Responses to feedback received from the second public consultation on safeguarding conveyancing money

04 MAR 2011

4 Mar 2011 Posted in Announcements

Background

  1. On 18 January 2010, the Ministry of Law (MinLaw) released a second public consultation paper to seek views on the refinements to proposed measures to safeguard conveyancing money. These refinements were made based on feedback received from the first public consultation. The second public consultation ended on 12 February 2010.

  2. MinLaw also conducted two pilot trials (from April to August 2010 and November 2010 to February 2011) involving 111 law firms, three banks (Development Bank of Singapore, United Overseas Bank Group, and Oversea-Chinese Banking Corporation Limited), Singapore Academy of Law (SAL), Central Provident Fund Board and Housing & Development Board.

Revised measures

  1. MinLaw has considered and incorporated useful feedback received from the second public consultation, dialogue sessions with the Law Society and stakeholders and pilot trials, into the present proposed measures and legislation. The Conveyancing (Miscellaneous Amendments) Bill has been revised and a copy of the Bill can be found at https://www.mlaw.gov.sg/conveyancing. The accompanying conveyancing rules will be uploaded on this web-site when they have been finalised.
  1. The key features of the revised measures are:

General prohibition on receiving and holding of conveyancing money

  1. Lawyers will no longer be allowed to receive or hold conveyancing money, including stamp duties, on behalf of their clients, in their client accounts. A breach of this prohibition is a criminal offence, and the penalty is an imprisonment term of up to three years or a fine of up to $50,000: clause 2(c) of the Bill introduces sub-section 73D(2)(b) of the Conveyancing and Law of Property (Conveyancing) Act.
  1. Real estate agents, who could potentially be asked by members of the public to hold conveyancing money, are prohibited from so doing through Rule 7 of the Estate Agents (Estate Agency Work) Regulations 2010.

Lawyers may only receive and hold conveyancing money in the manner stipulated by the new measures

  1. Law firms can continue to hold conveyancing money if the money is deposited in a special conveyancing account that they open with any of the banks appointed by the Minister for Law. S trict safeguards are imposed on these accounts to prevent the unauthorised withdrawal and co-mingling of money deposited in the accounts. For example, the conveyancing accounts will not come with cheque book facilities and appointed banks will not allow internet banking or telegraphic transfers of money out of the accounts: clause 2(c) of the Bill introduces sub-section 73D(2)(c) of the Conveyancing and Law of Property (Conveyancing) Act.
  1. To cater for complex commercial deals or collective transactions where the use of a conveyancing account may not be suitable, respective lawyers can jointly open and manage conveyancing money through an escrow account : clause 2(c) of the Bill introduces sub-section 73D(2)(c) of the Conveyancing and Law of Property (Conveyancing) Act.

Singapore Academy of Law to hold conveyancing money

  1. SAL will also be providing a service to hold conveyancing money on behalf of buyers and sellers. This is an attractive option for buyers and sellers who prefer to entrust their money with another depository: clause 2(c) of the Bill introduces sub-section 73D(3) of the Conveyancing and Law of Property (Conveyancing) Act.

Two-party authorisation for payment-out

  1. A two-party authorisation for the withdrawal of conveyancing money from the lawyer’s conveyancing account or SAL will be introduced. Any instruction for the withdrawal of conveyancing money from a conveyancing account or SAL will have to be counter-signed by the other party. 1 The counter-signing lawyer 2 will have to ensure that the identity of the payee and the pay-out amount (for certain categories of payees) are correct: c lause 2(c) of the Bill introduces sub-sections 73D(2)(d) to (g) of the Conveyancing and Law of Property (Conveyancing) Act.
  1. To facilitate and expedite the counter-signing process, the Singapore Land Authority (SLA) has developed an electronic Payment Instruction system (ePI) to enable lawyers to securely and efficiently lodge and digitally sign electronic pay-out forms. These forms will then be retrieved by the counter-signing lawyer and digitally counter-signed before the appointed bank or SAL retrieves the pay-out form from ePI for processing.
  1. MinLaw’s responses to the feedback received from the second public consultation are in Annex A. Information on the proposed measures and guidebooks on the conveyancing workflow are available at https://www.mlaw.gov.sg/conveyancing.

Attachment:
MinLaw’s responses to feedback received from the second public consultation on safeguarding conveyancing money (0.04MB)

[1]Payees are divided into Categories A, B and C:

Category A payees include the Commissioner of Stamp Duties, Commissioner of Lands, Comptroller of Income Tax, Jurong Town Corporation, etc . Category A payees can be paid with no counter-signing. Category B payees include the s eller or his receiver, b uyer, mor tgagee, CPF Board, HDB, Town Council, MCST, Comptroller of Property Tax, etc. As these payees are closely connected to the conveyancing transaction, the counter-signing party only needs to check if the identity of the payee is correct. Category C payees include all other payees, such as real estate agencies for their commission and lawyers for their legal costs. For this category, the counter-signing party will have to check that the identity of the payee as well as amount are correct.

[2] While the most common counter-signatory is the lawyer acting for the other party, there could be non-lawyer counter-signatories such as unrepresented lay clients, CPF Board or HDB, depending on the nature of the conveyancing transaction.

Last updated on 05 Feb 2013