Q.
Why do you need client’s account in agency practice?
A.
The reason for that is because the money is held temporarily before its transmission to the payable account of the intended party.
Take for example in renting a house. Jerry wants to rent your house. But he doesn't know you at all. He is afraid that if he pays you, he cannot regret no more. The money is already paid. He has no more negotiating power if he changes his mind.
Then, he looks for an agent. He gives the deposit money to this agent, and agent will offer to you as landlord. Obviously, as tenant, he details what he wants if he rents your house. Similarly, as landlord, you cannot assume all prospects are good tenant. So, you ask the agent to screen the tenant. As long as you have not signed the offer to rent, you can refuse to rent. You as landlord also want to see if the prospect (tenant) can really come out with the deposits.
All talks and "I sure can" holds no water before deposit is paid (to client's account). If there is a fell off before landlord signs the offer to rent, Jerry’s deposit/booking fee will be returned to him. Jerry does not suffer any loss. Landlord also feels good that he has not agreed.
If the agent who has taken the money had disappeared, the client (who appoints the agent) can go to Lembaga Penilai, Penaksir, Ejen Harta Tanah Dan Pengurus Harta Malaysia (in English - BOVEAP) to lodge a complaint. The Board will investigate. If found guilty, disciplinary action will be meted.
Various rules are in place for regulating the Estate Agents. Disciplinary Procedures are mated in Part XIV of the VEAP Rules 1986. As for Client's Account, it is regulated by Part VIII of the VEAP Rules 1986. In particular S.24 VAEP Act, 1981 has various punishments for the convicted offenses for example, cancellation of registration, suspension, admonishing, imposing fine and prohibiting from application to the Board for registration until all the conditions specified by the Board have been complied with.
Therefore, deposits were held in “Client’s Account” to safeguard the position of client. Same is when Sales and Purchase Agreement is signed the down payment is held in Client’s Account of the law firm before the total loan is dispersed from the bank to the Vendor/Developer. So, these two professions - Lawyer and Estate Agent are the two unique professions where Client's Account is a special ingredient of the service.
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