11 Apr 2011 Posted in Parliamentary speeches and responses
Mr Speaker, Sir, I beg to move, that the Bill be now read a second time.
In previous years, the House has heard about lawyers who absconded with their clients’ conveyancing money. Such defrauding of money set aside to purchase a home often had a devastating effect on the people whose money was taken.
My Ministry, therefore, proposes to put in place, through this Bill, new measures which will provide greater protection for the public, while at the same time, balancing the commercial needs of the conveyancing market.
Amendments to the Conveyancing and Law of Property Act
- Sir, first, let me deal with the amendments to the Conveyancing and Law of Property Act.
Rule-making powers to regulate conveyancing transactions
- Clause 2(c) of the Bill introduces a new section 73D to empower the Minister to make rules to regulate conveyancing transactions and the receipt, holding and distribution of conveyancing money. In the main, these rules will:
- prohibit lawyers from holding conveyancing money except in the manner allowed in the rules;
- make a breach of this prohibition a criminal offence;
- require lawyers, who wish to receive conveyancing money, to deposit them with appointed entities or otherwise enter into an escrow agreement;
- prescribe the requirement of a two-party authorisation system in most circumstances, whereby any instructions for the withdrawal and distribution of conveyancing money deposited with an appointed entity will need to be countersigned by another party; and
- confer a limited level of protection from liability for persons who are required by the rules to countersign any document for the purposes of facilitating the payment of any conveyancing money.
New conveyancing accounts
- Most of the changes will be detailed in the Rules. It will be useful for me to give a brief overview of the new regime to the House.
- At present, conveyancing money may be banked into law firms’ client accounts. Withdrawal may be made with two authorised signatures from lawyers in the law firm.
- When the new Rules are in place, conveyancing money must be held in special accounts, termed “Conveyancing Accounts”. These Conveyancing Accounts will be offered by banks appointed by the Minister. Clients also have the option of engaging the Singapore Academy of Law (SAL) to hold such conveyancing money.
- Where CPF money is involved, lawyers will similarly have to set up a CPF Conveyancing Account so as to prevent co-mingling of funds.
- Money to be withdrawn from a Conveyancing Account or from the Singapore Academy of Law would, in the majority of cases, require prescribed pay-out forms and two-party authorisation. Generally, the lawyer acting for the other party will serve as a check on the payment details and then counter-sign on the payment instructions. The appointed entities (SAL or the banks) will also seek to ensure that the countersigning party has counter-signed before processing payment.
- Various system enhancements have also been introduced to facilitate the new counter-signing process. The Singapore Land Authority has set up an electronic platform to enable a more efficient counter-signing process. Lawyers will use electronic signatures and instructions for funds will be automatically generated.
- The Law Society will be providing a set of guidelines to assist lawyers in performing their role in the new regime. A new adjudication scheme, staffed by members of the profession, has been put in place. This will enable clients to seek a quick resolution should there be any disagreement between the lawyers involved.
- Clause 2(c) of the Bill introduces a new section 73E to provide for the establishment of an adjudication scheme to be administered by Law Society, to enable parties to submit their case for adjudication. Adjudication can take place where the counter-signing party declines to facilitate the payment out and distribution of conveyancing money which has been deposited in a conveyancing account. Parties can go to the courts if they feel that the adjudication scheme is not appropriate in any particular case.
Scope of new measures
- In order to ensure compliance with these measures, there will be a prohibition against lawyers receiving and holding conveyancing money other than in accordance with the new conveyancing rules. Breach of this prohibition will attract a criminal penalty, which could be a fine of up to $50,000, or imprisonment for up to three months.
- Lawyers will also not be permitted to hold money for the general purposes of conveyancing, where the client has not identified the property he wishes to deal with.
- The measures do not disallow the current practice of some buyers who make direct payments to sellers. Nor does it affect larger commercial transactions where the present method of holding conveyancing money is to set up escrow accounts jointly held by lawyers acting for both parties.
Consequential amendments to the Conveyancing and Law of Property Act
- Clauses 2(a) and 2(b) of the Bill amend the existing sections 64 and 65A of the Act to effect technical changes necessary to update the current conveyancing practice relating to the completion of a conveyance under the new regime.
Amendment of the Legal Profession Act
- Consequential amendments have been made to the Legal Profession Act to bring the new conveyancing workflow into the existing rubric of a law practice. The two key amendments are:
- First, the current section 25A(1)(h) of the Legal Profession Act provides that if the Attorney-General or the Law Society Council is satisfied that a lawyer has failed to comply with the rules made by Council for the keeping of accounts, the Attorney-General or Council may request the Registrar of the Supreme Court to refuse that lawyer’s application for a practising certificate, or issue such a practising certificate subject to such conditions as Council may specify. Clause 3(a) amends section 25A(1)(h) to bring parity to include non-compliance with the rules made by the Minister pursuant to section 73D of the Conveyancing and Law of Property Act, as an additional ground on which the Attorney-General or the Council can make a similar request to the Registrar;
- Secondly, the First Schedule to the Legal Profession Act prescribes the circumstances under which one can intervene in a lawyer’s practice, for example, when there is contravention of rules made by Council or when the sole lawyer of the practice has passed away. Clauses 3(d) to (i) seek to enable the Council to exercise its powers where there is a contravention of the rules made by the Minister pursuant to section 73D of the Conveyancing and Law of Property Act or where the practice of the sole lawyer that passed away has a conveyancing account.
- Lawyers currently hold conveyancing money for practical and important reasons as stakeholders or as agents for their clients who may be overseas or otherwise unable to attend to legal completion. They perform a valued service within the conveyancing market; these new measures will help enhance public confidence in their role.
- Sir, these measures have, as their object, the striking of a good balance between protecting the public, on the one hand, and ensuring, on the other, the efficacy of commercial life.
- In formulating these measures, my Ministry has engaged key stakeholders including banks, lawyers, real estate players and the relevant government agencies. Two public consultations, two pilot trials and multiple dialogue sessions have been conducted over a two-year period.
- More than 110 law firms have tested the new system, in the course of nearly 700 conveyancing transactions. Close monitoring and assessment of feedback from our partners have enabled us to make substantial enhancement to the new workflows.
- After the Bill is passed, we will continue to work in tandem with all affected parties to ensure a smooth transition for the public. We expect to bring the new system into operation, with phased refinements, starting from 1 August 2011.
- Sir, no system can be absolutely secure against a determined person who chooses to flout the law. But we have made it more difficult for a lawyer to try to abscond with conveyancing money.
- Sir, I beg to move.
Wrap-up speech in response to MPs Lim Biow Chuan and AP Paulin Straughan’s queries (0.02MB)
Last updated on 25 Nov 2012