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It will now be harder for crooked lawyers to abscond with conveyancing money as the new measures kick in on 1st Aug 2011.
The Singapore government has taken steps to ensure the safety of buyer’s money which are deposited with lawyers in a property transaction. This has come about as there were several cases of lawyers absconding with the money.
In Singapore, when you purchase a property, the process is as follows:-
- Once the price of a property is agreed upon, the buyer gives to the seller an option fee or some people call it the earnest money in exchange for the option form. This is usually 1% of the purchase price of the property.
- Normally in 2 weeks time (this again can vary depending on buyer & seller), the buyer than exercises the option by paying the balance of the 4% or 9% (depending on whether the buyer has any other outstanding housing loan) and this is the option deposit.
- Payment of stamp duty is required to be paid by the buyer, at this point.
- The balance of the sales proceeds will then be paid, normally in 10 weeks time.
The option fee is normally given to the seller directly so this is unaffected by the new measures.
The option deposit is paid by the buyer to the seller when he exercises the option to buy the property via the option form. This is where the guidelines come in. It is now required that the option deposit which is either in cheque or cashier’s order must be made to either:
- The seller’s lawyer’s Conveyancing Account in the form ” – CVY” or
- The Singapore Academy of Law
And this must be stipulated in the option form.
Stamp Duty is paid either:
- Directly to the Commissioner of Stamp Duties with the Payment Voucher (the lawyers will e-stamp the necessary documents to obtain the payment voucher) or
- By depositing into:
- Your lawyer’s conveyancing account ” – CVY” or
- Singapore Academy of Law
Balance of sales proceeds can be paid in 1 of 3 ways:
- Money to be placed in the lawyer’s conveyancing account ” – CVY”
- Money to be placed with the Singapore Academy of Law
- Direct payment to the seller or his nominees
Additional funds eg rental computation, tax payments may be required to be paid by the buyer. In such an event, the buyer may be asked to set aside such sums up to S$5,000 for each property or S$2,000 for enbloc properties. This however, is optional. The money can be paid into a normal client account.
To ensure the safety of the conveyancing money, funds from the conveyancing account or those held by the Singapore Law Academy can only be withdrawn by joint authorisation from both the buyer’s and seller’s lawyers. Lawyers who do not comply with the new ruling can be fined up to S$50,000 &/or 3-months imprisonment term.
In conclusion, for buyers, remember to put “CVY” suffix at the end of the payee when issuing a cheque for the conveyancing account and for sellers, never allow anyone to receive the sales proceeds on your behalf unless it is someone you trust.
