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Money from such conveyancing accounts can be withdrawn only with the signature of the lawyers of both parties of the property transaction and the payout will be only via cashier’s order.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 Jan 2010

I REFER to last Monday’s report, ‘Moneylenders target HDB sellers’, which mentioned that ‘agents…introduce desperate sellers to moneylenders, and may get a fee for the referral, usually about $500 a customer’.

The Singapore Accredited Estate Agencies does not support the practice of estate agents obtaining referral fees from moneylenders for introducing their clients to them.

Estate agents should not introduce HDB sellers to moneylenders for a referral fee as this is not within the ambit of their job and the real estate brokerage service rendered. Estate agents who do so may also breach ethical obligations to their clients.

Instead, according to the HDB resale checklist for sellers, estate agents should, among other duties, help HDB sellers work out their estimated sales proceeds before selling, and upon resale, sellers have to discharge their outstanding mortgage loan and refund the Central Provident Fund monies used to buy the flat with interest to their CPF accounts.

Estate agents should also advise sellers to plan for their next home before they sell their flat, and should the sellers wish to buy another HDB flat, they will need to know if they are eligible for an HDB or bank loan.

Consumers are encouraged to report estate agents who may, for their personal benefit, use pressure tactics to induce them to take up loans with moneylenders.

Dr Tan Tee Khoon
Chief Executive Officer
Singapore Accredited Estate Agencies

Source : Straits Times – 18 Jan 2010

CapitaLand, Southeast Asia’s biggest developer, agreed to buy the Chinese property assets of Orient Overseas (International) for US$2.2 billion ($3.06 billion), doubling its real estate holdings in the world’s most-populous nation.

The purchase of the Orient Overseas Developments unit includes seven sites in Shanghai, Kunshan and Tianjin, with about 1.48 million square meters of floor space, the Singapore- based developer said in a statement today. About half is residential and the rest is office, retail and hotel space.

CapitaLand raised $2.8 billion from the initial public offering of CapitaMalls Asia in November. Orient Overseas, Hong Kong’s biggest container line, is selling its real estate projects in China after a slump in global trade and excessive capacity in the shipping industry led to its first loss in 10 years. Orient Overseas reported a US$231.8 million ($322.4 million) loss in the first half ended June 30.

“It’s a good price,” said Geoffrey Cheng, a transport analyst at Daiwa Institute of Research in Hong Kong. “Orient Overseas should be using the cash to focus on shipping.”

Orient Overseas spokesman Stanley Shen declined to comment on the deal. Orient Overseas, controlled by the family of former Hong Kong Chief Executive Tung Chee-hwa, had revenue from property development of HK$14 million ($2.5 million) in the first half of 2009, or less than 1% of total sales of HK$2.07 billion. Tung was Hong Kong’s first post-colonial leader after Britain handed the colony back to China in 1997.

Redeploying Capital

CapitaLand is “in a very good position” to redeploy funds raised from the CapitaMalls IPO, Donald Chua, a Singapore-based analyst at CIMB-GK Pte., said before the announcement. “Redeployment of capital was lacking last year.”

CapitaLand was halted from trading in Singapore today pending an announcement, as was Orient Overseas in Hong Kong.

The developer said it will take over a shareholder loan of US$1.05 billion owed by Orient Overseas Developments to its parent, and fund the acquisition from internal cash resources.

The sale comes after the Chinese government’s attempts to cool the mainland property market, such as stopping hoarding by developers expecting price gains.

“Any measures that the Chinese government takes to stabilise the market, we welcome them,” CapitaLand Chief Executive Officer Liew Mun Leong said at a press briefing today.

More Takeover Targets

Underlying demand for property in China remains, Jason Leow, the CEO of CapitaLand China, said at the event in Singapore. The Orient Overseas unit will be integrated into CapitaLand China, including employees, Leow said. He said he didn’t know whether CapitaLand made the highest bid for the unit.

CapitaLand wants China to account for 35–45% of its total business in the next three to five years, or about $10 billion, it said Dec 11. The company’s asset size in China was $6.7 billion, or 28% of the total, at the end of September, it said.

CapitaLand may look at other acquisitions in China, and “also Vietnam and possibly Singapore” following this deal, Chief Financial Officer Olivier Lim said at today’s press event. Lim said there are no plans to list CapitaLand’s Chinese business at present.

Lim said the acquisition “will have some impact on the decision-making process” regarding whether to pay a special dividend from the CapitaMalls Asia IPO. The company said in November it would recommend paying a special dividend following the listing.

Source : The Edge – 18 Jan 2010