Proposed changes that restrict the access of lawyers to their client’s money in property deals has been tweaked by the Law Ministry, which is going for a second round of public consultation before the finalization of the changes.
The new suggestions will allow conveyancing lawyers to hold the money of their clients, although a string of safeguards will be established to make it harder for them to run away with the funds.
The ministry suggested during the first round of public consultation in August to prohibit lawyers from depositing conveyancing money into the accounts of their regular clients and to make the Singapore Academy of Law (SAL) the prime entity to hold it.
However, after the feedback, the ministry tweaked the measures that permits clients to leave money matters to their lawyers, but to leave it in the hands of the SAL, or be kept in approved banks.
The initiatives are aimed at providing a final solution to the longstanding issue involving lawyers running off with the money of their clients. At least four rogue lawyers ran off with almost $20 million in funds intended for real estate transactions and held the accounts of their clients in their law firms in the past six years.
Included in the conveyancing funds are the stamp duty payable on the deals, as well as the options to buy deposits, purchase and CPF money.
Under the new proposals, law firms will be asked to open up a separate conveyancing account in approved banks.
In addition, the ministry will also assign a party to organize a central signature repository of the lawyers’ signatures to permit the SAL and the banks to check the records against the counter-signatures.
If their clients approve, lawyers can be allowed to hold up to $5,000 of their client’s money in their regular accounts to deal with miscellaneous costs and last-minute payments incurred in transactions.
These new proposals are not expected to delay transactions, which normally takes up to three months to complete.
In April and May, a trial run involving SAL and the three local banks – UOB, DBS and OCBC – on 400 new real estate deals will be conducted to straighten out any kinks in the system.