proper transfer of ownership of property and payment of monies, and compliance with the terms of the agreements – all these are necessary in order to protect their clients’ interests.
Failure at any step of the process may jeopardize the transaction entirely, and so, on account of the above, it is not uncommon for the property transaction to deviate from what is ‘standard’.
As a cost-cutting measure, perhaps, can’t a purchaser’s lawyers act for both the vendor and the purchaser simultaneously?
Lawyers are prevented by law from acting as a common lawyer for any particular transaction: see Order 7 of the Solicitors’ Remuneration Order 2005:
…No acting for more than one party
(1) In any transaction referred to in the First, Second, Third and Fourth Schedules, a solicitor shall not act for more than one party in a particular transaction.
(2) Notwithstanding subparagraph (1), a solicitor may, where there is no conflict of interest, prepare, file or wit-ness the miscellaneous documents specified in the Fifth Schedule for another party to the transaction.
A lawyer caught acting for more than one party will be subjected to disciplinary proceedings; there is also the possibility of disbarment.
There is firm logic behind this rule: a lawyer is supposed to act in the best interest of his or her clients. As vendors and purchasers have competing interests, a lawyer who acts for both will thus be in an unenviable position of conflict.
We lawyers are aware of the biting expenses involved with property transactions; and yes, we are just as affected too.
For instance, when I purchased my first property, an apartment, I found myself, on numerous occasions, arguing with my property valuation company for a better discount. I also opted for an Islamic home loan facility, so that I could get a 40% discount on the stamp duty of my loan agreement. (I suppose my opting so did come with a price, as the agreement states that I am not allowed to consume pork and alcohol in my apartment.)
Remember always that you don’t need a lawyer for property transactions; however, having a professional on your side, one trained to deal with the vagaries of large purchases such as property, may afford you peace of mind and better sleep at night.