Saturday, November 12, 2005

property 6

Real estate agents, developers hypocritical Charles Hector Nov 11, 05 4:19pm

The Real Estate and Housing Developers Association Malaysia (Rehda) is an association of developers and real estate agents, one for their own good and profit. They have been on a campaign to distract the ordinary consumer from the truth of their ever-increasing oppressive charges and commissions to the ‘poor’ lawyer whose fees have stayed unreasonably low at a rate of 1% or less of the purchase price. The developer’s profits have been increasing. The developer even makes the purchaser pay for the developer’s lawyer. The developer does not pay legal fees and/or disbursement charges to their own lawyers in a Sale and Purchase agreement. The developer and his lawyers deceive many a purchaser into believing that the developer’s own panel lawyer is in fact the purchaser’s own lawyer. In reality, the purchaser is many a time not at all represented by an independent lawyer. The real estate agents, the other group of persons in Rehda, increased their fees from 2% of the purchase price to 3% some years back, and then brought it down to 2.75% of the purchase price. Comparatively, a lawyer’s legal fees is 1% for the first RM100,000 and 0.5% thereafter. In most cases, the developer does not pay the legal fees of his own lawyer but makes the purchaser pay the fees. What is most disturbing is the fact that the purchaser is hoodwinked into believing that he is paying the fees of his own lawyer, who is protecting his interest in the Sales and Purchase agreement. In fact the lawyer on the developer’s panel of lawyers even sends the bill directly to the “client” purchaser, who then pays directly to the said lawyer. This further propagates the belief that this is indeed the purchaser’s lawyer, acting in the best interest of the purchaser but this is not true. The developer selectively picks and chooses lawyers for his panel of lawyers. A lawyer in the developer’s panel of lawyers cannot mean anything but being the developer’s lawyer. Many a developer disallows or discourages the purchaser from choosing and appointing their own lawyer from the over 12,000 lawyers in Malaysia. And if the purchaser still insists on getting his own lawyer – then the purchaser is expected to pay the fees of both the developer’s lawyer and the purchaser’s own lawyer. Many of the purchasers are just conned into believing that the lawyer from the developer’s panel of lawyer is their own lawyer. Whose interest do you think these lawyers will protect – the purchaser’s or the developer’s? After all the purchaser is a one-off client and the developer is a potential long-term client and the source of much work now and in the furture. Hence, reasonably, the lawyers from the developer’s panel of lawyers cannot be independent of the developer and therefore, can never be said to be concerned about protecting the best interest of the purchaser. Why indeed should the purchaser pays the fees of the developer’s lawyer? Why also should the borrower pay the fees of the financier’s lawyer? After all, the developer profits greatly from the increasing purchase prices of houses and buildings. It would be so easy for the developer to pay his own lawyer’s fees. But then Rehda is not interested in helping the consumer this way. The agenda seem to be focus the attention on non-issues like lawyer’s fees and the “no discount rule” so the public will not look at hanky panky of the developers, the inflated prices of houses and poor standards of buildings. Many may believe that this is all ‘propaganda’ by the lawyers but the truth begins to be revealed to the purchaser when it comes to the enforcement of his right in a Sale and Purchase Agreement. For example, if the property is not delivered by the time stipulated in the Sale and Purchase Agreement, the purchaser is entitled to claim for late delivery charges. But when your go back to “your” lawyer, who was a lawyer on the developer’s panel, to help you get your entitled late delivery charges, you will find that the lawyer is not to keen about pursuing your right. The lawyer may even propose that it best that the purchaser take just a certain percentage of the sum claimable as per the agreement. Some of these lawyers even go on to say that the authorities have granted an extension to the developer to finish the project, and thus there can be no claim during these extension periods and that one can only claim late delivery charges for the period after the end of this ‘extension period’. This is a lie – a purchaser is entitled to claim late delivery charges for the period beginning from the date the property was to be completed and delivered as stated in the Sale and Purchase Agreement. The fact that the developers license or permit is extended will not alter the fact that late delivery charges are claimable from the date as stipulated in the agreement. A wise purchaser will see the truth then and know that “their” lawyer was really not their lawyer at all, and most definitely never had any intention of looking after the best interest of the purchaser then or later. The statutory provided standard form for Sale and Purchase Agreements of residential units purchased from a developer do not have the necessary recital stating very clearly whether the purchaser is represented or not, and if represented, by whom? Parliament must look into including this recital to ensure that the poor consumer is less likely to be deceived. There is no statutorily provided standard Sale and Purchase Agreement form when it comes to shophouses, commercial property and for individual sale and purchase agreements (sub-sales). Here it is most important for parties to be represented by their own independent lawyers, who would protect their interest, because it very important to ensure that clauses that best protect their individual interest are inserted into the final agreements. 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 1% of the purchase price, a most unreasonable and low rate, how much effort can you expect from your lawyer? But alas, efforts to increase legal fees have received protests from many a lawyer and one wonders why ... Rehda should look at itself, consider their charges and fees that they are levying on the Malaysian consumer, and do the necessary to ensure that the best interest of the consumer is protected. They should stop their sad attempts to distract the consumer by pointing fingers at the lawyer, who fees are at present extremely low and have not seen any upward movement for far too long.

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