Tutorial 2 Q2

QUESTION 2

• Vendor sells a piece of land to Purchaser. Each party employs their own
Solicitor. Purchaser’s Solicitor conducts a title search and finds no
encumbrances. Parties sign the SPA on terms of 30% deposit and balance
of 70% of purchase price within 3 months of execution of SPA. Purchaser
completes payment accordingly and money is duly released to Vendor
upon presentation of documents of transfer for registration.
• However the registration of transfer is rejected due to 2 caveats lodged
by the true registered proprietor. Solicitors realise that the Vendor was
false and had obtained a fraudulent Replacement title.
• Discuss the liability of Solicitors for the Vendor and Purchaser.
Before the execution of SPA:

Vendor’s solicitor:
• Should have obtained the particulars of the vendor and purchaser and of the property. For example, their
IC/passport, title of the property, quit rent receipt, utility assessment and etc. Besides, VS should identify
and determine the capacity of the parties to avoid fraudulent dealings.
• VS should be the stakeholder for the money released by purchaser before the completion of the whole
transaction. This is to protect interest of both vendor and purchaser. According to Bar Counsel Ruling
14.10, a solicitor acts as stakeholder must strictly adhere to the terms. No money shall be released except
in accordance with the terms of stakeholding or with the express written consent of all relevant parties.
Purchaser’s solicitor:
• Should conduct two searches.
• The first search on title is before allowing purchaser to sign SPA whereas the second search on title is
before presentation of documents at land office. It is because there is three-months-gap between the first
title search and the registration of transfer. Anything would happen within this period so it is mandatory to
do a second search. Title search will reveal nature of title, the land owner and show whether any consent
of third parties need to be obtained.
• In conclusion, the purchaser can sue the solicitors for negligence and also make a complaint to Malaysian
Bar for disciplinary actions. The solicitors should have followed the conveyancing checklist to avoid
negligence. Based on the mistakes they have done, they will be liable for negligence.