by Tim O’Dwyer M.A., LL.B
Below are comments I have received independently from a couple of legal colleagues. They are clearly quite concerned about the ‘costs consequences’ of conveyancing solicitors’, rather than real estate agents’, preparing sales contracts. The first comment (slightly edited) comes from a North Queensland practitioner. The second (also edited a tad) is from a Brisbane suburban solicitor.
“I enjoy your Real Estate Blog, and particularly the recent article on Section 24 of Queensland’s Legal Profession Act (Catch 24 On Agents’ Contracts ).
I have spoken to a few local lawyers who either doesn’t even know it exists or, if they do, really don’t want to get into it.
Probably one out of 100 Real estate salespeople know something exists, but don’t want to be told too much lest it interferes with the whole purpose of getting a quick sale. Their commissions might be at risk if time is taken to get proper clauses inserted into contracts.
From an everyday lawyer’s point of view, if we are approached by a salesperson to assist with drafting special conditions to a contract the parties are keen to sign, a number of issues arise: Who are we acting for? Why should I risk my position with advice over the phone without full instructions? Funny how many consumers feel the need for a solicitor’s involvement if an ex-shoesalesman-from-Myers-turned-real-estate-salesman drafts the clause. If a buyer or seller wants their own lawyer to look at it, the agent then sees his commission going out the door.
If we start getting 8 or 10 or more calls a day to draw clauses we will have to put on more staff and put our fees up considerably to cope with the extra work.
My staff would be horrified if we had people calling us all day for clauses for contracts, half of which would not proceed. Whom do we bill for that? The agents won’t want to pay.
The clients (if they are clients?) won’t pay. Some of the agents’ clauses we all see are incredible, yet they somehow sort themselves out because of willing and understanding buyers and sellers.
We are not talking about potential court actions involving huge sums of money because litigation is expensive and only worthwhile where heaps of money is up for grabs by litigants…and lawyers. These are some thoughts from someone at the coalface of everyday conveyancing matters.”
THE PRICE OF CONSUMER PROTECTION
“A recent article by Tim O’Dwyer (Catch 24 On Agents’ Contracts) made this prediction: “All hell will break loose when it sinks in that (Queensland) agents can no longer prepare contracts like they used to”. A dire prediction indeed! Tim’s article, which first appeared in The Courier Mail newspaper, certainly caused a flurry of requests to my office for advice on the effects of the dreaded Section 24 of Queensland’s Legal Profession Act 2007. So much hot air was created that Tim now has a serious case to answer in relation to greenhouse gas emissions.
To date I have been unable to allay any of the fears of those agents who contacted me. My advice to them is not to amend contracts or give legal advice. As a humble suburban legal practitioner, and out an abundance of caution, I even double checked with my city colleagues. However as Men At Work named their first album, it is apparently “Business As Usual” for agents.
I applaud Tim O’Dwyer’s approach towards consumer protection. For some time I have supported his views in respect of Land/Building Sales Contracts in Queensland. Quite simply I agree that Queensland should follow the procedure which Tim advocates, and which has been largely accepted by the ACT. In that progressive territory, long before a property is sold, the real work is done when a property is listed with an agent for sale. At that point the contract must be prepared together with supporting searches and approvals. Just as selling a car requires a roadworthy certificate, then selling a house should come with a “houseworthy certificate”. I have long advocated and supported this position as a solicitor, consumer and teacher of property law subjects to agents over a number of years.
However the current situation presents a dilemma for advocates of consumer protection. While Section 24 seems to require that only solicitors prepare and amend contracts, the vexing question is: Who will pay solicitors for this extra work? Who will pay the ferryman? (If Tim can quote from a famous Australian poem (“Said Hanrahan”), then my heritage dictates that I take the liberty to refer to the Irish singer Chris De Burgh).
For some time now solicitors have been required to do more and more work in conveyancing for less and less remuneration. In recent years the number of searches required has doubled. Requests for extensions of finance, inspection and settlement dates are common place. Invariably, banks are not ready to settle on time, so extensions are required. Buyers’ dissatisfaction with their building and pest inspections is increasing, and often opens up a whole new opportunity for buyers to re-negotiate the sale price.
To add the further task of solicitors’ preparing contracts and special conditions – if agents are prevented from doing so – should warrant payment for those professional services. It is one matter for Tim to propose consumer protection and a clear demarcation of services so that, in the perfect world post-Section 24, solicitors prepare contracts and agents sell properties. It is another matter that consumer protection must come at a price. Ask those property buyers who attempt to exercise their cooling–off rights only to find that it costs them .25 % of the purchase price!
Are consumers prepared to pay solicitors for preparing contracts? Will Tim offer his services gratis? Who pays the (legal) ferryman?”