David Falk – An Example of Estate Agent Power

Posted on December 10, 2007 by | 7 Comments


Peter Mericka B.A., LL.Bby Peter Mericka B.A., LL.B
Real Estate Lawyer
Qualified Practising Conveyancer Victoria
Director Lawyers Real Estate Pty Ltd

 


Continuing our theme on estate agents and their control over the contract stage of the sale transaction, the following is an extreme example of the way estate agents are empwered by their access to the contract, and how some will use that power to the detriment of all parties involved.


David Falk is a real estate agent in Victoria’s west.  David Falk knows the power an estate agent has when he is able to control the sale contract. This was demonstrated when, in a fit of anger, he blurted out the following statement:


“Listen, your client had better get another solicitor, or I’ll be selling this property to someone else.”Estate agents should NEVER handle contracts!

In this posting I will examine this particular incident in detail, setting out all of the facts, and looking at the way the purchaser, the vendor and the lawyers engaged by each, were affected by Falk’s control the contract stage of this real estate sale.


An Offer To Purchase


My client was interested in a property listed with David Falk. The lawyers acting for the vendor had prepared a Contract of Sale and delivered it to David Falk.


It should be borne in mind at this point that the vendor had engaged his own lawyer for the purpose of preparing the sale documents, being the Section 32 Vendors Statement and the David Falk - Direct of Falk & Co Estate AgentsContract of Sale. According to the lawyer, the Contract of Sale had been prepared with a set of “vendor warranties”, required by law in this case because the vendor was an owner-builder.


It would appear that David Falk, acting on his understanding of the law, decided that his simple REIV Contract Note was better than the contract prepared by his client’s lawyer, and took it upon himself to substitute the correct contract with his Contract Note.


Let’s pause here for a moment. On what basis did Falk, a non-lawyer, conclude that he had the right to abandon a full contract prepared specifically for this transaction, and substitute it for his own single page Contract Note?


Did Falk discuss this with the lawyer who prepared the proper contract? Apparently not; she would have told him not to tamper with the legal documents. In fact, when I spoke to the vendor’s lawyer she was shocked and annoyed to discover that Falk had switched documents!


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7 Comments

  • What if Google entered the real estate market?

  • We would see corruption end over night!

    Dismantle the estate agents’ monopoly over access to advertising, force them to take responsibility for what they do and say, and both the estate agent (as he/she exists today) and the associated corruption would would disappear.

    Another way to deal with estate agent corruption would be to require all estate agents to also undertake the conveyancing role. Just follow the reasoning, and you will see how this would stop estate agent corruption quite effectively.

  • http:// says:

    Apart from exposing this sort of conduct on the net, Peter, you must also begin regularly reporting the details (preferably with your clients’ written consent) to Consumer Affairs Victoria…and maybe to the A.C.C.C.

    Don’t expect your complaints to be handled too promptly, or even to be taken too seriously, but just keep up the water-torture on the regulators. And one day, some day, perhaps…

    In the meantime be prepared to cop some official flak – as I did when I dumped hundreds of complaints on Queensland’s Office of Fair Trading about licensed agents’ misconduct. In my case I found myself slandered in the Cowards’ Castle, Parliament. (I am aware you’ve already been vilified otherwise in your State Parliament.) But wait, there was more shooting of the messenger: The Commissioner for Fair Trading lodged a vindictive complaint against me with my Law Society for overburdening his Office with complaints about agents without my clients’ authority.

    The commisioner’s complaint was not pursued when I showed that I had written approval from my clients in every case. No matter that I argued also that, as an officer of the court, I had a duty to report apparent breaches of the law to the relevant regulator with or without my clients’ instructions.

    Neverthess, some of my complaints have born limited fruit over the years and have been reported here in your Blog. Nary a thank you, however, from those officially charged with protecting consumers from real estate rogues.

    Finally, don’t forget to dob in the dodgy solicitors and conveyancers you seem to come across so often.

  • Tim, I have gone to the trouble a few times, but it usually comes to nought.

    Here’s an example. Paul Fenech is the No.1 Stockdale & Leggo estate agent in Victoria, and he crows in the local newspaper about himself (a recent piece being about speaking at a high-powered estate agent conference in Fiji, although he did not mention that his talk was about maximising vendor-paid advertising).

    This No.1 estate agent was annoyed that I attempted to negotiate my client’s purchase through the vendor’s lawyer rather than through the estate agent.

    How did Mr. No.1 deal with the matter? He knew that I would not want to discuss the matter with him, and so he rang my office pretended to be a “John Williams” and told a lie about returning a telephone call I had made.

    When I answered the call he identified himself to me as Paul Fenech, and started sreaming,

    “The vendor says you’re a fucking idiot and he won’t deal with you…no-one fucking likes you, not me, not the vendor…” I then hung up on Mr. No.1.

    I complained to Consumer Affairs Victoria, telling them that I regarded Mr. No.1’s behaviour as improper and unprofessional in terms of:

    1. His refusal to recognise the solicitor-client relationship;
    2. His defaming me to the vendor in a real estate transaction; and
    3. His rude and unprofessional comments made in response to formal correspondence.

    The response from Consumer Affairs Victoria was:

    “This office notified Paul Fenech, Principal of the agency, of your complaint and allegations. I have also discussed this matter extensively with the agent. Please be advised that the agent has been reminded of his obligations and duties under the Estate Agents (Professional Conduct) Regulations 1997. On this basis, no further action will be taken in this matter. Thank you for bringing this matter to our attention.”

    This blog has more influence in terms of informing/protecting consumers and exposing bad behaviour that Consumer Affairs does.

  • http:// says:

    “This blog has more influence in terms of informing/protecting consumers and exposing bad behaviour that Consumer Affairs does.”

    Agreed, my friend.

    I regularly receive emails from consumers all over Australia who have done a little net-surfing before or after signing up for deals. These folk promptly get in touch when they find some of the Blog articles where we have named villains.

    Would you believe that Queensland’s Office of Fair Trading Register of Enforceable Undertakings (by sprung villains) is no longer available on line? Yup, if you want to check out whether the agent you’re dealing with has been up to mischief, you have to visit the OFT in Brisbane.

  • http:// says:

    have been duped by agents 4 times-they never act in the buyer’s or seller’s interests. some are bullys especially in a boiling market or dealing with new migrants like me then. others are duffers who bumble through and undersell your property without any effort. yet others pressure you to buy today and if you are green you fall for that without bargaining. and others are charming and nice and finally bring down the price with immoral softening up of the vendor with tire kickers and then get you to drop your price.
    there are no ethical agents. or educated ones. they should all be put out of bnusness

  • Hi Kdorge,

    There is a way to make estate agents educated, ethical and honest: they should be required to become conveyancers.

    If an estate agent were required to take full responsibility for the vendor’s side of the sale transaction, he or she would not be able to meddle in the other side of the transaction.

    Thus, the estate agent would not be able to “assist” the purchaser to prepare the offer, or control the purchaser. The estate agent could do no more than to tell the purchaser to consult their own lawyer or conveyancer.

    If estate agent were stopped from being “double agents” working for both sides of the transaction, the corruption would stop.

    Amazingly, the the new Conveyancers Act (to come into operation in Victoria next year) specifically prohibits estate agents from acting as conveyancer if they are also acting as estate agent in the same matter – this indicates the low level of understanding our legislators and regulators have of the problem.

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