Legal Fees for Property Transactions - Leases and Tenancies
Our series on Legal Fees for Property Transactions continues today with the scale legal fees for Leases and Tenancies. It would be beneficial if you read the introduction to the Legal Fees before continuing reading here if you have not done so earlier. A reading of that introductory article would give you an idea of what this article is all about.
Putting it briefly, a lease is registrable under the National Land Code and constitutes a term exceeding three years whilst a Tenancy exempt from registration is for a term no t exceeding three years. The Second Schedule of the Solicitors’ Remuneration Order 2005 prescribes the scale fees chargeable by a solicitor in respect of tenancies or leases as follows:-
| Lease | |
| Monthly rent | Scale of Fees |
| For the first RM10,000 | 50% subject to a minimum fee of RM600 |
| For the next RM90,000 | 20% |
| Where the rent is in excess of RM100,000 | Negotiable on the excess but shall not exceed 20% of such excess |
| Tenancy | |
| Monthly rent | Scale of Fees |
| For the first RM10,000 | 25% subject to a minimum of RM300 |
| For the next RM90,000 | 10% |
| Where the rent is in excess of RM100,000 | Negotiable on the excess but shall not exceed 10% of such excess |
Again, just like in a sale and purchase transaction, a solicitor shall only act for the lessor/landlord or the lessee/tenant and the remuneration of the solicitor shall be in accordance with the applicable scale fee above.
The parties to the transaction should also be made aware to the fact that any consideration in the lease or tenancy agreement expressed to be payable other than by way of rent (eg. Service charge, hire of furniture and fixtures) shall be deemed to be rent for the purposes of this Schedule. Where varying rent is payable, the remuneration of the solicitor shall be based on the highest amount of rent payable.
It is not uncommon in Malaysia for parties to draft their own lease or tenancy agreements by themselves without the counsel of a solicitor. Whilst this is perfectly legal, it is best that the parties obtain a professionally drafted lease or tenancy agreement as there may be salient points or facts which the parties may inadvertently left out. It goes without saying that in the event of a dispute between the parties, the rights, obligations and liabilities of the parties are confined to the spirit of the four corners of the agreement signed by the parties.
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