Protect the purchaser
NST 8/11/2005

THE Real Estate and Housing Developers Association Malaysia (Rehda) is an association of developers and real estate agents.

They have been on a campaign to distract the consumer from the reality of their ever-increasing char- ges and commissions to law- yers whose fees have stayed at one per cent or less of the purchase price.

Lawyers' fees have not increased at the same rate as the fees of other professionals in the country.

The move to stricter enforcement of the "No Discount Rule" is meant to protect lawyers and consumers, and to prevent a further decrease in fees by reason of undercutting within the profession.

Before this rule came into being, there were some lawyers being forced to give 50 per cent or more discount just to survive.

The legal profession, in its efforts to arrest the decline of professional standards and to ensure that the best interest of the consumer is protected, has stepped up the enforcement of the "No Discount Rule".

The developer does not pay legal fees to its own lawyers in a sale and purchase agreement and

even makes the purchaser pay for the developer's lawyer.

They persuade purchasers into believing that the developer's panel lawyer is in fact the purchaser's own lawyer.

In reality, the purchaser is, many a time, not represented by an independent lawyer.

The real estate agents, the other group of persons in Rehda, increased their fees from two per cent of the purchase price to three per cent some years back, and then brought it down to 2.75 per cent.

A lawyer's fee is one per cent for the first RM100,000 and 0.5 per cent thereafter.

In short, the legal fee of a professional lawyer is, on average, less than one per cent of the purchase price.

In a sale and purchase agreement, there are two parties and both are entitled to be represented by a lawyer.

Each party is expected to pay its lawyer's fees - but this is not what normally happens in an agreement involving a developer on one side.

In most cases, the developer does not pay legal fees of its lawyer.

In fact, the lawyer in the developer's panel even sends the bill directly to the "client" purchaser, who then pays directly to the said lawyer, and this perpetuates the belief that this is the purchaser's lawyer.

The developer chooses lawyers for the developer's panel.

Many developers discourage the purchaser from appointing his own lawyer.

And if the purchaser still insists on getting his own lawyer, then he is expected to pay the fees of both the developer's lawyer and his own.

The truth begins to dawn on a purchaser when it comes to enforcement of his right in a sale and purchase agreement.

For example, if the property is not delivered by the time stipulated in the agreement, the purchaser is entitled to claim late delivery charges.

When the purchaser goes back to the lawyer to help them get late delivery charges, they find that the lawyer is not so keen about pursuing their rights.

The standard form for sale and purchase agreement of residential units purchased from a developer does not have the necessary recital stating clearly whether the purchaser is represented or not, and if represented, by whom.

Parliament must look into including this recital to ensure that the consumer is better protected.

There is no statutorily-provided standard form for sale and purchase agreements for shophouses, commercial property and for individual sale and purchase agreements.

Here, it is most important for parties to be represented by their own lawyers.

Lawyers generally spend much time exchanging drafts to ensure that their client's interests are protected.

But if they are still going to be paid less than one per cent of the purchase price, how much effort can you expect from your lawyer?

Rehda should look at itself, consider the charges and fees that are being levied on the Malaysian consumer, and do what is necessary to ensure that the best interest of the consumer is protected.

CHARLES HECTOR Petaling Jaya