Lawyer Administration fee levied on property deposit

[Viva]

Hi there

Quick question.

Is it normal for lawyers who keep a deposit on a property in their trust account to set the administration fee at a percentage of the capital?

In my case
- Interest earned on the capital is set at about 5.6% per annum.
- The administration fee they ask is set at 1.5% of the capital/deposit per annum.

To me, this seems like daylight robbery. The rate of 1,5% is similar to the rate one pays for an actively managed fund with a professional portfolio manager.

I just want to know if this is common practice or not. Thanks!

 

[Thor]

#FeesMustFall

But in all seriousness it does not seem correct.

PM @Padjakkels I am sure he will be able to give some insight

 

[Viva]

#FeesMustFall

But in all seriousness it does not seem correct.

PM @Padjakkels I am sure he will be able to give some insight

Thanks for pointing me in the right direction. I assume he's a lawyer or has some experience with property?

 

[Thor]

Thanks for pointing me in the right direction. I assume he's a lawyer or has some experience with property?

Experience with property

 

[Viva]

Experience with property

Great, will do.

 

[IzZzy]

Hi there

Quick question.

Is it normal for lawyers who keep a deposit on a property in their trust account to set the administration fee at a percentage of the capital?

In my case
- Interest earned on the capital is set at about 5.6% per annum.
- The administration fee they ask is set at 1.5% of the capital/deposit per annum.

To me, this seems like daylight robbery. The rate of 1,5% is similar to the rate one pays for an actively managed fund with a professional portfolio manager.

I just want to know if this is common practice or not. Thanks!

Depends on the market and the firm - fees are negotiable. Not unheard of for these fees to be charged from the big five.

 

[padjakkels]

Hi there

Quick question.

Is it normal for lawyers who keep a deposit on a property in their trust account to set the administration fee at a percentage of the capital?

In my case
- Interest earned on the capital is set at about 5.6% per annum.
- The administration fee they ask is set at 1.5% of the capital/deposit per annum.

To me, this seems like daylight robbery. The rate of 1,5% is similar to the rate one pays for an actively managed fund with a professional portfolio manager.

I just want to know if this is common practice or not. Thanks!

It is NOT common practise that they take a percentage of the capital. They are supposed to keep it in TRUST and may ask you a fee which you pay seperatly for a service they delivered. If you do not pay them, then they can take it from the capital.

I suggest you contact them as soon as possible and ask them for the invoice for their fee and discuss it with them.

 

[Viva]

padjakkers and IzZzy

Thanks so much for weighing in! It helped a great deal.

Some more background:

- I transferred the deposit to the attorneys almost 6 months ago. They did not mention the administration fee, although I did assume a minimal reasonable fee would be charged.
- Only in February did I find out that the fee is 1.5% of the capital, this while signing a whole stack of documents at the attorneys. I refused to sign the document in question. About two weeks later they called about this, and I again refused to agree to this.
- After posting here, I sent my reasons for refusing to agree via email.
- Today they offered me a flat once-off rate, not linked to the size of the deposit. This rate is ±5% (yes, twenty times less) of what I would have paid for the administration of the deposit had it remained 1.5% of the capital.

I'm happy with the outcome, but still somewhat sad that these guys are taking chances. I'm pretty sure 90%+ of their clients would have agreed to the original agreement, not realising just how ridiculously the administration fee has been inflated.

Thanks again for your input!

 

[IzZzy]

That sounds dodge indeed - you agree fees beforehand and don't try impose them afterwards. Happy you had a good solution

 

[padjakkels]

Glad you have it sorted.

 

[^^vampire^^]

I bought a property off plan a few years ago, the property lawyers wanted to put my money in a trust. In their terms and conditions they stated things (in legal speak) to the effect that if the money goes missing, someone at their firm steals it etc they are not liable. Told them to fokoff and that I will not be transferring/allowing them to hold any of my money.

Bunch of sharks the lot of them.

 

[ProfA]

Bunch of sharks the lot of them.

This ^

I don't see how they can charge you for the privilege of paying the deposit. A landlord may as well also start charging for keeping a tenants deposit.