Are Conveyancing Lawyers Necessary?
This post is an updated version of my reaction to the first of a two part article in the Edge’s Property Chat column by the House Buyers Association of Malaysia on “Why you need lawyers in property transactions, unlike buying cars”
For the record, yours truly respectfully disagrees. Here are my reasons :
Malaysia's property conveyancing system is based on the Torrens system of land title registration used in Australia. But property buyers in Australia do NOT need to appoint lawyers , IE members of the Bar, to do conveyancing (they can appoint conveyancers or settlement agents) unlike in Malaysia where lawyers are usually involved in both drafting SPAs and conveyancing residential properties. I think but cannot be 100% certain the cost of conveyancing a residential property in Australia is cheaper than in Malaysia.
The process of registering a new property title in Australia takes around a month. That is much quicker than the standard benchmark of between 3 to 6 months in Malaysia when our property title registration system is similar.
In Australia, for most residential properties, a standard SPA is used. The practice of using a standard SPA saves a lot of time AND money. In Malaysia, there are hair raising stories told of delays in signing SPAs because of nitpicking sellers who wanted to stick silly clauses like "buyers have to pay the sellers' previous sinking fund contributions”, etc.
In Australia, lawyers' fees for drafting SPAs are negotiable. Here, the Bar Council of Malaysia says conveyancing lawyers must adhere to a scale of fees, depending on the value of the property. Only a discount of up to 25% is allowed at the discretion of the lawyer. But why should professional fees between property buyers and sellers with their lawyers be subject to a cartel in Malaysia when they are already freely negotiable elsewhere?
🤠 thinks the good folks at the House Buyers Association of Malaysia should propose the following:
1. Bar Council of Malaysia's cartel arrangements for drafting SPAs and conveyancing residential properties, IE fee schedules, should be abolished.
2. Property buyers and sellers should be able to choose (just like in Australia) between getting a lawyer or a licensed conveyancer aka settlement agent to effect the transfer of titles for residential properties.
For my reaction to Part 2, see here
Post Script & Disclaimer
1. I am not a member of the Bar Council, but I have gleaned a lot of knowledge about the procedures for conveyancing properties in more than 20+ years experience in property investment. And what to ask conveyancing lawyers.
2. One of my siblings was a senior conveyancing lawyer in Malaysia . Another still works in a Land Office overseas, advising conveyancers aka settlement agents on property registration procedures.
3. It seems possible to do DIY conveyancing in Malaysia, but I think most property investors are probably better off using a conveyancing lawyer if they are getting a mortgage.
