Legal Fees for Property Transactions – Charges, Debentures and other Security or Financing Documents
Our fourth installment in my series on Legal Fees for Property Transactions is the scale legal fees for Charges, Debentures and other Security or Financing Documents. In case you may be wondering, Charges are also known as Mortgages in some other countries, especially in the UK. As always, 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.
The scale fees chargeable by a solicitor in respect of Charges, Debentures and other Security or Financing Documents are prescribed in the Third Schedule of the Solicitors’ Remuneration Order 2005:-
| Amount secured or financed | Scale of Fees |
| For the first RM150,000 | 1.0% subject to a minimum fee of RM300 |
| For the next RM850,000 | 0.7% |
| For the next RM2,000,000 | 0.6% |
| For the next RM2,000,000 | 0.5% |
| For the next RM2,500,000 | 0.4% |
| Where the amount secured or financed is in excess of RM7,500,000 | Negotiable on the excess but shall not exceed 0.4% of such excess |
| For the principal instrument | Full scale fee |
| For each subsidiary instrument within the meaning of subsection 4(3) of the Stamp Act 1949 | 10% of scale fee (subject to minimum fee of RM200 and a maximum fee of RM1,000) |
In case of any transaction governed by the Housing Development (Control and Licensing) Act 1966 or any subsidiary legislation made under that Act, the remuneration of the solicitor having the conduct of and completing the transaction whether acting for the financier/chargee or borrower/chargor shall be :-
| Consideration or Loan Sum | Amount |
| RM45,000 or below | RM250 |
| Excess of RM45,000 but not more than RM100,000 | 75% of the applicable scale fee specified |
| Excess of RM100,000 but not more than RM500,000 | 70% of the applicable scale fee specified |
| Excess of RM500,000 | 65% of the applicable scale fee specified |
A borrower / chargor should be reminded that a solicitor shall only act for either the financier / chargee or the borrower / chargor. Hence, in situations where a financial institution grants a loan facility with the promise of no legal fees (because they are paying for the legal fees), the borrower in essence is not represented by a solicitor (unless he engages his own) because the solicitor in charge of the transaction and whose fees are paid by the financial institution is in fact, the financial institution’s solicitor. His professional duty is to guard the interests of the financial institution, not the borrower.
The above scale fees do not apply to preparation for security documents / agreements for Islamic banking business as defined in the Islamic Banking Act 1983.
There are also some other exceptions to which readers are advised to seek further details from their solicitors.
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