Gold Coast Law Association Slams Agents And Calls For Contract Reforms

Posted on December 9, 2007 by | 10 Comments

Tim O'Dwyer M.A., LL.B by Tim O’Dwyer M.A., LL.B
Solicitor
Consumer Advocate
watchdog@argonautlegal.com.au


 


Solicitors, not estate agents, should prepare sales contracts. This is the view of the Gold Coast District Law Association which has called for Queensland to be brought into line with the long-established New South Wales practice whereby agents do not prepare or exchange contracts. Queensland Law Society president Megan Mahon agrees that real estate consumers “should be guided by professional legal advice at every stage”.Never allow an estate agent to handle the contract!


“The (legal) profession here would welcome this move,” writes Association president Ted Skuse in his Association’s newsletter IPSO FACTO which describes “recurring problems with agent-prepared documents”:



  • Unrealistic time frames in contracts;

  • Special conditions imposing duties on buyers and their solicitors to collect agents’ commissions;

  • Special conditions eroding buyers’ rights.

Agents are criticised for commonly setting 14 days or less for buyers to make investigations, secure finance and obtain building/pest inspections. Unrealistic settlement dates also prejudice sellers needing to arrange mortgage releases.


“The result is that in most transactions extensions of time are needed. If the contract is unconditional the party seeking more time is wholly in the power of the other party as to whether such an extension is granted.”


“Short time frames place the parties at risk if extensions of time are not consented to,” explains Mr Skuse, who is also concerned about possible claims against solicitors.


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10 Comments

  • http:// says:

    The whole industry is geared towards 7 day pest and 14 day finance. Plenty of time if the buyer has done hs/her homework. The vendor’s rights not to be off the market for too long a time needs to be considered also. If there are legitimate reasons for seeking an extension, it is also in the interest of the seller to grant it or risk loosing the deal.

  • http:// says:

    The Law Society says we should spend more on legal advice. What a surprise!

  • Hi Anton and Howard,

    To determine the credibility of your comments perhaps you should indicate whether you are consumers, lawyers or estate agents.

  • Chris Warren says:

    I am an agent in Brisbane and would like to make 2 comments. All my contracts currently have 21 day finance dates and neither buyers nor sellers have anyconcerns so far. No extensions have been needed as would have been the case with 14 days. Buyers have no control over when the banks will approve their finance so let’s just make it 21 days. The old 14 days are gone. My other comment is about agents commissions and deposits. All agents try to collect as much deposit as possible not just to “protect” their commissions but to secure a stronger contract. So many times the buyers do not have the cash available or say they have been advised by their solicitor that they do not need to put down a substantial deposit. We can not force buyers to pay the deposit we would like. Thank you.

  • Hi Chris,

    In Victoria the estate agents dictate to purchasers as to what conditions they can or cannot have in their contracts. Just type “Ian Reid” into the search facility above to see some truly outrageous examples of an estate agent’s finance condition and an estate agent’s gazumping condition.

    Would any estate agents like to comment on Ian Reid’s approach to “assisting” in the preparation of real estate contracts?

  • http:// says:

    Even when agents here in the Deeep North add a special condition (now illegally) with plenty of time for satisfaction, there’s a good chance they’ll get it awfully wrong.

    Scout’s honour, only this week I was bemused by one agent’s effort where the condition was due by “31st February, 2008”!

  • http:// says:

    Returning to the basic issue of agents’ generally brainless approach to contract prparation, this week an agent pepared-contract landed on my desk with a specific settlement date if 1st June 2008. Needless to say, this is a Sunday. Fortunately, the standard conditions of the contract provide in such

    a case (where settlement is not a business day) for the due date to be the next business day.

    No harm done, but the point is that this licensed clod (and the dumber, but trusting, parties to the contract) did not bother to check what day of the week 1/6/08 fell on!

  • http:// says:

    Have just seen the ultimate, obnoxious and self-serving clause added (illegally) to a contract by a First National agent from Queensland’s Gold Coast, Hey, where else?

    The really offending part of this clause read: “…both parties hereby charge the subject property and consent to the Agent lodging a caveat over the property pending receipt by the Agent of payment of the commission owing.”

    I’m presently writing to the buyers’ solicitors proposing that this outrageous addition (in patent breach of Section 24 of the Legal Profession Act inter alia) be mutually deleted from the contract, and that those solicitors join with me in lodging complaints with the Legal Services Commissioner and with the Office of Fair Trading.

  • http:// says:

    Tim

    I have been looking at the NSW contract 2005 condition. It has a box around a section which contains Inclusions (tick boxes) Exclusions Purchaser, Purchaser’s Solicitor, Price, Deposit, Balance, Contract date, In bold at the top of the boxed section it says ” A real estate agent is permitted by legislation to fill up the items in this box in a sale of a residential property” The copyright in the form is owned by the NSW Law Society. Its a pity our Law Society in putting its name to standard form contracts and does not make it patently clear what can or can’t be done by an agent.

    regards

    Bryan Pickard (Queensland & NSW Solicitor)

  • http:// says:

    Finally one of the national mega-law-firms went public last month on this topic, and agreed essentially with my (and others’) interpretation of Section 24. This is part of the report on Gadens’ website:

    “Australia: Preparation Of Contracts By Real Estate Agents And Property Developers

    23 November 2007

    Many people may not have realised that, with the commencement of the Legal Profession Act 2007 on 1 July 2007, it became an offence for a real estate agent to add special conditions to a standard REIQ contract.

    The new Act permits an agent to ‘fill in details in a pre-printed contract or other document as part of performing the work of a [real estate agent]’.

    If an agent does any more than this, it will be engaging in legal practice in contravention of s 24 of the Act. The maximum penalty for such a contravention is $22,500 or 2 years imprisonment.

    Therefore agents cannot:

    draft or add special conditions (even if they are from a standard clause bank prepared by a solicitor for use by the agent); or

    provide advice to a buyer or seller about the effect of the details completed by the agent or any other provision of the agreement.

    Previously an agent was permitted to “prepare or assist in the preparation of a contract for another person” so this is a significant change in the law, although the apparent change in policy did not rate a mention when the Act passed through Parliament.

    Practically What Will It Mean?

    It remains to be seen whether the Legal Services Commissioner, the person responsible for administering the Legal Profession Act 2007, intends prosecuting agents who continue to prepare contracts with special conditions.

    The fact that a contract with special conditions is prepared by an agent does not affect the contract’s validity but an agent may be liable if a seller or buyer suffers loss due to the agent’s negligent preparation of the contract.”

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