ARTICLE: Do you need a lawyer for property transactions?

It is a good idea to be represented in all legal matters, including all property transactions.

I may sound like an old man complaining about the great old days in this article, but I hope you will give me the benefit of the doubt. I’m talking about conflict of interest in “non-contentious matters” in Malaysia.

Non-contentious matters are matters not started in conflict (unlike contentious matters which are why lawyers existed in the first place) such as negotiations, correspondences, coffee and all things done between two parties leading to signing an agreement. Non-contentious matters are the oil moving the world of business, allowing businesses to joint venture, ensuring peace among competitors.

These include the various transactions and agreements which occur in the property market. According to many in the industry, there is no conflict of interest here. Those who usually forgo the appointment of a legal representative to act on their behalf are:

1) Buyers who purchase properties from housing developers;
2) Sellers who sell properties in secondary market;
3) Tenants renting properties; and
4) Borrowers of housing loan from banks to purchase properties (either in primary or secondary market)

The idea that there is no conflict of interest is a myth.
You should appoint your own legal representative to ensure your lawyer will dot all the i’s, cross all the t’s, tell you whether you have anything to worry about and make sure your agreement is airtight. You pay for your own lawyer and the other party pays for his own lawyer.

Many have bought property, rented a house or taken a housing loan and NOT paid any legal fees for it. But the lawyer is NOT acting for you when the lawyer is paid by the other party. The lawyer is acting only for the party paying him. If you buy a property from a housing developer and the housing developer pays for your legal fee to buy the housing developer’s property, the lawyer’s obligation is to protect the housing developer’s interest. The same applies to banks, landlords and purchasers in secondary market for property. They are the ones being protected, while the borrowers, tenants and sellers are considered unrepresented.

The term ‘free legal fees’ or ‘free moving cost’ are rampantly used and have become part of property jargon. People think they are get something for free. Indeed, they are getting something for free; they are free from legal representation.

Lawyers simply cannot act for both parties, either for contentious or non-contentious matters. They will be in breach of the Legal Profession Act 1976. The clause stating that the lawyer does not represent both sides is usually in the agreement; it is also in a policy enforced some years ago by the Malaysian Bar.

There was a time in the legal history of Malaysia when all sides were represented properly in non-contentious matters. Buyers and sellers of properties; tenants and landlords; banks and borrowers. I believe most of the contentious matters which came up then were due to breaches of agreement.

Compounded by market forces and with misunderstanding of the law, we have ended up with what is currently practised.

My final advice is: Appoint your own lawyer even if would you save a few hundred Ringgit using a “common solicitor”. If you don’t, you might run into trouble and there are a lot of my colleagues waiting to help you to solve your problem in court, for a hefty fee. That is when your non-contentious matter becomes a contentious matter and you will have your day in court. As the saying goes, one shouldn’t be “penny wise, pound foolish”.

SOURCE: http://www.starproperty.my/index.php/articles/investment/the-myth-about-conflict-of-interest-in-property-matters-a-k-a-why-it-is-a-good-idea-to-be-represented-in-all-legal-matters/

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