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The role of a solicitor in a property transaction
22/09/2006 The Sun - Law & Realty By Andrew Wong

Parties to a property transaction should understand and appreciate the duty and responsibilities of a solicitor in a typical conveyancing transaction. The following stages of work of a solicitor are meant to be illustrative and are not intended to be exhaustive.

(1) Pre-contractual stage

- Conduct NRIC search, bankruptcy search or winding-up search on registered proprietor or vendor.

- May be necessary to ascertain nationality of the purchaser.

- Investigation of title. This involves a title search, checking caveat book and other miscellaneous presentations e.g. acquisition etc.

- In the case of a recently computerised register document of title (“RDT”), may be necessary to check that all conditions in the manual RDT have been correctly set out in the computerised RDT.

- For each instrument of dealing presented but not registered, may be necessary to conduct a search on each instrument as particulars of the dealing may not be shown in the computer search.

- If there are express conditions of title, may need to ensure that all conditions have been complied with.

- If there are restrictions in interest, may need to ensure that such restrictions are complied with.

(2) Contractual stage

- The vendor’s solicitor will usually be required to draw up an agreement of sale, as unless the transaction is within the purview of the Housing Development Act (“HDA”) or by way of public auction, there are no standard conditions of sale and the terms of sale have to be negotiated between the parties.

- Where an option has been granted, to ensure that the option is duly and properly exercised.

- If property is charged, to ascertain that redemption sum and retention for real property gains tax does not exceed the purchase price.

- If transaction is within the HDA, to advise on provisions relating to progress payments, apportionment of outgoings between developer and purchaser, time for delivery of possession, remedies for defects in the property, shortfall in area, contributions towards maintenance of facilities prior to handing over to authorities etc.

- If transaction is one by way of public auction, to advise on the Conditions of Sale and in particular to monitor settlement before the completion date as there are usually no provisions for extension.

- To advise on party’s responsibility to submit real property gains tax return.

- To ascertain that payment of quit rent, assessment and utilities are current.

- If sale of property is subject to existing tenancy, to examine and ensure enforceability of the tenancy.

(3) Post contractual stage

- To prepare and lodge private caveat that is fit for registration, to protect purchaser’s interest.

- Make necessary applications to comply with restrictions in interest.

- If purchaser is a foreigner, to apply for FIC or State Authority approvals.

- If acting for an administrator, may need to apply to the Court for permission to sell.

- May need to submit relevant notification of disposal/acquisition to the Inland Revenue.

- If purchaser requires financing, to advise on financial services available to client.

- Ensure that instrument of transfer is fit for registration.

- Submitting instrument of transfer for adjudication.

- Stamp instrument of transfer within time allowed upon receipt of stamping notice.

- Advising client of right to appeal against the market value ascertained by Valuation Department.

(4) Completion stage

- Prior to actual completion solicitors will have to prepare and approve various undertakings. If acting for the purchaser and/or financier, need to ensure that funds are released for completion.

- Presentation of instruments of dealings for registration.

- reparation of completion statement and apportionment of outgoings.

- Monitor delivery of possession of keys and property.

(5) Post Completion Stage

- Following up with land registry or land office for title to be registered.

- Other post completion work may include, follow up with Inland Revenue for certificate of payment or certificate of clearance, notifying tenants of change of ownership and arranging for payment of rentals where applicable, notifying the local authority of change of ownership.

(6) Procedural and substantive legal rules to be considered

Common law, equity and statutes

Apart from applying and considering principles of common law and equity which are relevant in Malaysia some of the statutes which have to be considered by a conveyancing solicitor are Bankruptcy Act 1967; Companies Act 1965; Contracts Act 1950; Housing Development (Control and Licensing) Act 1966 and regulations made thereunder; Land Acquisition Act 1967; Local Government Act 1976; National Land Code 1965 and rules made thereunder, in particular, State Land Rules; Powers of Attorney Act 1949; Probate and Administration Act 1959; Real Property Gains Tax Act 1976; Stamp Act 1949; Statutory Declarations Act 1960; Strata Titles Act 1985; Trustee Act 1949; and of late, the Anti-Money Laundering Act 2001.

(7) Major government agencies to deal with

In the course of a conveyancing transaction the solicitor may have to deal with a number of government bodies or agencies, e.g. Land registry or Land Office; Inland Revenue Board, in particular the Stamping Office; State Valuation Department; Local Authority; Controller of Housing; and the Treasury.

8. Other relevant factors

Other relevant factors which parties to a property transaction should know about are:

(a) Automatic premium loading

Conveyancing work is now considered as “hazardous work” for the purpose of computation of premiums payable under the Malaysian Bar Professional Indemnity Insurance Scheme and conveyancing firms have to pay a higher premium for conducting such work.

(b) Court decisions against conveyancing solicitors

Many recent court decisions have highlighted the hazardous nature of conveyancing work, in particular relating to forgery. For example, a solicitor acting for a vendor was held liable to refund to the purchaser the purchase price, when it was subsequently found out that the vendor’s identity card was forged. The High Court held that by acting for the vendor, the solicitor had warranted that the vendor was the actual registered proprietor.

The writer is the Deputy Chairman of the Conveyancing Practice Committee, Bar Council, Malaysia


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