Wednesday, July 27, 2011

Real Estate - Rogues Or Well Meaning Fools?

I have just finished talking to a purchaser client who has received her termite inspection report.  The report indicates that she must spend thousands of dollars for pest treatment because of the presence of termites.

Of course, the client asked about her rights and I had to give her the same bad news I regularly give to clients in her position - the real estate agent is either a rogue or a well-meaning fool, and the client has to suffer the consequences either way.

What I mean by this is that the client trusted the real estate agent (I know, I'm always telling clients not to trust real estate agents, but they do anyway) to draft a special condition which would allow her to end the contract if there was a "pest problem".

The real estate agent readily obliged, using the standard special condition (yes, I know that's an oxymoron) distributed by the Real Estate Institute of Victoria (REIV) to its members.

Given that real estate agents are not lawyers, and are therefore prohibited from providing legal advice and drafting contract conditions (putting the obvious conflict of interests aside for one moment), any real estate agent who purports to be assisting a purchaser by inserting the standard condition into the purchaser's formal offer is either a rogue (doing it deliberately with the knowledge that the purchaser is being cheated) or a well-meaning fool (who doesn't understand the meaning of the condition being used).

Purchasers please take note!  Do not, under any circumstances, allow a real estate agent to advise you on the preparation of your offer.  Always obtain legal advice from your own lawyer first.  Even better, take advantage of our pre-purchase legal advice and stay safe.

Wednesday, July 6, 2011

Finance Approval Expiry

While providing pre-purchase legal advice to a client during their cooling off period this morning we noted that the settlement period was nearly 12 months.

The client was not aware that their finance approval would not last for such a long period of time, and that they may find that they are locked into a contract they can't fulfill if circumstances change and they can't access finance.

To make matters worse, the real estate agent had drafted the contract with a 20% deposit requirement, and a special condition stating that the deposit must be released early.  All kinds of legal arguments will come into this one!

Needless to say, our advice will be to cool off, and renegotiate the purchase!

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Holding Deposit? No Such Thing!

When a purchaser wants to submit an offer on a property the estate agent will often request what is termed a "holding deposit". It is important that consumers understand that there is no such thing as a "holding deposit" in real estate.

The term "holding deposit" implies that once the requested amount (usually $500 or $1,000) is paid the vendor cannot sell the property to anyone else. Of course, the purchasers believe that they cannot purchase another property without losing the "holding deposit".

In fact, neither the vendor nor the purchaser is bound by the payment of a "holding deposit".  The contract determines how much deposit is to be paid, and the date by which it is to be paid. The agent has no say in the matter at all. An agent who refuses to submit an offer to the vendor is not acting in the vendor’s best interests, and breaks the law by failing to communicate the offer to the vendor as soon as possible. This means that if a better offer is submitted to the estate agent, the estate agent must ignore the "holding deposit" and submit the better offer to the vendor, and vendor is free to accept the better offer.

Why does the estate agent demand a “holding deposit” from the purchaser if the agent knows that it cannot bind either party? The sole purpose is to control the purchaser. By taking hundreds of dollars from the purchaser, the estate agent creates something of a psychological hold over the purchaser, so that the purchaser is less likely to change their mind. Add to this is the knowledge that "cooling off" involves a loss of money, and the control becomes even stronger.

Estate agents who demand a "holding deposit" should be asked whether the vendor has confirmed to the estate agent that no further offers will be entertained after the payment has been made. Only if an acceptable response is received should the payment of a "holding deposit" be considered.

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Lawyers Conveyancing Melbourne

Lawyers Conveyancing is the market leader in conveyancing in Victoria, and has been providing conveyancing services to consumers throughout the Melbourne metropolitan area and regional Victoria since 1993..

Lawyers Conveyancing has built is reputation on the delivery of superior services, providing excellent client-care and fixed fair fees. For example, we are the only conveyancing law firm to offer comprehensive pre-purchase legal advice at a fixed fee.  Our conveyancers the use the most streamlined and efficient system. All staff members are knowledgeable, well trained, experienced and professional. Reliability and courtesy are core values within our team. We pride ourselves on our integrity and professional reputation.

As part of our continuing investment in client service innovations, Lawyers Conveyancing has attained accrediation as a LAW9000 Legal Best Practice law firm. This further enhances service delivery and ensures that we remain at the forefront of operational efficiency, quality assurance and client accessibility.

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Conveyancing Services in Maroondah

If you are considering moving to one of the suburbs of Maroondah, you are likely to require the services of a conveyancer. Lawyers Conveyancing is one of the few conveyancing and law firms in Melbourne with the capacity of deal with conveyancing matters anywhere in Victoria.

Our conveyancing services are offered on-line, and we can represent you in the sale of your existing property, and the purchase of your new property in any of the suburbs within the Maroondah area.

For information about the City of Maroondah, click on the image below. You will find the staff of the City of Maroondah very helpful in advising you on the services and facilities available in the local area.

City of Maroondah includes the suburbs of Warranwood, Croydon North, Croydon Hills, Croydon, Croydon South, Ringwood, Ringwood East, Heathmont, Kilsyth, and Kilsyth South
You will also find useful information about planning, rates, the local environment, and other matters of local interest.

Suburbs Of Maroondah
The suburbs of Maroondah are set out below, with links to their respective pages:
Conveyancing BAYSWATER
Conveyancing CROYDON
Conveyancing CROYDON HILLS
Conveyancing CROYDON NORTH
Conveyancing CROYDON SOUTH
Conveyancing HEATHMONT
Conveyancing KILSYTH
Conveyancing KILSYTH SOUTH
Conveyancing RINGWOOD
Conveyancing RINGWOOD EAST
Conveyancing WARRANDYTE
Conveyancing WARRANWOOD
Conveyancing WONGA PARK

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State Relaxes Estate Agent Controls

According to The Age newspaper of 7 July, 2011,

"THE BAILLIEU government is proposing laws that would reduce regulation of real estate agents - whose representative body is arguing for more regulation - specifically to stop agents' family members from buying vendors' houses.
The laws regulating when and how estate agents can buy a property they are meant to be selling changed at the start of this year. But other revisions now being considered by State Parliament would further whittle away at protection for vendors. Vendors selling a property to their agent are now required to get independent advice about the transaction from a lawyer or accountant. Before January, the laws were even tougher, requiring approval from Consumer Affairs Victoria for a sale to occur.
Under the new law, agents will still be barred from gaining a beneficial interest in a property they are commissioned to sell. But there will be exemptions and those sales will not have third-party oversight, the policy director of the Consumer Action Law Centre, Gerard Brody, said."

How can such a move be regarded as being in the interests of consumers?

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