Hypocrisy of REHDA in shifting blame to lawyers
Real Estate and Housing Developers Association Malaysia(Rehda) is an association of Developers and Real Estate agents, and for their own good and “profits”, 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.
Lawyer’s fees are already unjustly too low and has not increased at the same rate as the fees of all other professionals in the country. The move to stricter enforcement of the old “No Discount Rule” is meant to protect lawyers and also the consumer. It is meant to prevent a further decrease of fees by reason of undercutting within the profession.
Before this rule came into being, there were some lawyers being forced to give 50% or more discount just to survive. When the cost of teh tarek was 60 cents, lawyers fees was 1% or less, and now when the cost of teh tarek has gone up RM1-20, lawyer’s fees is still at 1% or less.
“If you pay peanuts, then you will only get monkeys.” The legal profession in its efforts to stifle the decline of professional standards and to ensure that the best interest of the consumer is protected have stepped up the enforcement of the “No Discount Rule”. Thus “No Discount Rule” was always there in our statute books but due to the lack of enforcement some unethical lawyers have ignored this rule to the detriment of the legal profession as a whole.
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/her 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, whose sole concern is to protect the interest of the client, the Purchaser.
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 RM100,000-00 and 0.5% thereafter. In short, the legal fees of a professional lawyer, who does more work and takes more risks, from the sale and purchase agreement until the transfer/extraction of title, is on the average paid less than 1% of the Purchase Price. Cost of living and almost everything has gone up but legal fees have been constant for far too long.
When it comes to a Sale and Purchase Agreement, like any other agreement there are 2 parties and both parties are entitled to be represented by a lawyer, who is expected to protect the best interest of their respective client. Each party to an agreement is expected to pay for their own lawyer’s fees – BUT alas this is normally not what happens in a Sale and Purchase Agreement involving a developer on one side.
In most cases, the Developer does not pay legal fees of his own lawyer but makes the purchaser pay the fees. What is most disturbing also is the fact that the purchaser is hood-winked into believing that he is paying the fees of his/her own lawyer, who is protecting his/her interest in the Sales and Purchase agreement. In fact the lawyer in the Developer’s panel of lawyers even sends the Bill directly to the “client” Purchaser, who then pays directly to the said lawyer, and this further propagates the belief that this is indeed the Purchaser’s lawyer, acting for the best interest of the Purchaser – and this is not true.
The developer selectively picks and choses lawyers for the Developer’s panel of lawyers. A lawyer in the Developer’s panel of lawyers cannot me anything but the Developer’s lawyer. Many a developer disallow or discourage the purchaser from chosing and appoint their own lawyer from the over 12,000 lawyers in Malaysia. And if the purchaser still insist on getting his own lawyer – then the purchaser is expected to pay the fees of both the Developer’s lawyer and the Purchaser’s lawyer.
But then 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 – Purchasers or Developers? 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 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’s pay the fees of the financier’s lawyer? After all the Developer profits greatly from the increasing purchase prices of houses and buildings of lowering standards. It would be so easy for the Developer to pay their 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 - and maybe the public will not look at hanky panky of the Developers, the inflated prices of houses and poorer standards of buildings.
Many may believe that this is all “propaganda” of the lawyers but the truth begins to revealed to the Purchaser when it comes to en 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.When your go back to “your” lawyer, who was a lawyer in the Developer’s panel, to help you get your entitled late delivery charges, you will find that the lawyer is not so keen about pursuing yopur right. If the said lawyer may start proposing 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 had 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’ granted be the authorities. 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 completeted 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 delievery 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 Agreement of residential units purchased from a Developer do not have the necessary recital stating very clearly whether the purchaser is represened 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 form Sale and Purchase Agreements when it comes to shophouses, commercial property and for indidual sale and purchase agreements (sub-sales), and 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 is 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, the efforts to increase legal fees have received protest from many a lawyer – and one wonders why?
REHDA should look at itself, consider the 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 has not seen any movement for far too long.
Charles Hector
25 October 2005
Petaling Jaya