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Robert Tan, author of Buying Property From Developers: What You Need to Know and Do, believes that it is necessary to have legal representation from start to finish. “While the property deal may be made to look easy, your rights and interests are to be safeguarded throughout the deal,” Tan says. “Anything can happen during the deal. If it goes sour, having a lawyer is like having a policeman when a crime has happened. Your lawyer would act to protect your rights and ensure that the deal goes through according to the terms of the agreement.”
Under the law, you are deemed to have read and understood every document that you sign, explains Tan. “Furthermore, promises made by the seller or someone else about the deal may not be enforceable if they are not put in writing.”
An important thing to note is that the same lawyer cannot represent both the seller and the buyer. Yet, it is common for both parties to have only one lawyer for the transaction, notes Tan. “This is very risky because the party without a lawyer may be given inadequate advice on what he or she is signing away. In some cases, where it involves buying from developers, buyers have been misled into believing that the lawyer for the sale contract is their lawyer, when in fact, he is the developer’s lawyer,” he says. “While you may think that you cannot afford the services of your own lawyer, consider whether you can afford not to.”
Property lawyer Raphael Tay agrees. “Although the S&P is standard in the primary market, there might be certain undertakings that you need from the lawyers. Developers’ lawyers cannot give you advice, and cannot act for you.”
Developers usually offer “free legal fees” as a perk. The developer would recommend to the purchaser a lawyer on its panel, who will then attend to the purchaser’s signing of the contract of sale, explains Tan. “If the purchaser appoints that lawyer, the developer will pay for his ‘legal fees’. Thus, the legal fees are ‘free’,” explains Tan, adding that the offer of free legal fees may not cover disbursements.
Developers, however, are prohibited by law to force purchasers to use a particular lawyer. “If the purchaser appoints his own lawyer instead, the developer may be required to pay his legal fees because it had promised ‘free legal fees’,” says Tan.
On the other hand, developers may advertise “free legal fees subject to terms and conditions”, notes Tan. These terms and conditions stipulate that the purchaser will get free legal fees if they appoint a lawyer on the developer’s panel.
Depending on the way in which you acquire your property, lawyers would play different roles. If you’re buying from a developer, which entails a fixed S&P, you would need a lawyer to ensure that the developer complies with the agreement, Tan says.
If you are buying from the secondary market and since the S&P is a private contract and open to negotiation, the lawyers are there to see that the negotiations mutually favour their clients, Tan says.
Are you represented?
How can you tell whether the lawyer is representing you? When you pay your lawyers, they must act for you and ensure that your rights are protected. This is regardless of how the lawyer was recommended to you, says Khairul in his book 40 Questions You Should Ask Your Lawyer Before Buying a Residential Property in Malaysia.
If your lawyers are acting for you, they will state so in their letters, adds Tay. “Verify with the Bar Council that they are genuine lawyers who hold valid practising certificates and have not been blacklisted.”
How much does it cost to hire a lawyer? All firms are governed by the same scale fees under the Solicitors Remuneration Order 2006, says Tan, adding that the cost will normally depend on the property purchase price (see table). Legal fees aside, buyers will also incur out-of-pocket expenses like disbursements and stamp duty. Furthermore, a 5% service tax is chargeable on the legal fees and is to be paid by the client, concludes Tan.
This article appeared in Special Focus Property, The Edge Malaysia, Issue 815, July 19-25, 2010
